How Much Does an Employer of Record Cost & What Factors Affect It?

What to Expect When Paying for Employer of Record Services

When using an EOR solution, you typically pay a fee per team member employed via the platform.  The approach to fees differs from provider to provider, and this fee usually covers everything from onboarding to compliance and HR management.

Here are the main cost models you could expect: 

• A flat monthly fee per employee in many cases.
• A percentage of gross salary (most commonly around 5-15 percent, depending on region).

These base fees generally cover the ongoing services such as payroll, compliance and benefits administration. However, the base cost varies based on several factors that we’ll discuss below.

What’s Included in the Cost of an EOR?

When you engage an Employer of Record, you aren’t simply outsourcing payroll. You’re entering into a relationship where the EOR takes on the legal, administrative, and compliance burdens that come with employing people. This is especially true in jurisdictions where you don’t have a local legal entity or deep local experience.

‍Common inclusions are: 

1. Payroll and Tax Withholdings

You are paying for the EOR to process payroll on your behalf and ensure that employees are paid correctly and on time. They calculate deductions and withholdings (such as income tax) as required by local law and take care of statutory contributions like social security, unemployment insurance, and pension contributions. 

2. Compliance with Local Labor Laws

EORs make sure your employment practices align with local regulations. That means they handle employment contracts, minimum wage, working hours, leave policies, severance rules, termination processes, and more. They also monitor changes in laws to prevent legal risk.

‍

Navigate Labor Laws with Ease

Get expert, country-specific guidance on benefits, leave, payroll, severance & more in 180+ regions.

Explore Guides

‍

3. Benefits Administration

The EOR is responsible for offering the required benefits by law in that country (like mandatory health insurance, paid leave, or retirement contributions), and can offer additional supplemental benefits, which is often an add-on fee. They manage the enrollment, contributions, carry-overs, and servicing of these benefits.

4. Onboarding & HR Operations

The EOR takes care of the admin side of employment — from contracts and onboarding to visas, leave, expenses, and offboarding. You’ll have a single dashboard to manage requests, and the EOR processes them for you.

You’re still in charge of the employee’s day-to-day work and performance, while the EOR handles the HR admin and compliance in the background.

5. Risk Management and Legal Protection

Because labor laws vary across countries, there is significant risk in non-compliance. As the legal employer, the EOR assumes responsibility for following local labor regulations. This includes correctly classifying workers, complying with employment standards and workplace laws, and maintaining full legal compliance in each jurisdiction.

6. Access to an International Market 

An Employer of Record gives you instant access to hiring talent in foreign markets, even where you don’t yet have a legal entity. You won't have to navigate entity formation, local registrations, or complex legal filings before you begin operations. 

‍

Make Smarter Budget Decisions and Avoid Surprises

Use our free Employee Cost Calculator to see the cost of taxes, contributions, and fees in 180+ countries.

Calculate Now

‍

‍

Common Additional and Hidden Costs of an EOR

Additional and hidden costs are those extra expenses that aren’t obvious up front when you agree to use a service like an EOR. They pop up later down the line, maybe when you onboard someone, terminate them, deal with a bonus, or run into legal or currency complications. The word “hidden” implies that these costs weren’t clearly visible in the first quote. Let’s go through some of these costs so you know how and where to catch them: 

• Onboarding and Offboarding Fees: Many EORs charge a one-time onboarding fee (usually about US$500–US$2,000) when you hire in a new country to cover things like contract drafting, local registrations, and payroll setup. When an employee leaves, there are also termination/offboarding costs (severance, notice-periods, legal filings, etc.) that vary widely by country, role or seniority, and local labor laws.
  ‍

‍

• Government-Related Costs: These include mandatory registrations, licensing, social security, pension contributions, taxes, and local mandatory insurances. In some countries, certain contributions are extremely high or complicated, which can inflate the EOR service cost.
• Service-Related Add-Ons: This refers to anything beyond the standard EOR package. Add-ons could include background checks, visa and immigration support, specialized benefits (like private insurance), custom contracts, and translations. These are often optional, but can add thousands of dollars. ‍
• Currency & Payment Costs: When salaries must be paid across currencies or via cross-border bank transfers, extra costs may arise, like FX markups, bank fees, delays, or compliance charges. These additional fees will invariably add to the total cost that your EOR charges you.
  ‍

‍

An EOR That Doesn’t Break the Bank

Quality service doesn’t need to cost a premium. Scale easily across 180+ markets from $399/month per employee.

