How Much Does Payroll Software Cost? A Breakdown of Costs and Hidden Fees
Implementing the right payroll system for your business will help save time and increase accuracy by automating payroll and tax calculations and ensuring adherence to payroll taxes and regulations.
But how do you choose the most cost-effective solution for your needs? What are the different kinds of costs involved?
Most of the vendors out there don’t make their exact pricing readily available so, to make your search easier, here I’ll walk you through the typical payroll software costs and other critical factors for you to make an informed decision.
How Much Does Payroll Software Cost?
Let’s get into it. First off, there are several factors to be aware of that contribute to the overall cost of payroll software.
For example, pricing varies based on the size of your company (number of users), specific features (often payroll is bundled as part of a wider talent management package), and the level of training and support you want.
Base plans for payroll software can start as low as $17 per month (Patriot Software), while more established payroll service providers like Intuit Quickbooks provide enterprise plans starting at $140 per month, so it’s quite a broad range.
Here’s an overview of the typical payroll software costs for small, medium, and larger organizations.
1. Small businesses (1-100 employees)
Small businesses often need less functionality and levels of support from their payroll software, which is reflected in the price.
There are even some free options out there for organizations on a really tight budget (Payroll4free, HR.my, ExcelPayroll).
Features generally include basic payroll processing, tax calculations, direct deposits, and employee self-service portals.
Typical Cost: $20-50 per month an/or $2–$25 per employee per month
Example: Onpay is a good payroll software for small businesses with a mercifully easy pricing structure. They charge a fixed cost of $40 + $6 per employee, which is about the going rate.
Their package includes unlimited payroll runs, automated tax filings, and support for both W-2 employees and 1099 contractors. You can easily scale up by adding more employees as needed.
2. Medium businesses (100-500 employees)
As companies grow beyond 100 employees, payroll becomes more complex due to compliance, automation needs, and potentially multi-location management.
Medium businesses often require auto payroll syncing, multi-state payroll processing, and more advanced security features like role-based access and payroll fraud detection are also crucial as payroll complexity grows.
Typical Cost: $60–$100 per month and/or $5–$20 per employee per month
Example: Gusto Plus is $60 per month + $9 per employee. For this you get multi-state payroll, next-day direct deposit, and expense and reimbursements.
3. Enterprise Businesses (500+ employees)
Enterprise organizations (500+ employees) require highly scalable and automated payroll systems to manage multiple types of workers as well as complex multi-state and global compliance.
AI-driven payroll analytics, workforce forecasting, and real-time financial reporting help optimize costs and compliance.
Enhanced security measures, such as multi-factor authentication, role-based access, and fraud detection, protect against payroll risks.
Additionally, enterprises often require custom payroll solutions and dedicated account managers for ongoing support. Many organizations will be straying into employer of record territory as well.
Typical Cost: $100–$1,000+ and/or $30-$250 per employee (really depends on needs).
Example: Pricing is usually highly customized at this level, but one example is Papaya Global's enterprise global package that starts at $15 per employee per month, so a minimum of $15,000 per month. Features include support for 160+ countries and automated payments in local currencies.
Payroll Pricing Models
As you might have noticed from the above, payroll software typically follows these three main types of pricing models: the monthly SaaS model, a fixed-pricing model, or a free/freemium plan.
Add-ons such as tax filing, direct deposits, and HR services may increase costs.
Software-as-a-Service model
Businesses subscribed to the software-as-a-service (SaaS) pricing model pay a monthly charge to access cloud-based payroll applications.
The subscription plans for such payroll software include charging a monthly fee per employee in addition to the base fee.
One good example of a payroll software provider following this model is Gusto, which charges businesses a base fee of $40 per month plus $6 for every employee. Thus, a company with 100 employees would pay $640 per month.
Many monthly subscription plans include multiple tiers, each offering different payroll features and services. The expensive plans might include extra technical help, extra HR support, and a personal accountant to prepare and submit taxes.
This model is best-liked by businesses, irrespective of their sizes, because of the cheap monthly charge and scalability options.
Fixed pricing model
Some payroll software charges a fixed monthly fee, irrespective of your number of employees.
The fee generally depends on predetermined variables like the features provided and the number of employees it can support.
However, these solutions have limited functionalities and are ideal for startups and small businesses with a limited workforce.
One good example of payroll software implementing this pricing model is Deel.
It offers flat rate user pricing, with a free plan for businesses with up to 200 employees. Heartland Payroll is another option offering pricing plans for a fixed number of employees. Prices start at $89 per month for 1-5 employees.
Free payroll software/freemium plans
Payroll software vendors offering freemium plans are rare, but options like Homebase exist that offer a free basic services plan for unlimited payroll at one work location, making it perfect for small businesses.
However, software employing this pricing model provides the bare minimum features to give you a glimpse of how the software works.
The goal is to hook customers into liking their software and then convince them to try out the paid plans.
I recommend using one of these plans only as a jumping-off point or if you are a small business owner with a couple of employees and have a tight budget.
Other Payroll Costs
Here are some additional costs that you may have to incur when you sign up to run payroll using software:
Setup fees
You might incur a one-time setup fee when transferring previous payroll information from an old or historical system to a new one. This data migration is critical to ensure the accuracy of your employees' year-end forms.
For some software like Quickbooks Payroll, the setup costs are only included in the highest plan (i.e., the Advanced tier).
On the other hand, bespoke programs like ADP RUN usually include the setup charges in the prices they quote.
Data integration
This includes extra costs for establishing data integrations with time-tracking apps, accounting software, or HRMS systems.
