Author: Rodrigo Vázquez Mellado
Choosing the right payroll and HRIS software can change how your clients work forever, automating complex processes, improving accuracy, and saving time and money. However, understanding the costs involved in getting these tools is crucial for making the best possible purchase decision.
This is why benefits brokers have such a unique opportunity to add value to clients and prospects when it comes to tool selection. It's an important and usually daunting process where a lot is on the line. The goal of this article is to arm you with information you can use to guide your clients specifically when it comes to pricing these solutions.
We'll break down the costs associated with Payroll and HRIS (Human Resource Information System) software. Through this quick read, you'll better understand what to expect to pay depending on the capabilities your clients are looking for, employee headcount, contract duration, and more.
Payroll Software Features
For clarity's sake, let's talk about payroll software functionality first. At its most basic, payroll software should be able to automate the calculation of employee pay, tax deductions, benefits, etc. It simplifies compliance with federal, state, and local regulations and can significantly reduce the administrative burden on HR departments. Core features typically include:
- Payroll Processing: Automated gross pay, deductions, and net pay calculations.
- Tax Management: Calculating and withholding taxes, ensuring compliance with tax laws.
- Time and Attendance: Integration with time-clock systems to track employee hours.
- Benefits Management: Tracking of insurance copayments, retirement plans, and other employee benefits either directly through their platform or through integration with leading dedicated benefits management platforms.
- Employee Self-Service: Portals for employees to access their pay and benefits information.
If your client is looking for help selecting the right vendor, the good and bad news is that there are hundreds of choices with unique selling points and feature sets. Your firm may have a dedicated HR technology center of excellence you can rely on. If not, take advantage of SSR's
Pricing Models
Considering the above core features, payroll software pricing generally falls into three categories:
- Per Employee, Per Month (PEPM): This is a subscription-based model where you pay a base monthly fee plus an additional fee per employee. For example, Patriot Software charges $17 monthly as a flat fee plus $4 PEPM. This means that a, let's say, 75-person company would pay $317 for this tool monthly (17 + 75 * 4).
- Per Employee Type: Some companies that support part-time employment or contractor payroll management will, naturally, charge different rates for each scenario. This is especially common with multi-country payroll providers.
- Custom pricing: For bigger businesses, payroll vendors will create a custom plan depending on your specific needs and headcount.
- Perpetual License: This is rarer in the days of SaaS cloud-based tools, but some vendors can still do a one-time fee for on-premise software. Your company would host the software and all its data on in-house servers. While the initial cost is higher, it allows for more customization and integration with other business processes. There are also industries (such as finance) where regulations require on-premises software for
data security .
Additional Considerations
Beyond subscription or licensing fees, some vendors will bill for implementation, support, and maintenance costs. These hidden fees can add up, and it's important to understand the total cost of ownership when vetting a vendor.
Certain payroll software vendors also offer services, meaning they'll have an account manager or consultant process some payroll tasks for you or at least help you with the initial setup. All of these may be charged separately and will be discussed when you fine-tune the details of a contract.
Speaking of contracts, the prices for each software module and even the PEPM model are likely to vary depending on the contract duration. For example, if you agree to sign for a full year, you can expect some price reductions.
HRIS Software Pricing
Moving on, HRIS or
Many HRIS vendors also offer payroll either via their own payroll processing infrastructure or through tightly integrated third parties.
Common pricing models for HRIS software are similar to payroll software, typically charged per employee per month. The average PEPM for SMB-focused HRIS software starts at around $8 but can vary widely based on features and capabilities. Typically, vendors will charge a few dollars more PEPM for add-ons such as Time and Attendance, ATS, or Performance Management.
HRIS pricing per company size
Generally speaking, PEPM for SMB-focused HRIS software starts at $8, and the average is closer to $14 PEPM. Still, after reviewing 300+ contracts, we've found a wide range of offerings. Small companies pay from $25 to $112 per employee annually, mid-sized companies around $83, and larger companies about $80 per employee annually. Customization, features, and integration needs significantly influence these costs.
Now you have an idea of the budget, what's next?
My hope is that by now, you have a clearer understanding of how much an HRIS or a payroll tool (or both) would be for your clients. A good next step would be to pick 2-3 vendors that are a good fit and get a feel for each solution.
However, navigating the nuances of HR software pricing and features can be complex. If you're uncertain about which solution best suits your company's needs, consider getting some free help from an
Author
Rodrigo Vázquez Mellado
Rodrigo has worked in tech since 2015 across various marketing and product roles. These roles put him on a path toward the world of recruiting and HR. For instance, he helped recruiters at companies like Walmart and Alorica improve their hiring through the use of AI.
At other startups, he also took an active part in recruiting new team members. More recently, he's worked as a writer and editor at
