PEO Calculator
Is a PEO Worth It for Your Business?
A PEO can lower what you spend on health insurance, workers’ compensation, payroll, and HR but only if the math works for your business. Instead of guessing, use the free calculator below to see a line-by-line estimate of your potential savings, built on current tax law and published benchmark rates. No contact details required to see your result.
Quick answer: Is a PEO worth it? For most businesses with roughly 10–100 employees, a PEO is worth it — it typically pays for itself through lower benefits and workers’ comp rates plus reduced HR overhead. Whether it’s worth it for you depends on your industry, current costs, and headcount. The calculator below estimates your specific number in about two minutes, and it will tell you when a PEO isn’t worth it, not just when it is.
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Your business
Six quick inputs. You can sharpen the number with more detail after you see it.
Figures are illustrative estimates, not an offer or a guarantee of results, and not tax, legal, or accounting advice. Independent estimate built on the latest published rates and law; your own quote will differ.
How can you estimate my health & comp costs from a few answers?▾
Health premiums cluster tightly by company size. We start from national benchmarks — the KFF Employer Health Benefits Survey — for firms in your headcount range, then adjust for a typical single-vs-family mix and workforce age.
Workers' comp isn't a flat fee — it's a rate per $100 of payroll, set by the risk class of your industry. We map your industry to its class-risk band and apply the going rate to the payroll you entered; your actual rate and experience mod refine it further.
The PEO fee scales with size — charged as a share of payroll or a per-employee monthly rate. We use the current market band for a company your size.
These are benchmark starting points, not a quote. In the full report you can enter your real figures and they replace each estimate line by line — which is what tightens the range above.
See the line-by-line breakdown your accountant can check.
The full report opens the current-vs-PEO ledger, the 3-year renewal outlook, and every source behind the numbers. Tell us where to send it.
Full report
One-time & cash-flow items
Worth weighing, beyond the dollars
Not in the number above, because they're harder to price — but often the deciding factors.
The tax picture: mostly a wash, with one thing to get right
Sources & assumptions — every figure traces to a rule, a rate, or a stated assumption
Want this run on your real numbers?
Book a short call and we'll pressure-test these figures against your actual census and current costs — independent, no obligation.
Book a call →Independent estimate, educational only — not an offer, quote, or guarantee, and not tax, legal, or accounting advice. Figures reflect current federal and state law and published market rates as of the run date. A PEO's actual quote depends on your census, claims experience, and plan selection. No specific PEO is recommended or named here; provider fit is determined separately.
The Math
How the PEO calculator works
Answer the six basics — headcount, payroll, state, industry, business structure, and whether you already use a PEO — and you’ll get an instant, no-signup estimate of your net annual savings. Unlock the full report to see the current-vs-PEO ledger line by line, sharpen it with your real numbers, and view every source behind the figures.
Enter six quick inputs
No email needed to see your directional number
See your estimate
Net annual savings, per-employee impact, and a cautious-to-favorable range.
Open the full breakdown
A line-by-line ledger across health, workers' comp, payroll, HR, and retirement — with sources
Our free PEO calculator gives you a starting point — not a sales pitch.
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When is a PEO not worth it?
Honestly? A PEO isn't the right move for everyone. It may not pay off if you already run very lean HR, already qualify for large-group benefits pricing, or are small with minimal compliance needs. That's not a knock on PEOs — it's a matter of fit and timing. The calculator is built to say so: when the numbers don't favor a PEO, it shows a net cost instead of a saving, so you can make the call with real figures rather than a sales pitch
Is a PEO worth it for a small business?
For most small and mid-sized businesses in the 10–100 employee range, yes — this is the sweet spot where benefits and workers' comp costs are significant but a full in-house HR department isn't yet efficient. Very small businesses (under ~5 employees) often see thinner margins, and the value grows as you add staff. Run your own numbers above to see where you land.
How much does a PEO cost?
A PEO usually charges one of two ways: a percentage of gross payroll or a flat per-employee monthly fee, and the rate typically drops as your headcount grows. That fee often replaces the separate payroll, benefits-administration, and HR costs you already pay so the number that matters is the net difference after the fee, which is exactly what this calculator shows
Where the savings actually come from
A PEO's savings come from pooling — combining thousands of employees to negotiate rates and spread risk no single small business or independent advisor can match. The main drivers:Health & benefits Workers' compensation. HR & compliance Payroll & tax filing Retirement admin
How we calculate your estimate
Every figure traces to a public, dated source — not a guess. Health benchmarks come from the KFF Employer Health Benefits Survey; workers' comp is modeled on class-based rates per $100 of payroll; HR cost uses BLS wage and benefits data; and tax figures reflect current SSA and IRS limits. We're an independent, licensed brokerage — we don't sell a single PEO, so the estimate is built to show you the real picture, favorable or not
Want to run your real numbers?
Book a short, no-obligation call and we’ll pressure-test the figures against your actual census and current costs — then, if a PEO makes sense, compare the best-fit providers for your industry and size.
Frequently asked questions
Is a PEO worth it for a small business?
For most small businesses with about 10–100 employees, yes. A PEO typically pays for itself through lower health and workers’ comp rates, reduced HR overhead, and fewer compliance mistakes. The exact benefit depends on your industry, current benefits costs, and headcount — which is what the calculator estimates.
How much does a PEO cost per employee?
PEO pricing usually runs either 2–6% of gross payroll or a flat per-employee fee of roughly $80–$200 per month, and it tends to decrease as headcount grows. The fee often replaces separate payroll, HR, and benefits-administration costs you already pay.
How do PEOs save you money?
PEOs pool thousands of employees to negotiate lower health insurance and workers’ comp rates than a small business can get alone, and they absorb HR, payroll, and compliance work so you need less in-house staff. Your net saving is what’s left after the PEO’s fee.
Do PEOs really lower workers' comp costs?
Often, yes — especially for higher-risk industries. Workers’ comp is priced as a rate per $100 of payroll based on your job classification, and a PEO’s master policy can offer better rates, pay-as-you-go billing with no large deposit, and claims handling. For low-risk office work, the savings are smaller but for higher risk work the savings can be larger.
Is a PEO cheaper than hiring an HR person?
Frequently, yes. A fully loaded HR employee can cost well over $100,000 a year in salary and benefits. A PEO spreads HR, payroll, and compliance across a team for a per-employee fee that’s often less than a single in-house hire — while still giving you a dedicated contact.
When is a PEO not worth it?
A PEO may not pay off if you already run very lean HR, already have large-group benefits pricing, or are very small with minimal compliance needs. The honest answer is that it depends on your numbers — the calculator will tell you when a PEO likely isn’t worth it, not just when it is.
How many employees do you need to use a PEO?
Most PEOs work with businesses starting around 5 employees, and the value often grows through the 10–100 range. Some PEOs serve larger companies as well.
What is the ROI of using a PEO?
Independent research from NAPEO puts the average return on investment of using a PEO around 27%, with typical cost savings near $1,775 per employee per year. Your actual ROI depends on your industry, benefits, and current costs.
Are PEO fees tax deductible?
Generally, yes — PEO fees are an ordinary business expense, and the wages, benefits, and taxes handled through a PEO stay deductible as before. Moving to a PEO usually doesn’t create a major income-tax change. (This isn’t tax advice — confirm with your accountant.)
