What Does an Employer of Record Cost?

At a high level, EOR costs fall into two categories:

1. EOR service fees (what you pay the provider)

2. Employment costs (salary, taxes, benefits)
   

Only the first category varies significantly between EOR providers — but both determine your total cost of hiring.

Typical EOR Pricing Ranges

Most EOR providers charge between:

$400 to $1,000+ per employee per month

This fee is in addition to:

• Gross salary

• Employer taxes

• Mandatory benefits

• Optional benefits
  

Lower prices are not always cheaper once risk and exclusions are considered.

Common EOR Pricing Models

Flat Monthly Fee (Most Common)

A fixed fee per employee, per country.

Pros:

• Predictable budgeting

• Easy comparison

Cons:

• Often excludes termination and special cases
  

Percentage of Payroll

The EOR charges a percentage (typically 5–15%) of gross payroll.

Pros:

• Scales with compensation

Cons:

• Expensive for senior hires

• Less transparent over time
  

Hybrid Pricing Models

Combines a base fee plus add-ons.

This is where hidden costs usually appear.

What Is Included in EOR Fees (and What Isn’t)

Typically Included

• Local employment contracts

• Payroll processing

• Tax withholding and filings

• Statutory benefits ad
  

Often Excluded or Add-On Costs

• Termination & severance management

• Equity administration

• Benefit upgrades

• Immigration support

• Contract amendments

• Off-cycle payroll
  

Always request a full cost breakdown by scenario.

Country-Specific Cost Differences

EOR costs vary dramatically by country due to:

• Labor law complexity

• Employer social contributions

• Mandatory benefits

• Termination protections
  

Example Cost Drivers

• Germany: high employer social costs and termination protections

• India: lower base cost but complex payroll compliance

• UAE: end-of-service gratuity obligations

• UK: pension auto-enrolment and notice rules

A “cheap” EOR in one country may be expensive in another.

The Real Cost of an EOR: Total Cost of Employment

To evaluate EOR affordability, calculate:

Total Cost = Salary + Employer Taxes + Benefits + EOR Fees

Many companies compare only EOR fees, which leads to flawed decisions.

Hidden EOR Costs to Watch For

Hidden costs are the most common source of dissatisfaction.

Common Examples

• Termination handling fees

• Severance markups

• FX conversion margins

• Country exit fees

• Minimum contract commitments

• Price increases after first year

Ask providers how they handle worst-case scenarios, not just onboarding.

EOR vs Local Entity: Cost Comparison

EORs are usually more expensive per employee than a local entity — but cheaper in the short term.

Rule of thumb: EORs are cost-effective below 10–20 employees per country.

EOR vs Contractors: A Cost Trap

Hiring contractors may appear cheaper — until misclassification penalties apply.

Costs of misclassification can include:

• Back taxes

• Fines

• Employee claims

• IP ownership disputes

EORs are often cheaper than fixing mistakes later.

How to Evaluate EOR Pricing Properly

Before choosing an EOR, ask:

1. What is the total monthly cost by country?

2. What happens during termination?

3. Are benefits fully statutory?

4. How are FX and payments handled?

5. How do costs change at scale?
   

Pricing clarity is a strong indicator of provider quality.

Red Flags in EOR Pricing

• Prices significantly below market

• Vague “all-inclusive” claims

• No written cost breakdown

• No explanation of termination costs
  

Low pricing often shifts risk back to you.

Tools to Estimate EOR Costs Accurately

People & Finance offers tools to help model EOR economics:

• EOR Cost Calculator

• Contractor vs Employee Cost Tool

• Country Hiring Risk Matrix
  

These tools help avoid surprises.

Employer of Record services are not cheap — but neither is non-compliance.

The right way to evaluate EOR cost is not to ask “What’s the monthly fee?” but “What risk and complexity does this remove?”

Companies that treat EOR pricing as a strategic decision — not a procurement exercise — get the most value.

Next Steps:

• Compare EOR providers by cost and coverage

• Review EOR cost by country

• Use the EOR Cost Calculator

• Read Best Employer of Record Providers
  

Clarity on cost leads to confidence in expansion.

EOR Costs Explained

EOR pricing varies widely by provider and country.

Common Pricing Models

• Flat monthly fee per employee

• Percentage of payroll

• Hybrid models

Typical Cost Ranges

• $199–$599+ per employee per month (excluding salary)

Costs depend on:

• Country labor laws

• Benefits requirements

• Complexity of payroll

Cheap EORs often cut corners — usually where compliance matters most.

Calculate EOR Cost

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