Costs and Fees of Processing Payroll


The costs of payroll differ wildly depending on the type, size and scale of the software or service. For this reason it is essential that you research the topic thoroughly in order to get the best price and method for you business.

Payroll Options

There are three main options available to businesses who require payroll services and software each will suit different requirements and budgets. These are:

  • In House
  • Part Managed
  • Fully Managed

In House

In house payroll is typically employed by those with less than 5 staff and will most often require little more than a basic software package that can be downloaded for free. At the other end of the scale, large corporations that can afford a fully functioning accountancy department may also keep their payroll service in house.

If you do have some expertise regarding payroll within the company, it can pay to purchase more complex software that can process the needs of a business employing between ten and hundreds of staff. Prices range from £20 per month to up to £500, while some packages require one off payments that can run into the tens of thousands. Most small businesses seeking payroll services, however, require the most straightforward packages, which also tend to be the most affordable.

payroll fees

Part Managed

Part managed packages allow companies to administer the front end of the payroll procedure while allowing a professional service to deal with the more complex and time consuming areas of processing the data. This is the most popular method for those that wish to keep their staff focused on the jobs they were hired to do while maintaining some control and oversight.

Prices will again depend on the size and scope of your business but part managed services can be highly affordable. Costs are usually calculated per employee so the rate will drop the higher the number of staff you employ. Some freelance services can charge as little as £10 and hour but for a professional service fees are usually around £20 per employee per month.

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Fully Managed

Outsourcing your entire payroll procedure is by far the simplest method of managing what can be a complicated endeavour. There are many options to choose from but it is particularly important that you choose a reputable and secure provider as they will be dealing with your business’s most sensitive data.

Costs for fully managed payroll services are the most varied as the process itself needs to be tailored to the specific company employing it. For small businesses with around 10 workers, this would typically cost around £30-£50 per month, while businesses with a workforce of around 500 will likely incur costs of between £1,000 and £1,500 per month. Some providers will also charge a setup fee or reporting costs, which, although appear minimal, can add up over time.


With so many options offering specifically tailored services, it can be difficult to know where to start when seeking a software package or service. There are many things to consider but it does pay to be mindful of all your options before you commit to what can be a significant outgoing.

In House Provider – Sage

Sage provide bespoke software for companies of all sizes. The Sage One Payroll package is suitable for businesses with up to 15 employees and is a highly affordable, simple and intuitive software that can cost as little as £2.50 per month.

Payroll 50, meanwhile, can be used for businesses with up to 500 staff from just £20 per month and there is also a one off payment package, Sage 50 P11D, available for just under £200.

Part Managed Provider – Payroll Options

Offering a wide range of packages, Payroll Options are a flexible and professional provider with affordable options across the many levels of service they provide. Small businesses can take advantage of their reasonably priced SME (small to medium enterprises) packages, while at the other end they provide more complex solutions for large ventures with workforces of up to 2,500.

Fully Managed Provider – Eagle Consulting

With decades of experience, Eagle provide a thorough and accurate service that is perfectly suited to SME businesses over the long term. As they are able to adjust their service to the needs of a business as it grows, they are often seen as a long-term partner for companies instead of a simple outsourced payroll service. Prices vary enormously as you would expect from a flexible service such as this.

Dan Barraclough

Dan’s a writer for Expert Market, specialising in a range of cool topics. He loves web design and all things UX, but also the hardware stuff like postage metres and photocopiers.

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