Book a Demo

‍

Different EOR Pricing Models Explained

There’s no one-size-fits-all when it comes to EOR pricing. The pricing model providers choose usually depends on what risks, regulations, and services are involved. Knowing how they charge helps you budget smarter and avoid surprise fees. Here are the main models to look out for: 

1. Flat Monthly Fee Per Employee

You pay the same fixed fee every month for each employee, no matter what their salary is. It typically includes the basics: payroll, statutory contributions, benefits admin, and compliance.

• Pros: Budgeting is made easier because you know exactly what you’ll pay per person each month. This is good for planning, especially if your team size is stable. No surprises when salaries go up (except taxes/benefits).
• Cons: If you hire someone in a high-cost jurisdiction or face a compliance complexity, the flat fee might not cover everything, so you may have to pay for extras after the fact. Also, if salaries are low, you might be paying “over” compared to some percentage-based models.

2. Percentage of Gross Payroll

The EOR takes a portion of the employee’s full salary. This cut is often around 5-15%, but it can sometimes be higher depending on services, seniority, or country. This cut or percentage is what covers the EOR’s  service fee and compliance/admin.

• Pros: It scales with what you pay your employees. If the salary is modest or varied, you pay less for junior roles. You don’t have to worry about the flat fee being “overpriced” for lower pay.
• Cons: If salaries are high, then fees can get  high quickly. This model is also less predictable if your compensation structure changes a lot. At times, the percentage includes less in “extras” such as localized benefits administration than flat-fee packages do.
  ‍

‍

3. Tiered or Country-Specific Pricing

• How it works: Instead of one fee that applies everywhere, the provider charges different rates by country (or region) to reflect the differences between countries in factors such as labor law complexity, mandatory benefits, taxes, and risk. Common tiers include “low complexity / high complexity,” or “standard / premium,” and so on. 
• Pros: This fee structure is often a fairer and more accurate cost allocation. This is because you’re not “overpaying” for simple jurisdictions just because your provider has to support harder ones. This may be especially helpful if you’re hiring in many diverse countries.
• Cons: It complicates your global budget as you need to know country-by-country rates and consider worst-case scenarios in specific jurisdictions. Additionally, forecasting becomes more challenging when new countries are added. Finally, switching hires across countries or roles might affect EOR cost significantly.

4. Bundled Service Packages

• How it works: The EOR combines core services with extras like visa support, tailored or additional benefits, and HR consulting. The pricing may be a flat fee with optional add-ons or include premium tiers.
• Pros: This option is super convenient as  one vendor manages most of what you'd otherwise source separately. Consider this option if you want a more hands-off approach or need more bells and whistles.
• Cons: Higher baseline costs. You may end up paying for services you don’t really need. Also, managing which extras are included and which cost you extra can become confusing.

5. Pay-As-You-Go or On-Demand Service

• How it works: You pay only when and for what you use. This is ideal when partnering with an EOR to hire contractors, seasonal hires, or short-term projects. No long fixed monthly commitments are required with this model, and you trigger services (such as onboarding, payroll, compliance support) as needed.
•  Pros: This fee structure is very flexible, especially for unpredictable, contracting, or project-based hires. Additionally, it offers low risk and lower upfront cost for small or occasional use.
• Cons: If usage becomes frequent, your total costs may accumulate faster than with flat or bundled models. Also, “per-use” items often have a higher unit cost. Finally, this fee model provides less predictability.

