Payroll software cost: what small businesses really pay

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Payroll software cost usually combines a monthly base fee with a charge for each employee paid, but the total also depends on how often you run payroll, which tax filings are included, add-ons such as benefits or time tracking, and the country you pay in. Prices that look similar on a pricing page can produce very different annual bills. This guide explains how payroll software is priced, what is usually included and what costs extra, gives worked budgets for small teams, and shows how to compare providers fairly.

The common pricing models

Most payroll software uses one of three models:

• Base fee plus per-employee fee: a fixed monthly charge for the account plus an amount for each person paid that month. This is the most common model for small businesses, especially in the US.
• Per-employee only: no base fee, just a charge per person. Simple and fair for very small teams.
• Tiered plans: a set price for up to a certain number of employees, with features increasing by tier. Common in countries where payroll is bundled with accounting software.

Some providers charge per pay run rather than per month, which matters if you pay weekly or fortnightly. Others include unlimited pay runs. Always check what counts as a billable employee: some charge only for people paid in the month, others for everyone on the system, including former employees for a period.

What is usually included

Core payroll plans typically include:

• Gross-to-net calculations with current tax and contribution rates.
• Payslips and an employee self-service portal.
• Direct deposit or bank payment files.
• Calculation of taxes and statutory deductions.
• Standard government reports and, in many countries, electronic filing.
• Year-end forms for employees.
• Basic leave tracking.

Whether the provider actually files and pays taxes on your behalf varies. In the US, full-service providers file federal, state and local payroll taxes for you. In many other countries, software calculates and produces files, and you submit them. That difference has a large effect on both cost and the time you spend.

What often costs extra

• Additional states or locations in the US, where filing in each new state may add a fee.
• Contractor payments, sometimes priced separately per contractor.
• Time tracking and scheduling.
• Benefits administration, health insurance and retirement plan integrations.
• HR features such as onboarding, document storage, performance reviews.
• Off-cycle pay runs, corrections and amendments.
• Year-end forms for some providers, or forms for additional employees.
• Setup or migration fees, especially mid-year when previous payroll data must be loaded.
• Priority support or a dedicated account manager.

Read the full plan comparison and the price list, not only the headline price.

US payroll software prices

In the US, full-service payroll for small businesses is competitive, and most providers file taxes in all states. Current entry prices for the providers we track:

Prices from vendor websites, checked 2026-10-12; they update automatically.

Gusto From USD 49 per month + USD 6 per person, OnPay From USD 49 per month + USD 6 per worker, Justworks From USD 50 per month + USD 8 per employee. Compare them in the US payroll ranking, best US payroll for small business, Gusto vs OnPay, Gusto vs Justworks and Gusto vs Rippling.

Payroll software prices in other countries

Outside the US, local payroll software is often priced per employee per month in local currency, sometimes bundled with accounting. Prices vary widely by country and by how much of the filing is automated. We compare local options and prices country by country:

• Kenya and WinguBox Payroll pricing.
• Nigeria and Ghana.
• South Africa and Sage Payroll pricing.
• India, with Zoho Payroll and RazorpayX Payroll pricing.
• the UK, Malaysia, the Philippines and the UAE.

Payroll inside accounting software

Many accounting packages include payroll or offer it as an add-on, which can be cheaper than buying a separate payroll product. The benefit is that payroll journals post directly to your books. The trade-off is that bundled payroll can be less capable, for example with complex pay rules, multiple locations or HR features.

For a small team with simple pay, bundled payroll is often the best value. For growing teams with shifts, commissions, multiple locations or benefits, a dedicated payroll product usually pays for itself in time saved. See the accounting software ranking and QuickBooks vs FreshBooks for options.

Free payroll software

Some governments and vendors offer free payroll tools. In the UK, HMRC provides free Basic PAYE Tools for employers with fewer than ten employees. Some vendors offer free plans for very small teams or free payroll within accounting software, sometimes with limits on employees or features. Free tools can work well for one or two employees with simple pay, but often lack payslip portals, pension integrations, support or automatic filing. Count the cost of your time and the risk of errors, not only the subscription.

Example budget: five employees in the US

To estimate the annual cost for five employees paid twice a month in one state:

1. Take the provider's monthly base fee and multiply by twelve.
2. Add the per-employee fee × 5 × 12.
3. Add any extra state fee if an employee works in another state.
4. Add contractor fees if you pay contractors through the same system.
5. Add benefits administration or time tracking if needed.
6. Add setup or migration fees if you switch mid-year.

Run the same calculation for two or three providers using their published prices. You may find that the cheapest base fee is not the cheapest total once per-employee fees and add-ons are included.

