HR outsourcing pricing comes in four structures, and which one a provider uses tells you as much about the deal as the number attached to it. Each rewards a different shape of business and punishes another, and providers naturally favour the structure that suits their own book rather than yours.
Base plus per worker
A fixed monthly subscription with a charge for each worker paid. It is the commonest structure among providers that publish anything, and it is the easiest to model because both halves are visible. It punishes very small employers, because the fixed half spreads across few people, and it treats a business with many irregular or part-time staff harshly, since the per-worker charge usually counts anybody paid at all rather than anybody employed.
Percentage of payroll
The fee tracks your gross payroll, so it rises with every raise you give even though the administrative work does not. It suits a large workforce on modest wages and is expensive for a small, well-paid team. If you are quoted this way, model it at next year's payroll rather than this year's, and ask whether the percentage is capped per employee, because an uncapped percentage on a growing salary bill compounds against you.
Flat fee and per employee per month
A single monthly figure regardless of headcount suits a stable business and penalises a shrinking one, which is the case nobody plans for. A flat per-employee-per-month charge with no base is the fairest structure for most buyers because it tracks the work most closely, and it is also the rarest, because it gives the provider no floor. Where you are offered it, take it seriously.
Telling which one you are in
Ask for the fee at your current headcount, at half of it, and at double. Three numbers expose the structure immediately regardless of how the proposal is worded, and they show you what happens if the business changes. A provider that will not give you all three has told you something about how the fee behaves at the sizes it does not want to discuss.
Questions people ask about hr outsourcing pricing
What are the HR outsourcing pricing models?
Base plus per worker, percentage of payroll, a flat monthly fee, and a flat per-employee-per-month charge. Each rewards a different shape of business, and providers favour the one that suits their book.
Which pricing model is fairest?
A flat per-employee-per-month charge tracks the administrative work most closely, which is why it is also the rarest: it gives the provider no floor.
How do I tell which model I am being quoted?
Ask for the fee at your current headcount, at half, and at double. Three numbers expose the structure whatever the proposal says, and show what happens if the business changes size.