6. Hybrid Models

• How it works: This model combines two (or more) of the fee structures discussed above. For example, you might have a base flat fee per employee and a smaller percentage of payroll, or flat rates in certain countries but percentage-based in others. Sometimes, providers will charge a minimum base fee plus variable costs once salary or benefits exceed a specific threshold.
• Pros: Flexibility. You can balance predictability with scalability. This model is often a good compromise if you have a variety of employees (like junior or senior employees) or if you’re operating in diverse countries.‍
• Cons: However, this model adds more complexity in understanding exactly what you're being billed when compared to other structures. There’s also more negotiation needed initially. Lastly, there is a higher likelihood of hidden fees.
  ‍

Shopping for the Right EOR? See How Playroll Stacks Up

Compare leading providers and see why Playroll offers unmatched value in pricing, support, and coverage.

Compare EORs Now

‍

Factors Influencing EOR Pricing

When you work with an EOR, the fee you pay depends on many moving parts. Understanding these variables enables you to predict costs more accurately. 

Below are key variables that tend to influence EOR pricing and what to expect in different scenarios: 

1. Country-Specific Laws & Regulations

Every country has its own laws, regulations, mandatory benefits, labor protections, and tax regimes. All of these aspects add to the total EOR cost employers pay. EORs in high-regulation countries have to invest more in legal, payroll, and HR infrastructure to stay compliant.

For example, employers may find that EOR costs are higher in countries such as Brazil and many parts of Europe that tend to have high mandatory benefits and strong employee protection laws. This is because in these countries, EORs face more compliance risk, complexity, and a higher compliance cost. The result is a higher EOR cost in these regions. 
‍

📖 Stay ahead of local labor laws with our global hiring guides in 180+ markets.

‍

2. Number of Employees

When you hire more people through the same EOR provider, certain fixed costs get spread out, so each person costs you less in the long term. Think of it like buying in bulk: setup costs (like legal registrations, setting up contracts, and onboarding) are high at first, but once you’ve done them, adding extra employees becomes cheaper. 

Also, processes like payroll paperwork and compliance checks become more efficient when you’re doing them for many people (versus one employee at a time).

3. Service Tiers  

Not all EOR service bundles are made equal: some are very basic, offering only payroll and statutory compliance, while others offer everything from enhanced benefits to dedicated account management. This means that the more premium services or add-ons you want, the more you’ll be expected to pay. 

The difference in features (such as speed, responsiveness, complexity, and legal risk) is usually reflected in the pricing structure. Not to mention that special roles (think senior, technical, and executive positions) often require more service (higher benefits, more legal review), which invariably increases costs.

4. Optional Add-Ons

Add-ons are services outside of the core package. Relocation might include help with immigration, moving expenses, and housing. Other add-ons include background or criminal checks, premium health insurance, and additional leave.

Each add-on adds incremental cost. Depending on how many employees you hire, or how many of them need relocation or immigration, these can add up significantly. Sometimes the cost of optional extras may seem feasible in the proposal, but with multiple employees, they become less manageable. Providers also often charge extra admin fees for managing these.

‍

EOR vs. Setting Up a Local Entity: Cost Comparison

When you’re expanding internationally, the choice often comes down to wholly owned vs partners – do you build your own local entity or use an EOR solution? The choice isn’t just about money; it involves hidden costs, ongoing work, risk, and time. Below are the visible versus hidden costs of an EOR vs a legal entity, with real data to help you see what usually adds up for each option:

Setup Costs

Using an EOR

These are one-time charges when you first bring someone on or enter a new jurisdiction. They cover costs like legal setup, contract drafting, registering with tax/social authorities, and account creation in payroll systems. Onboarding fees usually fall in the range of US$500 to US$2,000+ per employee or per country; however, providers’ fees may vary depending on the country and how complex the local jurisdiction is. Some providers, like Playroll, don’t even charge onboarding and offboarding fees. 

