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How much should you be charging for payroll?

27th Jun 2022
Brought to you by
capium

Capium is cloud based accounting and practice software.

Share this content

How much should you be charging for payroll?

It’s one of those age-old questions: How much should I be charging for my services?

You don’t want to undersell yourself and end up losing money for your hard work, but at the same time you don’t want to charge too much and scare away potential clients.

Finding that sensible middle ground is important, but how you find it is another question.

We can’t give you an exact figure for the ideal fee, as this will depend on various circumstances – but we can give you some idea on how much you should be charging for payroll services.

Average payroll outsourcing costs

There are two costing levels depending on the payroll service you’re providing.

Providing a fully managed payroll service will obviously require a higher charge as it involves more work than a part-managed service.

On average, payroll might cost a company with five employees:

  • £20-£25 a month for fully-managed payroll
  • £10-£15 a month for part-managed payroll 

Obviously these figures may vary from company to company depending on the size of the team.

Some providers charge £4-£10 per month per employee for a company of no more than 10 staff.

You’ll find adding extra employees to the payroll takes up additional time for your team, so it’s your decision whether you want to add a setup fee for this or not.

What’s the difference between part and fully managed payroll?

A fully managed payroll service will do everything for the company’s payroll including managing BACS payments and P60s. All administrative aspects of payroll will be your responsibility.

Part managed payroll services are a little less involved. Some consider it a 50/50 split between yourself and your client. Your main responsibilities will be carrying out the more complex tasks such as end of year filing and HMRC reporting.

Although a part-managed payroll service may seem like a better and cheaper choice, some companies may not want any of the payroll duties. That’s why they will come to you.

What else affects the costing?

As mentioned, payroll services can differ depending on the extent of the service you provide and the size of the business.

Each payslip you provide will incur a cost, so for a company of 200 or more you would need to charge more than a company of 50 people. You should look to charge £2-£3 per payslip on average.

Some payroll specialists provide discounts for larger companies, so this is something you could consider.

How your payroll system works will affect the amount you charge. For example, if you have an auto-enrolment pension system, this is a bolt on service meaning you can charge more.

Even setting up the payroll system is a chargeable job: these things don’t happen magically. If you integrate other management systems into your payroll services, you can offer these as optional extras.

Want a second opinion?

Our payroll software can make your life easier and give you the tools you will need to provide high-quality payroll services for your clients.

We’ve been doing this for a long time so we are keen to help you come to the best decision for your firm.

Don’t undersell yourself.

 

Contact us today about your payroll services.

Click here to learn more about our Capium Payroll module.