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An Employer of Record (EOR) cost ranges from $200 to $500 per employee, monthly. This is a generic estimation as EOR costs can vary depending on company needs. However, knowing the cost of EOR can help you prepare better and plan your budget based on each new hire.
The global workforce continues to expand in 2026, with 58% of companies now hiring internationally according to recent data. Yet pricing confusion remains the biggest challenge when evaluating EOR providers. Some providers start as low as $199 per employee/month. Others have prices starting at $599 per employee/month or more. This wide pricing variance makes it difficult to budget accurately or compare providers fairly.
In this blog, we'll cover everything you need to know about Employer of Record costs from what drives pricing differences to how to spot hidden fees and choose the right provider for your budget.
Factors That Influence The Cost of an EOR
If you are an employer looking to onboard talent in a foreign country via an EOR, you will typically pay for the following elements:
1. EOR Setup
EOR providers usually charge a one-time setup fee for new employees.
The fee covers:
- The cost of the contract
- One time-onboarding
- Payroll profile
2. Refundable security deposit
To ensure compliance, an EOR provider charges an initial deposit for each employee, equivalent to the employee's notice period pay. The deposit can be a lump sum or a percentage of the employee’s pay.
The EOR provider will withhold that amount, as long as the employee continues to work for the employer. The amount will be given back to the employer upon the termination of the employment contract, once all the dues are closed.
3. Employee’s Salary and additional liabilities
An employer is liable to pay the employee’s salary and local employer cost, commonly known as contributions. Each country has a set of laws on the contributions every employer must pay over and above the employee salary, such as social security, unemployment insurance, retirement fund, etc. EORs such as Gloroots offer a one-click payroll solution, ensuring you pay your distributed teams on-time. The EOR determines the employer liability per employee based on local laws and raises the relevant invoices to the employer. EOR will then make the necessary payments to employees and government authorities.
4. Supplementary Employee Benefits
Some countries require employers to provide mandatory employee benefits. These are a part of the local contributions in the employee’s payslip. Additionally, to remain competitive, many companies offer supplementary benefits, such as meal vouchers or software subscriptions.
5. EOR Service Fee
EORs charge a service fee - as a SaaS employee management fee - on top of the setup fee. Different EORs charge service fees differently. Some charge it once a month per-employee, while others ask for a lump sum. The onboarding candidate’s salary may also influence the service fee. Please talk to your EOR provider on this matter and note down all the factors that contribute to the final billing.
6. Currency Exchange Fees
EORs help businesses ensure best global pay practices, help navigating currency fluctuations and ensure employees are paid in full, worldwide.
It is important to note that these costs vary from one EOR to another, depending on their pricing model.
7. Regional Pricing Variations
Location is perhaps the biggest factor affecting EOR costs. Each country has its own labor laws and compliance requirements, tax systems and filing procedures, mandatory benefits and social contributions, and administrative complexity.
For example, hiring in France typically costs more than in the Philippines because French employment law requires extensive benefits and has strict termination rules. Similarly, Brazil's complex tax system makes EOR services there more expensive than in many other Latin American countries.
Regional cost drivers include:
- Western Europe: High statutory contributions (18-20% of salary in Germany for pensions, unemployment, healthcare)
- Latin America: Mandatory bonuses like Aguinaldo in Mexico, profit-sharing requirements
- Asia-Pacific: Complex visa requirements, diverse regulatory environments
- North America: Higher litigation risk, extensive compliance standards
It is important to note that these costs vary from one EOR to another, depending on their pricing model.
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Average Cost Ranges for EOR Services (By Region)
EOR pricing varies significantly by region due to differences in compliance complexity, labor costs, and statutory requirements.
Country-Specific Examples
1. High-Cost Markets:
- Germany: $600-$800/month - Employers contribute 18-20% to pensions, unemployment insurance, and healthcare above base salary
- France: $650-$850/month - Strict termination rules, extensive mandatory benefits
- Switzerland: $700-$900/month - Complex regulatory environment, high local salaries
2. Mid-Range Markets:
- Mexico: $400-$600/month - Aguinaldo (Christmas bonus), profit-sharing, vacation premiums add 20-25% beyond base
- India: $250-$450/month - Social security contributions under 15% of salary, cost-efficient for junior to mid-level roles
- Singapore: $500-$700/month - Streamlined compliance but high talent costs
3. Budget-Friendly Markets:
- Philippines: $300-$450/month - 13th-month pay requirement but lower compliance complexity
- Vietnam: $350-$500/month - Growing market with reasonable statutory obligations
- Poland: $400-$550/month - EU standards with lower labor costs than Western Europe
The actual cost depends on the specific country, employee position, and services included. Always request country-specific quotes when planning global expansion.
