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What determines the Pricing for Employer of Record Services?

Updated: Feb 1

Expanding your business globally is exciting, but navigating the intricate web of international employment laws can be daunting. That's where Employer of Record (EOR) services come in, acting as your legal employer in new markets, taking the weight off your shoulders. But before you hop on the EOR bandwagon, understanding their pricing structure is crucial. Brace yourself, potential global employers, for we're about to demystify the EOR pricing puzzle!

Employer of Record Services pricing

Factors that Influence Employer of Record Services:

1. Location, Location, Location

Just like real estate, location reigns supreme in EOR pricing. Countries with stricter regulations, higher minimum wages, and heftier social security contributions demand a premium. For example, expect a significant price difference between France and Estonia due to varying legal landscapes. A study by Globalization Partners found that location was the primary factor influencing EOR pricing, with costs varying significantly between regions due to differing labor laws and regulations.

2. Employee Headcount

Your global team size directly impacts EOR pricing. As your headcount grows, so do the administrative needs of your EOR, leading to potentially higher per-employee fees. However, some EORs offer volume discounts, making them increasingly cost-effective for larger teams.

3. Service Customization

Do you require basic payroll and compliance or a comprehensive HR feast of onboarding, benefits, and visa assistance? This level of customization significantly impacts the cost. Remember, personalized attention comes with a premium price tag.

4. Pricing Models

EORs typically offer three main pricing models:

  • Fixed Monthly Fee: Predictable and ideal for small teams with stable headcounts.

  • Percentage of Payroll: Scalable but can disproportionately increase costs with salary raises.

  • Transaction-Based Fees: Perfect for short-term projects or independent contractors.

5. Hidden Fees?

Beware of setup fees, onboarding charges, termination fees, and other sneaky costs. Transparency is key, so ask your EOR for a detailed breakdown to avoid budgetary surprises.

6. Industry Expertise

An EOR specializing in your industry can navigate the specific HR nuances you face, potentially improving efficiency and reducing compliance risks. Consider this a potential value-add beyond the base pricing. A white paper by Velocity Global highlighted the importance of choosing an EOR with industry expertise, emphasizing the cost savings and efficiency gained from their specialized knowledge.

7. Compliance Track Record

A clean legal track record is paramount. Choose an EOR with a proven history of compliance in your target markets to minimize potential legal troubles and associated costs.

8. Technology's Helping Hand

Tech-savvy EORs leverage robust platforms to streamline processes, boost efficiency, and potentially minimize administrative costs. This factor can offer long-term cost savings compared to manual processes. A report by Deel showcased the rise of technology in the EOR landscape, pointing towards the potential for cost reductions and improved service delivery through automation and platform-based solutions.

9. Government's Quota

In the case of EOR for Foreign Knowledge Workers (FKWs), the EOR will need to also provide the Employment Pass or Working Visa. However, said visas are usually limited in quota by the government. The less the quota the government gives, the higher the EOR pricing will often be.

Beyond the Price Tag: Finding the Perfect EOR Match

While cost is an important consideration, prioritize finding an EOR that aligns with your specific needs, industry expertise, and desired level of service customization. By carefully evaluating these factors, you can unlock the value proposition of an EOR partnership and unlock a smooth journey through global expansion.

Actionable Advice for EOR Seekers:

  • Get Multiple Quotes: Compare pricing and service offerings from different EORs to find the best fit for your budget and needs.

  • Don't Be Shy to Negotiate: Especially for larger contracts, negotiate for better rates and service inclusions.

  • Ask the Right Questions: Don't hesitate to clarify hidden fees, service limitations, and termination clauses.

With this knowledge in your arsenal, you're now equipped to navigate the EOR pricing landscape with confidence. Remember, the cost may vary, but the value of a good EOR is priceless! If you are seeking an EOR partner in Malaysia, you can consider working with GP Outsourcing Asia, the number one EOR service provider in the country!

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