Furthermore, you could face additional charges for utilizing an API providing HR functionalities like generating payroll reports and analytics.
While payroll integrations bring in more flexibility and efficiency, they often fail to provide value for money.
Besides this, several full-service payroll solutions offer core HR functionalities along with their payroll plans.
Training costs
You would expect that after paying for the software, training would be complementary. However, that is not always the case. Software like Ceridian Dayforce and Heartland Payroll charge for training your employees.
Even if the software provider doesn't charge for their training, you still pay your staff's wages for hours they spend getting up to speed with the new software.
This is why you should sign up for software that offers complementary training without charging any additional fees.
Cancellation fees
Some payroll software providers have a cancellation fee or a lock-in subscription pay period. As a result, look out for such hidden costs to avoid unavoidable expenses.
However, there are options like Sage HR and Intuit Quickbooks that refund purchase costs within 30 and 60 days, respectively.
This is why you should always choose a payroll system that offers a free trial. Check out this list of the 24 best payroll software offering freemium plans and free trials.
Customer support fees
In certain rare scenarios, payroll software companies charge customer support fees. One example is Quickbooks online, which only offers 24/7 live support as part of its higher-tier plans.
However, with most HR software options, basic payroll plans offer limited help (such as email and knowledge base support).
However, the higher-priced plans typically come with access to a personal customer service manager, avoiding the likelihood of extra fees.
Other Payroll Options to Consider
Besides the pricing models highlighted above, here are two more options for choosing the right payroll software for your business.
Full-service payroll outsourcing
From employee onboarding to filing tax forms and monitoring compliance, a full-service payroll outsourcing solution is an online payroll services provider that handles all aspects of payroll processing.
These services simplify payroll administration and compliance with tax and labor regulations.
Here are some helpful pros and cons to consider when using an outsourced full-service payroll solution.
Overall, it’s a good idea to delegate payroll operations to a third-party services provider.
Implementing a full-service payroll software can streamline tax payments, simplify HR operations, and improve employee satisfaction.
Such software also provides additional HR features like time and attendance, bookkeeping, paid time-off (PTO) tracking, benefits administration, payroll compliance, payroll data reporting, and employee self-service portals.
Some notable examples of full-service payroll outsourcing companies include Paychex Flex, Workday HCM, and Onpay.
Global payroll services
Firms operating internationally can outsource payroll administration to global payroll service providers that manage all aspects of payroll administration for multinational corporations.
These services oversee tax law intricacies, exchange rate concerns, and regulatory obligations to process payroll compliantly.
By implementing global payroll services, businesses can save time and money while steering clear of potential legal penalties.
Additionally, global online payroll services providers help their clients create customized payroll processes to meet your unique requirements.
Global payroll services also enable companies to manage currency risks by automatically translating salaries into local currencies. Some examples of global payroll service providers include Rippling, Papaya Global, and Deel.
How To Maximize The ROI From Your Payroll Software
It’s a fact that the payroll function costs money to set up and run, but use these tricks to ensure you get the most value from your payroll software:
1. Figure Out What You Actually Need
Before diving into payroll software, ask yourself:
- How many employees do I have?
- Do I need multi-state or international payroll?
- Do I hire contractors?
As mentioned above, smaller businesses can stick to simple, affordable payroll tools, while bigger companies need automated tax compliance, benefits management, and integrations with HR and accounting.
Knowing your needs upfront helps you avoid overpaying for features you won’t use.
2. Make sure it plays nice with other software
Your payroll software should work seamlessly with your accounting system (QuickBooks, NetSuite), HR tools, benefits platforms, and time tracking apps.
This saves time and prevents errors from manual data entry. The more integrations, the less headache for your HR and finance teams.
3. Choose software that grows with you
Changing providers can be a real headache, so, even if you're a small business now, think ahead.
Will you be hiring in other states or countries? Need to add benefits or compliance features later?
Pick a payroll solution that scales so you don’t have to switch platforms when your business expands.
4. Compare costs and read the fine print
Pricing can be tricky—some software charges flat fees, while others bill per employee. Watch out for hidden fees on tax filings, direct deposits, or extra users. A slightly higher upfront cost might save you hours of admin work, which is worth every penny.
5. Test the customer support
Payroll is too important to have bad support. If you run into a problem, you need quick, reliable help.
Check response times, availability (24/7 or business hours?), and support channels (phone, chat, email) before committing. A great payroll provider should feel like an extension of your team.
6. Try before you buy
Many payroll software providers offer free trials or demos—use them! This is the best way to see if the interface is user-friendly, test features, and make sure it fits your needs before locking into a contract. If the software feels clunky or confusing, move on.
More food for thought while shortlisting payroll software providers
Besides considering costs, you should ask yourself the following questions before choosing any payroll system solution:
- Is the software interface user-friendly and does it meet the skill level of your in-house HR team?
- Can the software accommodate your organization’s changing payroll needs?
- Does the software comply with local and global tax compliance requirements?
- Can the software seamlessly integrate with other existing HR and accounting systems?
- What kind of training and support does the software provider offer?
Compare Costs Vs. Features
With HR workload going through the roof, embracing payroll software improves accuracy and efficiency while cutting down costs.
Payroll software providers sometimes have complicated pricing models. In this article, I’ve attempted to unravel the various hidden costs to paint a complete picture of the financial implications behind implementing new payroll software.
If you’re looking to choose payroll software for your business, check out this guide highlighting the 30 best payroll software of 2024.
You could also talk to one of our knowledgeable software advisors.