Service-wise Breakdown of a Typical EOR Package
That monthly rate per employee breaks down into five core services. Here's where your money goes.
1. Payroll and Tax Management (30-35%)
EORs calculate local taxes, process statutory contributions, and file government reports. In India alone, that means managing 12% Provident Fund, 3.25% ESI, plus professional tax.
One calculation error triggers audits and penalties. They also handle currency conversion and real-time validation before processing.
2. Compliance and Legal Protection (20-25%)
This is your shield against labor law violations. EORs draft compliant contracts, manage terminations correctly, and monitor regulatory changes. Non-compliance fines hit $1,000 to $100,000+ depending on severity.
Companies skipping EORs often face back-payment obligations totaling 5-10% of annual payroll.
3. Benefits Administration (18-22%)
Health insurance, pension plans, leave tracking, and gratuity calculations all require ongoing management. In India, gratuity accrues at 4.81% monthly. Errors expose EORs to legal liability, so this cost covers coordination with insurers, state pension programs, and compliance audits.
4. HR Operations (15-18%)
Onboarding, payroll queries, expense reimbursements, leave approvals, and record-keeping generate constant administrative work. Industry standard: 1 full-time admin per 40-50 employees. That labor cost is built into your fee.
5. Account Management (12-15%)
Budget EORs ($200-$400/month) offer ticket-based support. Premium providers ($800-$1,500+/month) assign dedicated account managers with quarterly reviews and proactive guidance. You're paying for service quality and response speed.
EOR vs. Local Entity vs Contractors: Cost-Benefit Comparison
Let us take a look at what factors contribute to the decision between a local entity, an EOR, and independent contractors.
When to Choose Each Model
Choose Local Entity when:
- Hiring 15+ employees in one country long-term
- Establishing permanent market presence
- Full operational control is critical
- Long-term ROI justifies upfront investment
Choose EOR when:
- Testing new markets without commitment
- Hiring 1-15 employees across multiple countries
- Need quick deployment (days vs months)
- Want compliance protection without internal expertise
- Scaling distributed teams internationally
Choose Independent Contractors when:
- Project-based or short-term work (3-6 months)
- Highly specialized skills for defined deliverables
- Worker controls when/where/how work is done
- No intention of ongoing employment relationship
Risk Warning: When misclassifying workers, employers may not withhold the correct amount of employment taxes required by law. By some estimates, $3-4 billion is lost annually due to misclassification.
As you can see, an EOR clearly provides more value and support for its cost, proving to be more profitable and effective for business expansion compared to entity setup, with more legal protection than contractor arrangements.
Types of pricing model of an EOR
EORs practice several pricing models, each with distinct advantages depending on your hiring strategy and budget.
1. Flat Monthly Fee
The most common and transparent pricing structure. You pay a fixed amount per employee per month, regardless of salary level.
How it works:
- Fixed rate: $299-$799 per employee monthly
- Same cost whether employee earns $30,000 or $150,000 annually
- Typically includes core services: payroll, compliance, benefits administration
Best for:
- Organizations with high-salary positions
- Companies needing predictable budgeting
- Businesses scaling headcount with clear cost projections
Example: If you hire an employee at $80,000/year in Mexico, you pay the same flat $449/month as you would for a $150,000/year senior engineer.
2. Percentage of Employee Salary (CTC-Based)
The employer pays a predetermined percentage of the employee's total compensation (salary, bonuses, commissions).
How it works:
- Typical range: 8-20% of gross salary monthly
- $5,000/month salary at 12% = $600 EOR fee
- Scales up with every salary increase, bonus, or raise
Best for:
- Conservative expansion budgets
- Market testing with lower-salaried roles
- Employers with predominantly junior to mid-level positions
Caution: This model becomes expensive as your team matures. A 15% markup on a $10,000/month senior developer costs $1,500 monthly - far more than flat-fee alternatives.