Setup costs are generally much lower when partnering with an EOR as there is minimal legal or registration work required (since the EOR already has a local presence). Delays and bureaucracy aren’t as prevalent with this approach because EORs let you hire in days or weeks. This not only saves time but also money. 

Setting Up a Legal Entity

This approach is generally associated with high initial costs. These costs include registering your entity, paying incorporation fees, setting up bank accounts, sometimes meeting minimum capital requirements, and getting local licenses. 

The average total cost of setting up a legal entity is around US$20,000 (depending on the country). 

Ongoing Costs

Using an EOR

Once you’re set up with an EOR, many recurring costs (such as payroll processing, statutory benefits, local compliance, and legal updates) are bundled. This offers predictability as you pay known monthly employee fees, avoid many admin overheads, and offload the risk of local law changes and tax filings to the provider. 

The main hidden costs might come from add-ons, but you generally avoid the bigger burdens of maintaining your own entity.

Setting Up a Legal Entity

Running your own entity brings many ongoing obligations. You’ll need to maintain local payroll systems; file taxes, audits, and annual reports; renew licenses; retain legal and HR advisors; possibly pay for a resident director; maintain a registered local office; and comply with employment laws, which often change. Companies operating their own legal entity can incur USD$50,000 (or more) in annual maintenance alone, even if they have only a few employees.
‍

‍

Thinking About Opening a Legal Entity?

See how Playroll’s EOR stacks up. Get a full cost breakdown and discover where you’ll save time, money, and stress.

Read More

‍

Tips for Finding an Affordable EOR in 2025

Looking for a solid EOR without paying more than you should? These tips will help you find providers who offer great value, stay transparent, and avoid sneaky extra charges:

1. Get Quotes From at Least 3 Providers

‍Don’t settle on the first offer. Different EORs price things differently: one might include visa/immigration, another might leave that as an add-on. Seeing multiple quotes helps you establish what constitutes an extra versus what is an essential.

2. Check User Reviews

‍Don’t make a decision based on price alone. If the cheaper provider has poor reviews for compliance or payroll errors, those legal and reputational costs can easily eat into your upfront savings. Use sites like G2 or Trustpilot to see what real customers have to say about hidden fees, timeliness, and support.
‍

Check out Playroll on G2 and see how we fare against others.

‍

3. Negotiate Based on Volume

If you’re hiring 5, 10, or more people, ask providers if they offer volume discounts. The “per-employee” fee often drops once you hit certain thresholds.

Leverage bigger contracts or higher headcount to give you more negotiating power and lower per-employee cost.

4. Consider Long-Term Contracts for Discounts & Stability

‍Signing up for a longer contract (around 12-24 months) might give you better rates, stable pricing, or waived setup fees.

Plus, it reduces the risk of price hikes or other surprises down the line.
‍

‍

5. Clarify What’s Included vs Optional Extras

‍Be very clear about what you're paying for. You should be able to clearly define what each quote includes, what is considered table stakes, versus what is an extra.

Pro Tip: Ask EORs for a “full cost breakdown” for a sample scenario in your target countries (like our engineers in Malta) so you can see base fee plus extras.
‍

Leading EOR Services and Their Pricing

EOR services are a saturated yet diverse market filled with providers that try to differentiate themselves using different aspects and mechanisms. A major differentiator is price. Here’s a look at what the top Employer of Record providers are charging – not just to highlight Playroll’s value, but to help you see what’s “normal” (and what’s premium) in the market:

‍

‍

Choose Playroll for Cost-Effective Global Hiring

Expanding globally doesn’t have to mean unpredictable costs or surprise fees. With Playroll, you get transparent pricing starting at just $399 per employee, plus the peace of mind that compliance, payroll, and benefits are all handled.

Book a demo and learn why thousands of companies trust Playroll to build their global teams.