PEO Buying Guide: Pricing and Fees

October 21, 2025

People in an office.

If you’re considering partnering with a PEO, you’re probably looking for ways to streamline HR, save money, and improve compliance. A Professional Employment Organization (PEO) can deliver just that—offering payroll, benefits, compliance guidance, and other essential HR services within one partnership.

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But before signing with a provider, you’ll want to understand how PEO pricing and fees work. Our PEO Buying Guide breaks it down for you, explaining how each PEO’s focus, services offered, and cost are the most critical factors in selecting the right partner for your company. The guide provides insights into how to ask the right questions when comparing PEOs and understanding the potential all-in costs of partnering with one. 

Our PEO Buying Guide was prompted by our commitment to being fully transparent and the feedback we’ve received from prospective clients on how difficult it can be to understand the costs associated with a PEO partnership. Ambiguity leaves company leaders unsure of precisely what they’re paying for, what services are included in the price, or potentially surprises them with an unexpected fee. At FullStack, our goal is to make your PEO partnership decision easier by highlighting essential factors that help find the right match for your company.

What is a PEO?

A Professional Employment Organization (PEO) is a strategic HR partner that allows businesses to outsource key essential HR functions—such as payroll, benefits administration, compliance, and risk management—while freeing leadership to focus on company growth.

When you work with a PEO, your business enters a co-employment relationship. This means the PEO becomes the employer of record for tax and benefits purposes, while you retain complete control over daily operations. 

A PEO can serve as both an HR consulting company and a tactical support team—helping manage the complexities of human resources in an increasingly regulated environment. Any company can partner with a PEO; however, PEOs are particularly ideal for small to mid-sized businesses seeking to reduce the cost of hiring an internal HR department. Instead of leaving all the HR responsibilities to one individual or team, a PEO provides an already established process that can be tailored to suit your company’s needs. There’s no need to reinvent the wheel when you can outsource a team of experts to lead and assist your HR efforts.

What Services Do PEOs Provide?

PEOs deliver a wide range of HR services that fall into both essential HR and tactical HR categories.

Typical PEO services include:

  • Payroll processing and tax administration
  • Employee benefits procurement and management
  • Workers’ compensation coverage
  • HR compliance support
  • HR technology platforms
  • Onboarding and offboarding
  • Access to HR consulting and employee relations guidance

Comprehensive HR Made Simple with a PEO

While many PEOs operate like a traditional HR consulting company, the right partner goes further—providing essential, fractional, and tactical HR support alongside strategic HR guidance tailored for your industry.

Essential HR: Foundational Business Operations

Essential HR services encompass the core functions that every company must manage to remain compliant and operational. These include:

  • Payroll administration
  • Benefits management
  • Tax compliance
  • Employee recordkeeping
  • Workers’ compensation administration

Every team has its own unique set of challenges. Navigating payroll can be challenging, especially when the team’s structure is complex. If you take on payroll in-house, you’re left questioning what information is required of your employees, who can address accounting needs, and how to customize payroll reports. Managing payroll alone is a slippery slope for many business owners–particularly those on a small to mid-sized scale. 

One hurdle many small companies must overcome is providing competitive benefits to their employees. Within a PEO partnership, these companies can offer benefits comparable to larger organizations, helping them attract top talent and boost employee retention. PEOs can also assist employees with onboarding and open enrollment, as well as answer general questions regarding benefits. 

Despite the size of the organization, every company must abide by HR compliance requirements. A PEO partnership can alleviate the time you spend on complex paperwork and the money you spend on paying billable hour professionals to complete it for you.

Without essential HR in place, a business risks costly compliance penalties, payroll errors, and employee dissatisfaction. A PEO can centralize these services, reducing administrative burdens and ensuring accuracy.

Fractional HR: Flexible Expertise and Guidance

Not every business needs (or can afford) an in-house HR department. That’s where fractional HR services come in. With fractional HR support, you gain access to experienced HR professionals part-time or on an as-needed basis. This is a very cost-effective way to access high-level HR expertise without hiring internally. 

Benefits of fractional HR include:

  • Lower cost than hiring full-time HR staff
  • Expertise in both essential HR services and tactical HR initiatives
  • Scalability as your business grows
  • Personalized service from a dedicated HR partner
  • Support in bookkeeping, accounting, marketing, and technology 

Some PEOs, like FullStack, offer hybrid models that combine fractional HR expertise with traditional PEO administrative services—providing the best of both worlds. The beauty of fractional HR is that fractional teams can customize a game plan for your specific organization. It’s a personal touch to traditional HR and administrative services, for a fraction of the price.

Strategic HR: Planning for the Future

While essential HR will “keep the lights on,” strategic HR is what drives long-term success. Strategic HR means aligning HR policies, benefits, and culture with your company’s long-term goals. This approach ensures that every decision—from the benefits you offer to the way you develop leaders—supports your vision for growth and sustainability. Most PEOs offer specialized services, including consulting and educational training opportunities for the organization’s managers and employees, to ensure everyone is aligned with the same vision. 

For example, a small business planning to scale may focus on establishing consistent policies, fostering a strong company culture, and developing leadership capacity to handle new challenges effectively. Similarly, designing benefit packages that appeal to your target workforce can strengthen retention and employer brand trust, creating a workplace where employees want to stay and thrive.

Examples of strategic HR initiatives include:

  • Building a performance-driven culture
  • Designing competitive benefits to attract top talent
  • Implementing leadership development programs
  • Planning workforce growth for future market demands

According to industry insights, companies that integrate strategic HR with essential functions are better positioned to weather market changes, improve retention, and maintain compliance.

