Glossary · Sales & procurement
Service Fee (Administrative Fee)
The component of PEO billing that compensates the PEO for HR, payroll, benefits, and compliance services — distinct from pass-through costs.
All terms
Entravia Editorial
Service fees are the primary lever PEOs use to compete on price. They are commonly expressed as PEPM, percent-of-payroll, or bundled into all-in pricing.
When comparing PEO quotes, brokers should normalize all service-fee structures to a single comparable unit (PEPM at the actual census). This is the single most important step in any apples-to-apples PEO comparison.
Related terms
- 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.
- 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.
- All-In (Bundled) PricingA PEO billing approach that combines administrative fees, taxes, and certain benefits into a single bundled rate.
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