How Much Does an Employer of Record Cost?

The cost of an Employer of Record (EOR) solution is a significant consideration when expanding into a new market. Companies aim to minimize expenses and avoid the high costs associated with setting up their own entity in a new region. Therefore, EOR pricing is a crucial factor to take into account.

Firstly, the cost of using an EOR should always be lower than the expenses incurred when establishing your own entity. This cost savings result from not having to set up and maintain physical offices, open local bank accounts, obtain local insurance, and manage local tax obligations.

Employer of Record pricing typically follows one of two models:

Percentage Pricing Model - In this model, the company pays a percentage of the salaries provided to its employees. This approach is often more cost-effective when hiring junior staff in foreign locations. Higher salaries result in higher fees to the EOR, which can be challenging to estimate in advance, especially when considering salary increases or competitive compensation packages.

Flat Fee Pricing Model - The flat fee pricing model involves paying a fixed amount per employee, regardless of their position, whether they are executives or entry-level hires. It offers transparency in terms of costs, and you can anticipate expenses accurately without hidden fees such as termination or insurance charges.

Selecting the right pricing model depends on your specific hiring needs and the level of cost predictability you require when expanding your workforce abroad.