Payroll software can cost as low as Square Payroll’s $29 a month fee, or as high as QuickBook Payroll’s Elite tier, at $145 a month. Looking at this price range, as well as the amount of bespoke software providers on the market, and additional fee factors, you can see there are a wide array of costs when it comes to payroll software.
If you’re a business owner, it might seem ironic that you have to pay for a software that helps you pay your employees. But it’s very easy to see how the investment is worth it, when you see how much easier payroll software makes the process.
After all, payroll software doesn’t just transfer money from your business to your employees – there are a wealth of other functions that can be performed through payroll software. It can deduct and pay taxes, manage employee benefits, and some even come fully stocked with HR functionality.
To learn more about what is behind the costs of payroll software, read on.
How much dough will you need to spend, to use one of these lovely bits of software? Despite the fact that the payroll software industry is expected to be worth over $8 billion by 2023, they're surprisingly affordable.
Popular payroll software QuickBooks costs between $45 and $125 per month (with an additional $4–$10 for each employee on payroll), depending on which features you decide to fork out for. Gusto’s tiers cost between $39 and $149, charging between $6 and $12 per employee.
However, some software, like Heartland Payroll or iSolved People Cloud, are made bespoke for each customer, so their prices hinge on what you’ll want to include in your package.
For reference, let’s look at how much three plans, an expensive plan, a middling plan, and a cheap plan, will cost certain sized companies – Big Corp, which has 200 employees, Middle Ltd., which has 50 employees, and Little & Sons, which has five employees. We’ll assume that these businesses aren’t paying for any additional features.
QuickBooks Elite plan ($125 a month, plus $10 per employee)
Gusto Complete plan ($39 a month, plus $12 per employee)
Square Payroll ($29 a month, plus $5 per employee)
$2,125 a month
$2,439 a month
$1,029 a month
$625 a month
$639 a month
$279 a month
$175 a month
$99 a month
$54 a month
You can see from those comparisons that payroll software mainly makes its money from the amount of employees you pay, with the standard monthly fee simply being a supplement to that amount.
The Hidden Costs of Payroll Software
It’s easy to see the cost of a payroll software plan and think that that’s all you’ll be paying. However, there can be a lot of hidden costs behind each software package.
Paying per employee
Almost all payroll software on the market will charge additional monthly fees for the amount of employees, on top of plan costs. This charge per employee can vary depending on which plan you’re enrolled in.
For example, QuickBooks Payroll has three tiers, the Core ($45 a month), which charges $4 for each employee, the Premium ($75 a month), which charges $8 for each employee, and the Elite ($125 a month), which charges $10 per employee.
These can be built into bespoke plans, like the plans offered by iSolved People Cloud and Heartland Payroll, but with standardized plans, you’ll almost always have to pay additional fees for each employee you enroll.
As well as paying for the software, you may need to pay setup costs. You can opt to set up the software yourself, but you might want to consider letting a professional set up the software, especially if you’re migrating from another system.
For some products, the setup cost is included in certain tiers, like QuickBooks’s highest tier – the Elite tier, but in lower tiers, you’ll be on your own. Sage will also set up your software for a fee (which is available upon contact with a representative).
However, some products, like Gusto or Square Payroll, offer free videos and written set up instructions, no matter what tier you opt for. And bespoke programs like Heartland Payroll and ADP RUN will likely have the setup costs integrated into their quoted costs.
Depending on the amount of employees you’re managing, you might find yourself inundated with different terms and numbers and feel a bit overwhelmed. If that’s the case, you’ll be able to rely on your product’s customer service line.
Some payroll software options come packaged with very robust customer service features. For example, Gusto comes with live chat, phone lines, email support, and a knowledge base. While some software can miss out on one or two of these features, you’ll never be entirely without support. Even Sage, which has the weakest customer support options, still offers live chat and a knowledge base.
It’s rare that a customer support feature is locked behind a price. The only exception is QuickBooks’ 24/7 live support, which is only available on the Elite plan ($125 a month). Otherwise, all payroll software support options are available across all plans.
One step above customer service – training can help you learn the ins and outs of the software before calculating your first paycheck. Heartland Payroll and QuickBooks both offer live training, where you can watch an expert use the software and ask questions, while Sage and iSolved People Cloud offer pre-recorded video lessons.
QuickBooks’ training sessions are charged between $459.99 to $799.95, while Sage only charges $39 for their training package. Heartland and iSolved People Cloud are both quote-based software, so the cost of their training resources will likely be factored into the final cost.
There’s one more financial thing to consider when choosing a payroll software – cancellation fees. Some software, like Sage and QuickBooks, offer a complete money back guarantee.
However, other software won’t give you your money back when you cancel your subscription, with Paychex Flex not allowing anytime cancellations, and only QuickBooks and Sage offering a 60-day money back guarantee.
That’s why it’s a good idea to opt for a free trial when it’s an option. Sage, QuickBooks, and ADP’s RUN all offer free trials, so you can see what you’re in for before you decide to invest. You can also check out our review on the best free payroll software.
When choosing payroll software it’s important to consider your business growth plans alongside what you need at the moment. Most companies stick with the same payroll software for life, as migrating can be an arduous process, so you’ll want to be able to facilitate this growth with a payroll software that can handle it.
Some software options come with limits on the amount of employees that can be enrolled, so it pays to be aware of these limits if you’re looking to expand. For example, Sage 50cloud Accounting supports up to 40 employees, while ADP’s RUN supports 49.
