How much does HR outsourcing cost? HR outsourcing typically costs between $45 and $250+ per employee per month, depending on the service tier. Light HR support runs about $45 to $150 per employee monthly, full-service HR outsourcing runs about $100 to $250+, and PEOs charge roughly $100 to $300 per employee per month or 4% to 8% of total payroll. For most small and mid-sized businesses, that is less than the cost of a full in-house HR team.
Pricing is often the hardest thing to pin down when evaluating HR outsourcing, because providers rarely publish it and the models differ. This guide lays out the real 2026 ranges by service tier, shows sample monthly costs by company size, and explains what actually drives the number, so you can budget with confidence.
How much does HR outsourcing cost by service tier?
Price scales with how much you hand off. Here are the four common tiers and their 2026 per-employee-per-month (PEPM) ranges:
Service tier | What’s included | Cost (PEPM) |
Payroll only | Payroll processing + tax filing | $5–$20 + base fee |
Light HR support | Payroll plus basic HR admin | $45–$150 |
ASO / mid-level HRO | Broader HR administration, no co-employment | $60–$180 |
Full-service HRO | Payroll, benefits admin, compliance, support | $100–$250+ |
PEO | Full service under co-employment | $100–$300+ |
PEOs are also frequently priced as a percentage of total payroll, usually 4% to 8%, instead of a flat per-employee fee. Which model is cheaper depends on your average wage, because percentage-of-payroll pricing tends to cost more as salaries rise.
Sample monthly cost by company size
Here are rough all-in monthly ranges, to translate PEPM into a real budget:
Company size | Basic payroll | Full-service HRO | PEO |
10 employees | $100–$350 | $450–$1,500 | $1,000–$3,000 |
25 employees | $250–$700 | $1,500–$4,500 | $2,500–$7,500 |
50 employees | $500–$1,200 | $5,000–$12,500 | $5,000–$15,000 |
These are service fees. With a PEO, benefits premiums may flow through the provider as well, which raises the invoice but consolidates spend.
What drives the cost?
- Number of employees. More staff raises the total but often lowers the per-employee rate.
- Service scope. Payroll only is cheap, while full-service HR with benefits and compliance sits at the top of the range.
- Complexity. Multi-state payroll, prevailing-wage rules, or heavy compliance needs add cost.
- Benefits administration. Managing carriers and enrollment adds work and value.
- Model. Co-employment PEOs price differently from co-managed HRO arrangements.
Is it cheaper to outsource HR than to hire in-house?
For most small and mid-sized businesses, yes. A single in-house HR manager costs roughly $70,000 to $95,000 a year in salary alone, before benefits, payroll taxes, software, and training, and one person cannot cover payroll, benefits, compliance, and employee relations at depth. A full-service outsourcing partner delivers that whole function, often for less than the loaded cost of one hire.
How does HR outsourcing reduce costs?
- Avoided compliance penalties. A single missed filing or misclassification can cost more than a year of service fees.
- No HR salaries and overhead. You pay for coverage, not headcount.
- Better benefits pricing through the provider’s scale.
- Time returned to revenue work instead of HR administration.
- Lower turnover risk from professional, consistent HR support.
What you should expect to pay with Kona HR
Rather than force you into a bundle you will not use, Kona HR scopes pricing to the functions you actually need and your state footprint. The result is transparent, predictable monthly pricing, which means full-service HR without the cost of building the department yourself.
Frequently Asked Questions
Generally $45 to $250+ per employee per month depending on the service tier. Light HR support runs about $45 to $150 PEPM, full-service HR outsourcing about $100 to $250+ PEPM, and PEOs about $100 to $300 PEPM or 4% to 8% of payroll.
A 10-person company typically pays roughly $450 to $1,500 a month for mid-level HR support and $1,000 to $3,000 a month for a full PEO. A 25-person company generally runs $1,500 to $4,500 a month for full-service HR outsourcing.
For most small and mid-sized businesses, yes. One in-house HR manager costs about $70,000 to $95,000 a year in salary alone, before benefits and overhead, and cannot cover every HR function at depth. A full-service partner delivers the whole function, often for less.
By avoiding compliance penalties, eliminating HR salaries and overhead, securing better benefits pricing through scale, and returning owner and manager time to revenue-generating work.
Both models exist. HRO and ASO providers usually charge a flat per-employee-per-month fee, while PEOs often charge 4% to 8% of total payroll. Percentage-of-payroll pricing tends to cost more as average wages rise.
Kona HR builds transparent, predictable monthly pricing around the functions you actually need. Tell us your headcount and states, and we will scope a full-service HR plan and quote it.
