PEPM is a pricing model that charges a fixed fee per active employee per month, making payroll and HR service costs predictable and scalable.
Why PEPM pricing matters for employers
Per employee per month pricing has become the standard for managed payroll, HR software, and benefits administration services. PEPM rates make costs predictable, easy to budget, and directly tied to headcount - as the company grows, costs scale proportionally rather than jumping with activity.
Contrast PEPM with per-payroll-run pricing, where each payroll run costs a fixed fee plus a per-check charge. For employers who run bi-weekly payroll (26 runs/year), per-run pricing often totals more than equivalent PEPM pricing, especially when add-ons for direct deposit, tax filings, and W-2s are included.
When evaluating PEPM quotes, the key question is what is included. Some providers quote a low PEPM for basic processing but charge additional fees for: quarterly tax filings, W-2 production, off-cycle payrolls, direct deposit, new employee setup, year-end services, and state tax registration. Always request an all-in PEPM that covers all standard services.
BEG Managed Payroll charges $25 PEPM when working in the client's existing payroll system or $45 PEPM when using BEG's isolved account with full HCM capabilities. Both rates are all-inclusive for standard services.
PEPM rates typically decrease with scale. An employer with 10 employees pays a higher PEPM than one with 200 employees. When requesting quotes, provide accurate headcount and ask about the pricing tier structure so you understand how costs will change as you grow.
BEG Managed Payroll PEPM pricing
BEG Managed Payroll charges $25 PEPM using the client's existing system or $45 PEPM on BEG's isolved platform - both fully managed, all-inclusive. See what is included.
Frequently asked questions
What does PEPM stand for?
PEPM stands for Per Employee Per Month. It is a pricing unit used by managed payroll, HR software, and benefits administration providers to charge a consistent amount per active employee regardless of pay frequency or payroll run count.
What is a typical PEPM rate for managed payroll?
PEPM rates for managed payroll vary by provider and scope. Basic processing-only services may run $6-$15 PEPM. Fully managed services including all filings and compliance typically run $25-$80 PEPM depending on employee count and services included.
Is PEPM better than per-run pricing?
For most employers, PEPM is more predictable and often lower total cost than per-run pricing once add-ons are factored in. Per-run pricing can be cheaper for very small employers who run payroll infrequently, but becomes expensive for bi-weekly or weekly payroll schedules.
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About the author
Anthony Moretti is VP of Sales at Business Executive Group, where he builds BEG's managed payroll and HR service verticals for employers across Dallas-Fort Worth and nationwide. He writes the BEG Payroll Glossary to give employers plain-English answers on payroll and compliance.
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