Understanding how much a payroll service costs is the first step in solving payroll for good.
It’s easy to get lost in the details of what level of payroll services you need, what is included and excluded from your plan, and how much you should pay for that plan.
There are dozens of payroll service providers, and they all offer different levels of service, often offered in packages. While these packages are usually marketed as a good fit for businesses of certain sizes, it can be complex sorting through what you actually get from these packages in contrast to what you need and what you will actually use.
There’s one thing for certain: you should only pay for the payroll services you need and nothing more.
Understanding Payroll Services Pricing
Every payroll service has their own way of pricing. In some cases, in pursuit of the “lowest price,” it’s a race to the bottom in terms of quality and service. Others have a low sticker price but nickel and dime their customers to death with hidden and confusing fees.
We don’t believe in those business models.
Our pricing program is crafted on a transparent model. We show any and all services that could be generated or offered during our free consultation, along with the pricing of those services. We discover what services you need, and build your payroll service based on that need.
Pricing, therefore, differs from client to client based on what services they actually need. We don’t build any packages that include services our customers don’t need or use.
Ballpark Payroll Service Pricing
On average, small businesses with ten employees typically pay somewhere around $2,000 annually in payroll expenses. Included in this average are the base payroll processing fee and a per-check charge per employee. Other services, like HR resources and workers’ compensation, are added as needed.
The true cost of payroll, though, goes beyond the “sticker price.”
The True Cost of Payroll Services
When considering the cost of a payroll service, you should understand that the price of processing the payroll is only a part. There is also a cost associated with everything that touches payroll.
There is a cost in time (human capital) and a cost in risk (uncertainty, fear, and stress). When something goes wrong, there is a cost there as well.
The price tag doesn’t take into account all those additional costs.
What happens when you pay a fixed price for a payroll service but end up getting an IRS tax notice or penalty?
That additional cost and time to deal with the issue is most likely not reflected in the price on the service’s website. But, it’s still an expense you have to pay - unless you’re a ConnectPay customer and enjoy our zero tax penalty or fee guarantee.
Beware of Over-Packaging
There is also a common industry problem with over-packaging. This is where the payroll company provides a “package” deal that includes a lot of services that aren’t needed. Even though the client can’t use the service, they are still charged for it because it was part of the package.
Beware of ‘New Customer’ Discounts
Another thing to watch for are companies that slash pricing for new customers. Once they get you in the door and your company’s payroll tied up in their service, the price will increase. By then, it’s more painful to switch, so a lot of customers feel trapped.
How Much Should You Pay for Payroll Services?
When we counsel small businesses on payroll services, our first priority is always to identify what’s important to them in a payroll partner:
- Technology
- Service
- Price
- Compliance
- Location
Once we understand what the company really needs and wants, we can start making recommendations to meet those needs. This is the complete opposite of offering a company a rigid, one-size-fits-all package.
If you would like to talk to us about what payroll services you need, and how much that should cost, you can consult with one of our representatives.
We almost always recommend medium-to-small businesses work with a local provider rather than a nationwide or global provider. Nationwide providers sell their own products, and support for small business is often frustrating or nonexistent. Local companies tend to be the best partner-based provider because access to support is unmatched. The local provider knowing your specific area is valuable for local compliance as well. That’s why ConnectPay doesn’t sell health insurance, workers’ compensation, and the like. Instead, we connect our clients with local trusted advisors. They get the best support, and a provider they can access and rely on.
If you’re a small business and want to talk to a trusted payroll provider, you can schedule a consultation with us here.
We look forward to talking to you about your payroll needs.
