Glossary · Sales & procurement
PEPM (Per Employee Per Month)
A pricing model in which a PEO charges a fixed monthly administrative fee per worksite employee, separate from pass-through costs like benefits and taxes.
PEPM (Per Employee Per Month) is one of two common PEO administrative-fee models. The client pays a flat monthly amount for each enrolled worksite employee. Pass-through costs — health premiums, statutory taxes, workers' compensation premium — are billed separately.
PEPM pricing is generally easier to forecast than percentage-of-payroll pricing because it does not scale automatically with wages. Buyers comparing quotes should normalize fees to PEPM equivalents to make true side-by-side comparisons.
Related terms
- Percent-of-Payroll PricingA PEO pricing model where the administrative fee is calculated as a percentage of gross payroll instead of a fixed per-employee amount.
- Pass-Through PricingA PEO billing approach where statutory taxes, benefits premiums, and workers' comp are billed at cost, separate from the administrative fee.
- All-In (Bundled) PricingA PEO billing approach that combines administrative fees, taxes, and certain benefits into a single bundled rate.
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