Tactical HR: Day-to-Day Problem Solving

While strategic HR focuses on the future, tactical HR addresses immediate operational needs across essential and strategic initiatives. This includes:

  • Handling employee relations issues
  • Conducting performance reviews
  • Managing conflict resolution
  • Implementing policy changes
  • Coordinating training programs

Tactical HR ensures your business remains agile and responsive to employee needs, compliance changes, and market shifts. Think of it as the “boots on the ground” side of HR, where strategy turns into action. For smaller companies, this often means juggling multiple responsibilities simultaneously, like addressing attendance issues while implementing a new benefits package. 

Tactical HR also encompasses critical compliance tasks, such as maintaining up-to-date employee files, ensuring payroll accuracy, and staying informed about evolving labor laws. By managing these operational details effectively, tactical HR frees leadership to focus on growth initiatives while giving employees the support they need to perform at their best.

HR Compliance: Why It’s Critical

Compliance is one of the most important (and complex) aspects of HR. Employment laws, tax requirements, and workplace safety regulations change frequently, and non-compliance can result in fines, penalties, legal disputes, and reputational damage.

A PEO takes on much of the compliance burden by:

  • Monitoring changes to federal, state, and local laws
  • Updating employee handbooks and policies
  • Ensuring tax filings and payments are accurate
  • Managing workers’ compensation and unemployment claims

For Indiana businesses, partnering with a PEO in Indiana ensures compliance with both federal and state-specific regulations without the stress of managing it all in-house.

Why Partnering with a PEO for Healthcare is Beneficial

Navigating health insurance for your team can be incredibly challenging—How much coverage is the right amount? What state and federal laws do we need to keep in mind? 

One of the most significant advantages of working with a PEO is access to high-quality, affordable healthcare plans. Because PEOs pool employees from multiple companies, they can negotiate better rates and benefits packages than many small or mid-sized businesses could secure on their own.

These benefits may include:

  • Lower premiums for employees
  • Broader provider networks
  • Access to additional wellness programs and resources
  • Simplified benefits administration

Why Should I Work with a PEO?

Outsourcing essential HR through a PEO can help your company:

  • Save time by outsourcing essential HR tasks
  • Improve employee satisfaction with better benefits and resources
  • Reduce compliance risks
  • Access HR technology without large capital investments
  • Gain fractional and strategic HR expertise without full-time costs

In short, partnering with a PEO allows you to focus on your business while a team of experts manages your HR operations. For more on the value of outsourcing essential HR, read Why You Should Consider Outsourcing Essential HR.

HR is evolving rapidly—especially in areas like remote work policies, AI in recruitment, and DEI initiatives. Businesses that keep up with 2025 HR trends are better equipped to attract and retain talent while remaining compliant.

PEOs can help companies adapt to recent HR trends by:

  • Updating policies for hybrid and remote work
  • Advising on competitive compensation strategies
  • Integrating new HR technology
  • Enhancing workplace culture
  • Considerations on Ethical Implications of AI for people functions

Pricing and Fees: What You Need to Know

When evaluating a PEO buying guide, pricing is one of the most important considerations. Unfortunately, PEO pricing can be complex, so here are common fee structures and questions to ask:

Common PEO Pricing Models + Questions to Ask

  1. Administrative Fee – Will you pay per employee or a percentage of payroll? 
  2. SUTA/FUTA Rates – How do they compare to your current rates?
  3. Workers’ Compensation Rates and Fees – What do these costs include? 
  4. 401(k) Administration – Is this included in your admin fee, or billed separately?
  5. Transactional Services – Are background checks, I-9 verifications, and other services included in the price or charged separately?
  6. Consulting & Coaching – Is there as-needed strategic HR advice available beyond included services?
  7. Health and Other Benefit Premiums – What do these costs include? 
  8. Technology Fees – Are there any technology-related costs included in our contract? 

Pro Tip: Request an itemized breakdown of all costs before signing a contract.

Ask for References

Once you’ve narrowed your list of potential PEOs, an important next step is to ask for references to get an honest understanding of how a company similar to yours benefits from partnering with a PEO. 

  • Why did you choose this PEO?
  • Which services have been most valuable to you and your employees?
  • How responsive is the team?
  • Have there been challenges, and how were they resolved?

How FullStack PEO is Different from Other PEOs

FullStack’s approach blends the efficiency of a PEO with the personalization of fractional HR support. Founded in 2017, we launched to bring reform to the industry through price transparency and by offering services that go beyond traditional PEO offerings. Our goal is to become a strategic HR partner to small to mid-sized companies looking to scale their operations.

Our fractional HR services help people-focused organizations not only provide quality employee experiences, but we make things administratively easier by combining multiple vendors—payroll platform, broker for benefits, 401k provider, HR strategy, etc.—into one comprehensive package. We focus on your essential people operations, such as payroll, benefits, and compliance, so you can focus on growing the core of your business.

You get:

  • Transparent pricing
  • Access to both essential HR services and strategic HR guidance
  • Local expertise as an Indiana PEO
  • Scalable solutions that grow with your business

Choosing the right PEO involves more than just comparing prices—it’s about finding a partner who understands your industry, your employees, and your vision for the future.

If you’re ready to explore how FullStack PEO can help you save time, reduce risk, and enhance employee satisfaction, schedule a call today.