How Much Can Your Business Actually Save With a PEO? A Real Cost Breakdown
Independent research from NAPEO puts the average PEO cost-savings ROI at 27.2%. Here's what that number actually measures and what you can realistically expect for your business.
What the 27.2% ROI Measures
The NAPEO figure measures the net savings from PEO fees against the total cost reduction in HR administration, benefits, workers' compensation, and compliance. It's an average across thousands of businesses - your actual result will depend on your current costs, company size, industry, and state.
Where the Savings Come From
- Benefits: PEOs pool thousands of employees, giving them large-group buying power. Most clients save 15-30% on medical insurance alone.
- Workers' compensation: PEOs often have lower workers' comp rates due to their scale and safety programs.
- HR administration: Outsourcing payroll, compliance, and HR administration reduces internal staff costs.
- Compliance: PEOs take on significant compliance liability, reducing your exposure to fines and penalties.
What You Pay
PEO fees are typically structured as a percentage of payroll (2-12%) or a per-employee-per-month fee ($100-$200). The right structure depends on your payroll size and the services included. A&C evaluates total cost - fees minus savings - for every option we present.
What to Expect From an A&C Analysis
We conduct a comprehensive, multi-factor analysis of your current costs and the full PEO market before making any recommendation. We show you the total cost comparison - not just the PEO fee, but the net impact on your benefits costs, HR costs, and compliance exposure.