If you’re looking to go above that, you might want to look at Dominion Payroll or iSolved People Cloud, which are both bespoke payroll products that claim to support growth. And while some platforms claim to be limitless, like QuickBooks Payroll or Gusto, they do also claim that they’re intended for smaller businesses. Be cautious when opting for these if you’re intending to grow, as you wouldn’t want to hit a ceiling you didn’t know was there, and have to unexpectedly pay for new software on top of your original costs.
Payroll Software Pricing Models
There are a few ways you might pay for your payroll software. Here are the main models that will affect your payroll software pricing.
Many payroll software providers will charge a fixed monthly fee for their payroll features, based on set factors such as the plan offered, and the number of employees in your system. An example is QuickBooks, whose Core plan costs a flat rate of $45 per month, with an additional $4 a month for each employee.
Payroll costs per employee
As in the Quickbooks example above, some software providers will tack on the amount of employees in your payroll as a small additional cost to the flat monthly subscription cost for a certain plan. Some other examples include Gusto, which charges an additional $6 or $12 (depending on your plan) for each employee you have enrolled in your software, and Square Payroll, which charges $5 per employee.
Some payroll software providers, such as Heartland Payroll and iSolved People Cloud, will create a bespoke pricing plan for your business. The price you pay will be based around your exact needs, including:
- the exact features and functionality you want
- how many employees the software needs to serve
- the length of the contract you sign up for
Some providers also include frequency of use as a factor in their bespoke pricing. For example, ADP'S RUN will charge you every time you activate a payroll function. In contrast, fixed fee providers, such as Square Payroll and Gusto, will offer unlimited use.
Best Cheap Payroll Software
If you came here looking for some payroll software of your own, and you’re concerned about cost, you might be interested in some of the cheapest payroll software on the market. Here are the payroll software providers that we can recommend, and are still kind to your wallet.
Employee tier: $29 a month, plus $5 for each employee
Core: $45 a month, plus $4 for each employee
Core: $39 a month, +$6/employee
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There’s a single subscription fee for Square Payroll – $29 a month plus $5 for each employee paid. For a business with 10 employees on their payroll this will cost $79 per month.
Despite the low price, Square is still a very helpful product, with phone-based setup support, all the necessary tax features, including both calculating and automatically filing employee taxes, and very helpful analytics.
Square offers quotes from its benefits partners, Guideline (401(k) provider), AP Intego (workers compensation), and SimplyInsured (health insurance). You can also use Square to create tax reports, as well as additional analytics reports.
Their time-tracking could be improved, as it doesn’t allow employees to clock in and out via an app, and they also don’t allow self-enrollment in benefits or ACA reporting. Unless missing out on those features are a deal breaker for you, Square is the best choice for cheap payroll software.
Square Payroll is the only payroll software we’ve found that allows you to solely pay contractors. And since contractors come and go, Square Payroll doesn’t charge a subscription fee on their contractor plan – you simply pay $5 per paid contractor.
QuickBooks is one of the larger names in the accounting software industry, but that doesn’t mean it has to be ridiculously expensive. QuickBooks’ cheapest plan is the Core plan ($45 a month, additional $4 per employee). For a company employing 10 staff this will cost $85 per month.
It’s one of the most comprehensive payroll software out there, especially on the higher tiers, which you can upgrade to at any time. On the lower tiers, you’ll be able to deduct and pay federal and state taxes, as well as allow your employees to view their pay stubs on an online portal.
You can use QuickBooks’s Employee Cost Calculator to assess how much you’re spending on employees, as well as create reports that show the specifics behind your company’s payroll and taxes. The Core plan also runs next-day bank deposits.
Gusto is extremely cheap at its lowest levels. The cheapest level, the Core plan ($39 a month), requires a $6 fee per added employee. However, it still offers two-day direct deposit, which is pretty speedy, and automates both payroll and taxes.
While their HR tools aren’t incredibly robust, they do still offer a place to store employee documents and information. They also allow employees to self-enroll in benefits – benefits that can be quoted directly through the Gusto dashboard.
Gusto offers great analytics at any tier, letting you create and view tax reports, as well as custom or premade reports about your payroll process as a whole.
There are some downsides though. There is no setup fee, but there are also no training resources. There is a free data migration service, but lackluster time-tracking.
Can You Outsource Payroll?
Payroll can be outsourced to an accounting firm. Larger businesses will have their own accounting departments (which will likely still use payroll software), but for smaller businesses, it’s not uncommon to hire a professional individual or service to stay on top of payroll.
When hiring an individual, you’ll be paying anywhere between $20–$100 per hour, as the rate is set by the contractor. While the exact amount of time spent will vary depending on who’s conducting the payroll, a common figure seems to be four to five hours per pay period.
However, what you may notice is that many of these contractors use payroll software to do their jobs. With some payroll software being priced as low as $19 a month, you might find it’s worth your while to skip the middleman and dive straight into the software yourself.
If you’re intimidated by numbers and forms, don’t let that turn you away from payroll software. While it’s used by accounting professionals, payroll software is very much intended for business owners, and isn’t as hard to use as it could be.
If you’re still not convinced, some of the software allow you to take part in a free trial or demo, like Square or QuickBooks, so you won’t have to spend money just to realise it isn’t for you. And many of them offer comprehensive support and training, which will allow new users to make the most of the program.
Is payroll software worth the cost?
When compared to outsourcing, the costs can be somewhat similar. Paying an external accountant $50 an hour to conduct your payroll can add up to $200 (or more) each month, which is definitely more expensive than a standard payroll software plan.
Ultimately, payroll software can really be as expensive as you want it to be. If you’re a small business with a handful of employees, investing in payroll software can be a worthwhile decision that can take a lot of weight off your shoulders, without putting a massive dent in your financials.
Contractors will also be exempt from company-wide payroll deductions like healthcare programs or parking plans.
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