3. Tiered or Volume-Based Pricing
Offers discounted rates based on number of employees or contract duration.
How it works:
- 1-5 employees: $599/month per employee
- 6-20 employees: $499/month per employee
- 21+ employees: $399/month per employee
Best for:
- Businesses with clear, aggressive hiring goals
- Companies planning significant headcount growth
- Organizations hiring in multiple markets simultaneously
Benefits:
- Rewards scaling with better unit economics
- Long-term contracts may unlock additional discounts
- Often includes premium support at higher tiers
4. Custom/Hybrid Pricing
Tailored packages combining flat fees, percentage models, or service bundles based on specific requirements.
How it works:
- Negotiated rates for unique circumstances
- May include add-ons like visa sponsorship, equity administration
- Often requires annual contracts or minimum commitments
Best for:
- Enterprises with complex compliance needs
- Companies requiring white-glove service
- Organizations with non-standard employment arrangements
Which Model Should You Choose?
Pro Tip: If you're planning to hire internationally, calculate costs using both flat-fee and percentage models across your expected salary bands. Often, hybrid approaches work best - flat fees for senior roles, percentage-based for junior positions.
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When Is an EOR The Right Choice For You?
An Employer of Record delivers the most value in specific scenarios where speed, compliance, and flexibility matter more than full operational control.
1. If You're Expanding Into New Markets
With an EOR, you can onboard local talent globally in record time and catalyze your expansion strategies. Testing demand in Spain, India, or Brazil? An EOR lets you hire employees in days without the 3-6 month entity setup process.
Ideal when:
- Testing market viability before committing to permanent infrastructure
- You need boots on the ground quickly to capture opportunities
- Establishing product-market fit requires local expertise
2. If You Need Speed Over Infrastructure
Whether you are a small or large-scale business, EORs help you meet your cross-border hiring goals without the hassles of global compliance and payroll.
Speed advantages:
- Onboard employees in 3-7 days vs 2-6 months for entity setup
- Launch sales, support, or engineering teams immediately
- Respond to client demands in new time zones without delay
3. If You're Hiring Small Teams (1-15 Employees)
The economics rarely justify entity setup at this scale. An EOR provides full compliance and payroll infrastructure for a fraction of the cost.
Cost comparison for 5 employees:
- Local entity: $20,000-$50,000 setup + $5,000-$10,000/month overhead = $80,000-$170,000 Year 1
- EOR: $0-$5,000 setup + $2,000-$4,000/month = $24,000-$53,000 Year 1
4. If You Want Access to Global Infrastructure and Features
An EOR manages a variety of responsibilities – contract generation, onboarding, payroll, benefits administration, and much more.
Recently, SaaS-based EOR platforms have been disrupting the industry with their tech-savvy onboarding and payroll solutions. For example, Gloroots' EOR solution, besides an onboarding workflow, also offers a single-click payroll solution to disburse salaries for your distributed teams. These solutions ensure fully compliant payments and benefits administration and enable automated payments if possible.
Technology advantages:
- Multi-country payroll from one dashboard
- Automated tax calculations and filings
- Real-time compliance updates as regulations change
- Integration with your existing HRIS, accounting software
5. If You Need Full Compliance Without Internal Expertise
The biggest challenge to remote hiring and onboarding is compliance. Without expert advice, any company can unknowingly skip mandatory regulations, resulting in penalties. An EOR ensures you do not have any risks associated with the onboarding of the employee. EORs also assign employers with dedicated account managers to navigate queries around compliance, labor laws and payroll.
Compliance protection:
- Legal liability shifts to the EOR (they're the legal employer)
- Contracts drafted according to local labor law
- Statutory benefits automatically calculated
- Protection from misclassification penalties ($10,000-$100,000+ fines)
6. If Your Workforce Is Fully Distributed
Managing employment across 5+ countries makes entity setup impractical. An EOR scales with your remote-first strategy without multiplying legal complexity.
Multi-country advantages:
- One invoice, one contract, multiple countries
- Consistent employee experience regardless of location
- Simplified offboarding when team members relocate
7. If You Lack In-House Global HR and Legal Expertise
If you don't have dedicated resources to manage international employment, outsourcing to an EOR makes financial and operational sense.
