How Much Does Payroll Software Cost? 2023 Fees & Hidden Costs

Payroll software costs can be as low as Square Payroll’s $29 a month fee, or as high as QuickBooks Payroll’s Elite tier, at $145 a month. In this payroll software cost summary, we break down common pricing models for payroll services, additional fee factors, and the best value options on the market.

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.

On this page:

• Payroll Software Cost Breakdown
• The Hidden Costs of Payroll Software
• Payroll Software Pricing Models
• Best Cheap Payroll Software
• Can You Outsource Payroll?
• Frequently Asked Questions

Payroll Software Cost Breakdown

There’s a lot that can go into the cost of a payroll software. With all the tiers and features, pricing can get confusing, so let’s have a look at what is behind the price of a payroll software.

Still getting to grips with the business solution? Read our guide to payroll software here.

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. Read more about QuickBooks Payroll Pricing Plans here.

Gusto’s pricing plans cost between $40 and $60, charging between $6 and $9 per employee. Custom pricing options are available too. 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.

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.

Payroll software cost 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.

Setup

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.

Customer Service

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.

Training

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.

Cancellation Fees

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.

Scalability

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.

Fixed 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 software cost per employee

As in the QuickBooks example above, some software providers will tack on the number 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 $9 (depending on your plan) for each employee you have enrolled in your software, and Square Payroll, which charges $5 per employee.

Bespoke Pricing

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

Pay Frequency

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.

Read our breakdown of payroll prices to learn more about how much this software might cost your business.

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.

Square

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.

Patriot Software

If you're looking for a budget-friendly payroll service and can do without the bells and whistles that pricier providers offer, Patriot Software will be a safe bet – with its Basic plan starting at $17 per month, plus an extra $4 per employee or contractor.

Patriot offers a broad range of payroll features from payment controls to advanced reporting and analytics The platform even offers an employee portal for workers and lets them clock in and out of shifts through their own employee-centric app.

Businesses can use the provider's Basic plan to carry out basic pay frequencies, manage different pay rates, and even compensate workers across multiple locations. However, if you want to access Patriots' full suite of features and file and deposit state and federal taxes through the platform, you'll need to opt for the provider's Full Service plan which retails at $37 per month, plus $4 per employee or contractor.

Patriot offers a 30-day free trial too and doesn't lock businesses in with long-term contracts either, making it one of the most financially flexible services we've reviewed.

Paychex

Paychex may not be the biggest name in the accounting industry, but it's certainly not one you should overlook.

Paychex's starting price is $39 per month plus $5 per employee. This may be pricier than Square and Patriot, but the platform offers some of the most advanced payroll features we've reviewed and still manages to undercut major providers.

With Paychex's Flex, the provider's cheapest tier, businesses can manage payroll duties, create flexible reports, pay workers in real time, and even choose to work with a dedicated payroll specialist. The plan includes an employee-focused app and financial assistance to workers too.

However, businesses looking for advanced capabilities like employee handbook building, custom analytics, and document & performance management will have to opt for pricier packages or select these paid-for add-ons, which bumps up the price of the overall service.

Pro Tip: Look for a Scalable Solution

A payroll service may seem affordable, but if it offers poor integrations or has static packages, it may end up costing your business more down the road. Therefore, if you're serious about keeping costs low, you should take scalability into account.

Scalable payroll providers offer a range of additional HR services for businesses to tap into as they grow. Since they offer these tools in-house,  businesses don't need to switch providers when their needs evolve, saving them in potential cancelation and startup fees.

If you want to manage your payroll with a scalable solution, our team of experts found that ADP Run excels the most in this field, due to its flexible payroll program, its wealth of HR integrations, and its open API. Rippling and Paychex also scored high for scalability, both receiving a category score of 4.8/5 in our testing.

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.

If you're still playing the field, we've devised an in-house payroll quiz to save you the rigmarole of scanning the market yourself. It's completely free, and it matches you to a provider in a matter of minutes.

Payroll Software Cost: Frequently Asked Questions