Example budget: fifteen employees in Kenya

For a Kenyan business with fifteen employees, local payroll software priced per employee per month in shillings is usually much cheaper than international platforms. Include the monthly fee for fifteen employees, any setup fee, and optional modules such as leave management or HR. The software should generate PAYE, SHIF, Housing Levy, NSSF and NITA figures and payment files; see statutory deductions in Kenya.

Also include the time someone spends each month submitting returns and payments on iTax and other portals, since many tools calculate but do not submit. That time is part of the real cost.

Software vs outsourced payroll vs EOR

Payroll software is the cheapest option if you have the time and knowledge to run it. An outsourced payroll bureau or accountant runs payroll for you for a per-employee fee, usually higher than software but with less work on your side. An employer of record goes further, legally employing staff in countries where you have no entity; it costs much more per employee but includes employment compliance. See what an employer of record is and employer of record cost.

Choose based on where you employ, how many people, and how much time you can spend each month. Many companies use software at home and an EOR abroad.

Hidden costs of cheap payroll

The cheapest option can be expensive if it leads to errors. Common hidden costs include penalties for late or incorrect filings, time spent fixing mistakes and answering employee questions, employee frustration when pay is wrong, and the cost of switching later. When comparing prices, consider the provider's track record for keeping tax tables current, the quality of support, and whether they guarantee accurate tax filings or cover penalties caused by their errors, as some US providers do.

Questions to ask before buying

• What is the total monthly cost for our number of employees and pay frequency?
• Do you file and pay taxes for us, or produce files for us to submit?
• Which locations, states or regions are included?
• Are off-cycle runs, corrections and year-end forms included?
• How do you handle contractors?
• Is there a setup or migration fee?
• Can we export our payroll history if we leave?
• What support is included, and when is it available?

Switching payroll providers

Switching is easiest at the start of a tax year, because you avoid loading year-to-date figures. Switching mid-year is possible but requires accurate year-to-date data for every employee, which providers may charge to load. Plan a parallel run, comparing one pay run in both systems, before going live. Keep access to the old system or exports for record-keeping requirements.

Tracking price changes

Payroll vendors adjust prices from time to time, often at renewal. Put renewal dates in your calendar, check whether your plan has changed, and compare alternatives once a year. Our software price tracker records recent price changes across the payroll and HR tools we follow.

Common mistakes

• Comparing base fees and ignoring per-employee fees.
• Assuming tax filing is included when the software only calculates.
• Forgetting extra-state or multi-location fees.
• Paying for HR features nobody uses.
• Switching mid-year without budgeting for data migration.
• Choosing free tools for complex payrolls and paying for it in errors.

How pay frequency changes the bill

Pay frequency affects cost in two ways. Providers that charge per pay run will bill twice as much for semimonthly or biweekly payroll as for monthly payroll, and four times as much for weekly. Providers with unlimited runs charge the same either way, which makes them better value for hourly teams paid often. Pay frequency also affects your time: every run needs inputs, review and approval.

Before choosing a provider, decide your schedule based on local rules and employee expectations, then compare prices on that basis. In the US, some states require at least semimonthly pay for certain workers; in many other countries, monthly pay is standard, while the Philippines commonly uses semimonthly payroll.

Per-employee fees: who counts

The definition of a billable employee varies more than people expect. Some providers charge for every active employee on the system in a month, even if they were not paid, such as people on unpaid leave. Some charge only for people included in a pay run. Some charge for contractors at the same rate as employees, others at a lower rate. Seasonal businesses should look for providers that charge only for people actually paid, so quiet months cost less. Ask for a written definition before signing.

Bundles: payroll plus HR and benefits

Many payroll providers now sell bundles that include HR tools, benefits administration, time tracking and onboarding. Bundles can be good value if you would otherwise buy those tools separately, and they reduce the number of systems employees log into. But they also raise the per-employee price considerably, and features you do not use are wasted money.

List the HR features you actually need now, such as digital onboarding, document storage, time off requests or performance reviews, and compare a payroll-only plan plus a separate tool against the bundle. For small teams, a lean payroll plan plus a simple shared workspace often costs less; see the remote team software stack for ideas.

Example: comparing three quotes

Imagine three providers quote for a team of eight paid semimonthly. Provider A has a low base fee but a higher per-employee fee and charges extra for a second state. Provider B has a higher base fee, a lower per-employee fee and includes all states. Provider C has no base fee, a moderate per-employee fee, but charges for each off-cycle run.

For a team in one state that rarely runs off-cycle payroll, A or C might be cheapest. For a team spread across several states, B may win. For a company that pays frequent commissions off-cycle, A or B is likely better than C. The point is that the right choice depends on your pattern, so build a simple spreadsheet with your actual numbers before deciding.

Questions