A filled-in census for a 150-person, $9M payroll, multi-state company, with every line an employer should model before comparing a PEO against an in-house HR team.
Start with your own census, and this one is mid-market
You are an operator at a company that has outgrown its payroll software and its first HR hire, and you are deciding between a PEO and building the team. Walk into every conversation with a filled-in census: real headcount, gross payroll, the states people actually work in, benefit elections, industry class codes, and claims history. Providers price on this, so the proposal is only as good as the data you hand them.
This article works one scenario end to end: a 150-person company with about $9 million in gross annual payroll across six states. That is a $60,000 average gross wage per employee, which keeps the math legible. It sits in the 100 to 250 employee band where the decision stops being about relief and starts being about the total cost of an HR operation.
The administrative fee is the only true PEO line, and it is negotiable here
PEO administrative fees are quoted one of two ways: a flat per-employee-per-month (PEPM) fee, or a percentage of gross payroll. Market guides put PEPM fees at roughly $40 to $160 per employee per month, with 2 to 12 percent of payroll the most-cited percentage band. Both cover administration only; benefits premiums, workers' compensation, and payroll taxes are billed on top either way.
On this census, model a $100 PEPM fee: 150 employees times $100 a month is $15,000 a month, or $180,000 a year. At this size $180,000 is exactly 2 percent of a $9 million payroll, the low end of the percentage band, and buyers negotiate PEPM down because the payroll denominator is large. Across the full PEPM range this company's annual fee runs from about $72,000 at $40 to $288,000 at $160. Treat every figure as an estimate.
The pass-through lines dwarf the fee
A proposal shows more than the fee, and the other lines are the ones people misread as PEO cost. Health benefits, workers' compensation, and payroll taxes exist with or without a PEO; a PEO administers them and may buy them on a larger group, but it does not create the underlying cost.
The biggest pass-through is employer FICA: 7.65 percent of gross wages, 6.2 percent Social Security plus 1.45 percent Medicare on the employer's side. The 6.2 percent portion applies up to the $184,500 Social Security wage base for 2026, and Medicare has no cap. At a $60,000 average wage almost nobody in this census clears the base, so 7.65 percent on $9 million is a close estimate: about $688,500 a year. Unemployment taxes (FUTA, and state SUI) add a smaller, state-dependent amount on top.
Model the benefits line too. The KFF 2024 Employer Health Benefits Survey puts the average employer contribution at about $7,583 per covered worker for single coverage and about $19,276 for family. A 150-person census is a mix, so model a blended $9,000 to $12,000 per covered employee per year; at roughly 130 covered employees that is $1.2 million to $1.6 million a year. Label it an estimate and pull your real renewal.
Workers' compensation depends on class codes and claims. For a mostly office and professional-services census, model about $0.50 per $100 of payroll, or roughly $45,000 to $70,000 a year. A warehouse or field-services mix moves this line up materially, so use your actual class codes.
Total employer cost, both scenarios
Add the lines: a $180,000 administrative fee, about $688,500 in employer FICA, roughly $1.2 million to $1.6 million in benefits, and about $45,000 to $70,000 in workers' compensation. That is about $2.2 million a year in total employer cost, of which the PEO's own fee is $180,000: roughly 8 percent of the total and 2 percent of payroll.
The comparison that decides the decision is not PEO versus nothing. It is PEO versus what you spend to run the same administration yourself: payroll software, benefits administration, compliance work, and the salaries of whoever owns it.
- PEO administrative fee (modeled, $100 PEPM): about $180,000 per year, negotiable at this headcount
- Employer payroll taxes (7.65% FICA on $9M): about $688,500 per year, with the Social Security wage base applied
- Benefits (pass-through, blended employer contribution): about $1.2M to $1.6M per year
- Workers' compensation (pass-through, office-professional class codes): about $45,000 to $70,000 per year
- Total employer cost: about $2.2 million, of which the fee is roughly 8 percent
The honest break-even versus an in-house HR team
At 150 employees the realistic alternative is not one cheaper vendor; it is a team. The U.S. Bureau of Labor Statistics puts the May 2024 median annual wage at $140,030 for human resources managers and $72,910 for human resources specialists. Fully loaded with benefits and employer payroll taxes (roughly 25 to 30 percent on top), a manager runs about $175,000 to $182,000 and a specialist about $91,000 to $95,000, so a two-person team costs roughly $270,000 a year, plus $20,000 to $40,000 for payroll and HR software. That lands the in-house path around $290,000 to $340,000 against a $180,000 PEO fee at $100 PEPM.
Be honest about both directions. On cash, the PEO fee usually beats a two-person team. But at this size you almost certainly keep an internal people lead anyway, because a PEO lifts administration, not leadership: managers still need coaching, and employee relations still need an internal face.
If you already have that person, the real question is whether the PEO's large-group benefits renew better than what you can buy on your own 150-life census. When the benefits buying power is real, the PEO wins. When it is not, an ASO or a good payroll platform plus the team is often cheaper and keeps you the sole employer. The break-even is your census, your states, and your hours, not a universal answer.
Your one next step
Before you take a call, put your real census through these lines and get three numbers back: a PEO proposal, an ASO proposal, and an in-house model with real salaries from your market. Compare total employer cost across all three, and price the benefits renewal separately, because at 150 employees that single line moves more money than the fee ever will.
Frequently asked questions
How much does a PEO cost for a 150-employee company?
Administrative fees run roughly $40 to $160 per employee per month, or 2 to 12 percent of payroll, before benefits, workers' compensation, and payroll taxes, which are pass-through costs billed on top. On a 150-person, $9 million payroll census, a $100 PEPM fee is about $180,000 a year, and at this size the fee is negotiable.
Does a PEO save money at 150 employees?
Sometimes, but not because of the fee. The fee is a small share of a roughly $2.2 million total employer cost, and the pass-through lines (payroll taxes, benefits, workers' compensation) exist either way. The saving, if any, usually comes from large-group benefits pricing, so compare the PEO's renewal against your own census before assuming it is cheaper.
Should a 150-person company still hire HR if it uses a PEO?
Usually yes, at least one internal owner. A PEO administers payroll, benefits, and compliance, but it does not replace the internal work of coaching managers, running employee relations, and shaping policy. Most companies this size keep a thin internal people lead alongside a PEO.
Why is the PEO's fee not the deciding line at this size?
Because the pass-through costs dominate. On this census the $180,000 fee is roughly 8 percent of total employer cost, while payroll taxes and benefits are most of the rest. The decision turns on benefits buying power and how much administration you would otherwise staff, not on shaving a few dollars of PEPM.