Hiring an international HR specialist costs $70,000-$120,000 annually. An EOR provides this expertise across 100+ countries for a fraction of the cost.
Busting EOR Cost Myths
Myth #1: Employer of Record solutions are generally costlier than setting up a local entity
Fact: An EOR solution requires a monthly payment to the EOR provider, who assumes all the compliance responsibilities for the employee’s employment. If you are experimenting in a new market or looking only to leverage the talent of a specific country, an EOR will provide more value.
Setting up a local entity to hire talent, results in monetary and opportunity costs. Opening a bank account and availing business insurance and utilities, and paying corporate taxes scale the price multifold.
Myth #2: EOR solutions have many hidden charges
Fact: EOR solutions only charge for the initial setup and the subsequent monthly employee costs. Gloroots provides a complete breakup of all the costs involved in the monthly charge, so users know what they are paying for. Furthermore, the details of the monthly cost are provided in the initial proposal before the client signs off.
In any situation where external advice is required, the additional cost will be first discussed with the user and pursued after full agreement.
Myth #3: EOR solutions are best for long-term projects
Fact: EOR solutions are very flexible, as the pricing model and onboarding solutions are suitable for a business's short and long-term needs. The EOR platform is scalable for contractors and full-time employees; hence, EOR solutions can be used for any project of varying duration.
Myth #4: EOR is used mostly by big companies
Fact: MNCs and SMEs require the best global talent for their endeavors, and an EOR provides this solution with no prejudice to the size of the client. An EOR’s features and costs are accessible to small and large companies without infrastructural requirements.
Myth #5: EOR is only viable for overseas employment
Fact: While EOR is a go-to solution to hire talent across borders, employers can also avail an EOR’s payroll services to pay their local talent.
4 Hidden Costs That Inflate Your EOR Bills
EOR providers quote clean monthly rates. Then the invoice arrives. Here's where the extra charges hide and how to spot them before signing.
1. FX Markups Disguised as Conversions
Currency conversion is the silent profit center. EOR platforms apply 2-10% markups above mid-market exchange rates when processing international payroll. You won't see it as a line item. It's embedded in the conversion itself.
Paying $100,000 monthly across 15 employees with a 5% markup costs you an extra $5,000 each cycle. That's $60,000 annually. Every payroll run, bonus, and reimbursement passes through this marked-up conversion.
Some startups discover their actual spend running 20-30% over budget purely from exchange rate manipulation.
The real problem: Fluctuating rates plus hidden markups make financial forecasting impossible. You're forced to build larger contingency buffers that could fund additional headcount instead.
2. Onboarding and Exit Fees That Multiply Fast
Most EOR providers separate setup and termination costs from base rates. Onboarding runs $500 to $2,000 per employee depending on jurisdiction, covering contracts, compliance checks, and payroll enrollment. These aren't one-time charges. They recur with every hire.
Exit processing costs $150 to $400 per employee for final tax calculations and documentation. A 50-person team with 20% annual turnover means 10 onboardings ($5,000 to $20,000) plus 10 exits ($1,500 to $4,000) yearly. That's up to $24,000 that never appeared in initial pricing.
Why it matters: You can't model hiring costs accurately when each addition carries hidden administrative taxes. Headcount planning becomes guesswork.
3. "Included" Benefits That Cost Extra
"Benefits administration included" sounds comprehensive. It's not.
Base fees cover statutory processing, but EORs charge separately for health insurance enrollment, retirement plans, and supplementary benefits. These are requirements for competitive talent in most markets.
Compliance updates after labor law changes, mandatory training, HR consultations, standard reporting. One tech company found their package excluded dental administration, equity management, and compliance reviews.
These were activities they assumed were foundational. The extras added $75 to $150 per employee monthly.
The catch: You can't benchmark providers because "included services" definitions vary wildly. Apples-to-apples comparisons require forensic contract analysis.
4. Renewal Fees and Compliance Upcharges
Annual renewals unlock a new tier of charges. Platform access fees, technology maintenance costs, and data storage charges appear when initial terms expire. You're now paying extra just to access your own employment data.
Compliance fees are particularly problematic. When local regulations change (a constant in international employment), some EORs bill it as a service, not a responsibility. A tax update in India becomes a $200 to $500 "compliance adjustment fee" despite legal knowledge being their core value.
