The cost of HRO services varies widely. Most providers charge for their services based on two models: by the individual service provided or a subscription plan that comprises a bundle of features and/or services.

Consider your business’s needs before purchasing a bundled subscription plan ‒ you don’t want to pay for services you don’t need.

For small to medium-size businesses, base costs typically range from $50 to $100 per employee per month.

Other “Add-on” Costs

If you need what many HRO providers consider “add-on services,” plan on your costs increasing by $20 to $50 per employee per month. This cost is also influenced by the size of your business, if you have multiple locations and the complexity of your organization.  

Implementation Fees

Besides service-related costs, there are one-time implementation fees. These fees typically range from $1,000 to $3,000. Some HROs reduce or waive fees. Most HROs do not require you to sign an annual contract, but they will require 30 days’ notice before you terminate service.

Some Perspective on the Costs of an HRO

As you consider the costs of an HRO, try not to panic. We recommend that you add up your total costs on what you presently spend on HR management, your HRIS (human resources information system) and payroll, benefits administration (including COBRA, flexible spending and health savings accounts, 401(k) management and tax preparation). These costs can all be absorbed under the HRO partner model. When you consider it from this angle, the financial comparison is more psychologically (and financially) manageable. For many small companies, switching to an HRO almost always results in cumulative savings, particularly when you factor in opportunity costs and overly worked and stressed HR team members.

Tip: The upfront cost of implementing an HRO is usually offset by the long-term savings you gain by not having to maintain an internal HR department.