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PEO Pricing Concepts
Most PEO's create a factor and bundle all employee related costs (FICA, FUTA, SUTA, WORK COMP, and ADMIN) into a bundled factor for each work comp class code to make payroll and other services simple and predicable for the employer. These factors will either stay stagnate using mathematical estimates for SUTA and FUTA cut-off's, or they will reduce as wage base limits are met for SUTA and FUTA tax. This is known as an unbundled factor
A third pricing model involves a "real time" factor for taxes and work comp, plus a per employee fee per pay cycle or month. Known as a fee-based factor
Example of Employer related costs (per $100 of payroll):
*Notes - State Unemployment Tax rates vary significantly by state & employer experience. - The Small Business Administration estimates that administrative overhead for business with less than 100 employees ranges from 4% - 8%. - Total cost is estimated and may very by employer.
Examples of Pricing Structures by PEO's:
1. Bundled Factor Example
*Note - The factor stays constant throughout the year.
2. Unbundled Factor Example
*Note - The factor shifts with Federal and State Unemployment Tax.
3. Fee Based Factor Example
*Note - The factor shifts with Federal and State Unemployment Tax, and the fee is carved out.
PEOs may have additional fees for group benefits such as health or 401(k) implementation. They may also have fees for delivery or client set-up. PEOshop.com helps our customers identify and compare PEO packages.
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