The trap: Switching providers means offboarding your entire team and starting fresh. EORs know this and raise fees after you've committed infrastructure and employee relationships.
How to Choose an EOR That Works With Your Budget?
Selecting the right EOR requires looking beyond advertised pricing to understand total cost of ownership and service quality.
1. Request Complete Cost Breakdowns
Don't accept surface-level pricing. Demand itemized quotes that include:
- Base monthly fee per employee
- Setup/onboarding charges
- FX conversion rates and markups
- Benefits administration costs
- Offboarding/termination fees
- Annual renewal or platform fees
- Country-specific surcharges
Red flag: Providers who can't give you this breakdown upfront often hide fees in fine print.
2. Calculate All-In Monthly Costs
Your true cost per employee includes more than the EOR fee:
Total Monthly Cost Formula:
Base EOR Fee + Employee Gross Salary + Employer Statutory Contributions (10-20% depending on country) + Mandatory Benefits + FX Markup (if applicable)
= True Monthly Employment Cost
Example for a $5,000/month developer in Germany:
- EOR fee: $599
- Gross salary: $5,000
- Employer contributions (18%): $900
- Health/pension: $350
- Total: $6,849/month
3. Evaluate Service Quality Indicators
Cheap providers cut corners. Look for:
Compliance Infrastructure:
- Do they own entities in-country or use resellers?
- How quickly do they update for regulatory changes?
- What's their track record with labor audits?
Support Quality:
- Dedicated account managers or ticket system?
- Response time SLAs
- Multi-timezone support coverage
Technology Platform:
- Self-service employee onboarding
- Real-time payroll visibility
- Integration with your HR/accounting tools
4. Check Contract Terms and Exit Clauses
Before signing check:
- Minimum contract duration - Can you exit after 3 months or locked in for 12+?
- Termination notice requirements - 30, 60, or 90 days?
- Exit fees - What do you pay to offboard employees or switch providers?
- Price escalation clauses - Can they raise fees mid-contract?
- Volume discount eligibility - When do you qualify for better rates?
5. Validate Through References
Ask the EOR provider for:
- 3-5 customer references in similar industries
- Case studies showing cost savings vs entity setup
- G2/Capterra reviews filtered by company size
Questions to ask references:
- "What hidden fees appeared after signing?"
- "How accurate were initial cost projections?"
- "Did pricing increase at renewal?"
- "How's the support quality when payroll issues arise?"
6. Compare Total 3-Year Cost, Not Just Year 1
EORs betting on Year 1 discounts often raise prices at renewal. Model out 36 months:
Scenario Planning:
Year 1: 5 employees across 3 countries
Year 2: 12 employees across 5 countries
Year 3: 20 employees across 7 countries
Calculate:
- Which pricing model (flat vs percentage) is cheaper at each stage?
- When does entity setup become more economical?
- What's your total 3-year cost with Provider A vs B?
7. Negotiate Better Terms
EOR pricing is more flexible than advertised. Leverage:
Negotiation Points:
- Waive setup fees for multiple employees
- Lock in flat rates for 24-36 months
- Volume discounts based on hiring projections
- Bundle services (EOR + contractors + payroll) for better rates
Timing leverage: Negotiate at quarter-end or fiscal year-end when providers have revenue targets.
8. Pilot Before Committing
Start small:
- Hire 1-2 employees through the EOR
- Evaluate for 3-6 months
- Check invoice accuracy, support responsiveness, compliance handling
- Scale only after validating service quality
Cost-effective testing: Use EOR for new markets while keeping existing entities for established regions.
Choose Gloroots as your EOR partner
As you can see, EOR is the most versatile solution on the market for expanding your distributed team and leveraging global talent in a faster and more compliant manner. With Gloroots as your EOR partner, you can onboard any candidate within a day. The leading EOR review site RemotePad has recognized this by rating us a leading EOR solution in its 2024 rankings.
Furthermore, Gloroots's EOR platform takes care of the contract generation, payroll, benefits, insurance, and much more of both your independent contractors and full-time employees. You can view the breakup of the invoice for each professional you have on boarded via our platform and process the payment in various currencies.
When you think of onboarding global talent compliantly and swiftly, think of Gloroots.
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