Employer of Record Pricing: How Much Should an EOR Cost?

Offering remote work options is one of the most effective ways to attract top talent and build your dream remote team of skilled international employees.

But global expansion holds potential legal pitfalls, which is why many global employers are now turning to EORs (employer of record organizations) to take the hassle out of global hiring and compliance.

EORs do a lot more than just hiring and onboarding new team members — they also handle:

• Global payroll processing
• Employee benefits
• Employment contracts
• Talent retention
• Compliance with changing labor laws
• Consistent HR support
• Health insurance
• And liaising between the employer and the employee.

If you’re considering partnering with an EOR, one of the main factors in your decision will probably be the cost. You’ll want to make sure you balance the services you need with the best value for your budget, so let’s take a look at how EOR pricing works and how much you can expect to pay.

Factors Affecting the Cost of an EOR

To understand how EOR pricing works, it’s important to first get familiar with the different factors that contribute to EOR costs. Here are some of the most common:

Geographical Location

Different regions or countries have varying labor and regulatory environments, and the cost of hiring, tax obligations, and compliance can vary significantly from one location to another. EOR providers must navigate these variations and ensure compliance with local employment laws, which can impact the overall cost.

Employee Headcount

The size of the workforce the EOR is responsible for managing directly impacts the cost of their services. EORs may charge fees based on the number of employees being onboarded, as the workload and administrative efforts increase with a larger headcount.

Industry or Job Complexity

Different industries or job roles have specific requirements and complexities that can influence the cost of an EOR. For instance, highly regulated industries like healthcare or finance may require additional compliance measures and specialized human resources expertise. EORs might need to invest in industry-specific knowledge, certifications, or tools to support clients in these sectors, leading to higher costs.

Additional Services

Some EORs offer value-added services like benefits administration or payroll management, which may incur additional costs.

Compliance Requirements

Different countries have different labor laws, regulations, and legal compliance requirements. EORs must ensure their clients remain in full compliance with these local laws, which involves additional administrative efforts and legal expertise.

Pricing Models for Employer of Record Services

Now that you understand the different factors that influence EOR pricing, let’s take a look at the main pricing models that different EORs use to set their prices.

Percentage of Employee Payroll

In this model, the EOR charges a percentage of the employee’s salary. The most significant disadvantage of this pricing structure is that it disincentivizes employers from raising salaries or hiring more workers because they must pay the EOR extra money to offer an employee a bonus or raise.

While a percentage-based structure may seem more enticing initially, especially if you’re only hiring one or two employees, a flat-fee costing structure is likely to be more flexible and cost-effective in the long run, allowing you to reward team members for their work and expand your operations without racking up additional costs.

Fixed Fee Per Employee

This is the most common model, whereby the EOR charges a set fee for each employee, regardless of the employee’s salary. This pricing structure is popular among businesses with a small or fluctuating workforce because it allows them to only pay for the services they require rather than a percentage of payroll. This pricing model also provides greater cost transparency and predictability, allowing businesses to better budget their expenses.

Industry rates for the fixed-fee model vary widely. For instance, EOR service providers such as Papaya Global, Remote, or Deel have fees that range from $599 to over $1,000 per employee per month, depending on the specifics of each employee, such as their role or geographic location.

At Remofirst, we pride ourselves on being one of the most accessible EOR solutions in the industry, with pricing starting from $199 (where the highest end of pricing is still less than the starting price of competitors). On average, Remofirst’s pricing is 30% lower than our competitors.

Fixed Pricing Model

This model typically covers a specific number of employees and a defined scope of services. Fixed pricing is popular among businesses with a stable workforce because it allows them to easily predict their HR-related expenses. This pricing model also gives business owners more control over their costs and can be tailored to their specific requirements.

Custom Pricing

EORs also offer customized pricing based on specific client needs, allowing businesses to choose the specific services they need without paying for additional services they don’t require. This model is ideal for businesses with unique HR requirements or those that need a high level of customization in their HR management.

Tips for Evaluating EOR Costs

Taking the plunge and partnering with an EOR is not an easy decision, and there are several factors you’ll need to consider before you sign on the dotted line. Here are some things to keep in mind as you look at EOR providers and pricing.

Shop Around

Request detailed pricing quotes from multiple EOR providers. This way, you can compare their pricing structures, fee breakdowns, and any additional costs they may charge. Gathering as much information as possible will empower you to make informed decisions and avoid any potential hidden costs.

Compare EOR Services

Compare the services and features included in each pricing proposal. It’s a good idea to consider factors such as the scope of services, customization options, and the technology and tools the EOR company offers.

Look Beyond Costs

While cost will be an important factor in your decision, there are other aspects of the service that you should also take into account, such as the long-term value and quality. Some things to look at include:

• Reputation and track record: Research the EOR’s reputation, client reviews, and testimonials. Look for its experience in the industry and ability to provide reliable and efficient services over the long term.
• Client support: Assess the level of customer support and responsiveness the EOR provides. A dedicated account manager or reliable customer service can significantly impact your experience and the value you receive.
• Scalability: Consider whether the EOR can accommodate your company’s growth plans — for example, evaluate its ability to handle increased employee headcounts or expansion into new markets without compromising quality.

Sniff Out Additional or Hidden Costs

Some EORs may have hidden or additional costs that are not apparent upfront. Look out for any of the following:

• Setup fees: Inquire about any one-time setup fees that the EOR may charge to onboard your company and employees onto the platform.
• Termination fees: Understand the terms and conditions regarding termination or contract cancellation. Determine if any fees or penalties are associated with ending the engagement with the EOR.
• Additional services: If you require any specific services or customizations beyond the standard offering, inquire about the associated costs. Ensure that you have a clear understanding of what is included in the base fee and what requires an additional charge.

Attract Global Talent with an Employer of Record

Thanks to EORs, international hiring has never been easier, enabling you to build your global team while ensuring compliance and keeping costs low.

Selecting the best EOR provider for your needs requires finding that perfect balance of comprehensive services and competitive pricing. That’s where Remofirst stands out in a rising tide of EORs: we provide full-spectrum EOR solutions at some of the lowest prices — starting at just $199 per employee per month.

Looking for more information about EOR providers? Check out our comparison of the best EORs for startups, or get in touch with the Remofirst team to have all your burning questions answered.