HR Software vs PEO Cost: What You Would Actually Pay

When owners ask whether to use HR software or a PEO, the first question is usually cost. The two are priced differently and cover different things, so the useful comparison is the total monthly cost of each complete setup. This post lays out how each is priced, runs a worked example with published rates, and points out what each price does and does not include.

What a PEO does, in plain terms

A professional employer organization, or PEO, takes on payroll administration and tax reporting responsibilities for its business clients. The IRS describes it this way: PEOs handle various payroll administration and tax reporting responsibilities for their business clients and are typically paid a fee based on payroll costs.

The IRS also runs a voluntary certification program for PEOs. If you are evaluating one, the IRS publishes a list of certified PEOs, and says a certified PEO contract must contain the exact name and EIN of the entity carrying out the federal employment tax obligations in the contract.

Justworks, for example, lists payroll, compliance tools, HR consulting, and support in its PEO plans for one monthly per-employee rate, as covered below.

What HR software does

HR software is a tool your own team uses. It keeps people records, documents, time off, hours, and often hiring and performance in one place. Your company stays the employer, and you choose your own payroll provider and benefits carrier. CypressHR is in this category: it is not a PEO, and it does not include payroll.

That difference is the heart of the cost comparison. A PEO price includes payroll and related services. An HR software price does not, so you add the cost of payroll separately.

How each one is priced

PEO pricing commonly follows headcount or payroll. Justworks, for example, publishes per-employee PEO rates on its pricing page: PEO Basic at $79 per employee per month and PEO Plus at $124 per employee per month, with no base fee (checked October 28, 2026). The page lists payroll, compliance tools, HR consulting, and support in the PEO plans. Other PEOs may price differently, and the IRS notes the typical basis is payroll costs, so always ask for the exact formula.

HR software pricing is usually either per employee or flat per company. BambooHR's pricing page lists a flat monthly rate for companies with 25 employees or fewer and per-employee pricing above that (as of October 28, 2026). CypressHR is flat per company. Essentials is $350 a month. Pro has a founding price. Founding price: $500 a month for companies that sign up by December 1, 2026 (11:59 PM Central). Standard price is $700 a month after that. Both plans are a flat monthly price per company with no per-employee fees, plus applicable sales tax.

Payroll pricing is separate if you go the software route. Gusto's pricing page lists its Simple plan at $49 a month plus $6 per person per month (as of October 28, 2026). Justworks also lists a Payroll plan at $8 per employee per month plus a $50 monthly base fee. Gusto describes its Simple plan as basic payroll in one state, and it starts with payroll and adds HR tools on higher plans. In this comparison, it stands in for the payroll piece of the software route.

A worked example with published rates

Table: monthly cost for 40 employees, using list prices from the Justworks, Gusto and CypressHR pricing pages as of October 28, 2026. Plans: Justworks PEO Basic and PEO Plus, Gusto Simple (one state only), CypressHR Essentials and Pro. Excludes sales tax, add-ons, discounts, benefits, and workers' compensation costs. Not quotes. CypressHR Pro shows the $500 founding price, available through December 1, 2026; the standard price is $700 after that.

Two cautions. First, these are not equal packages. Justworks PEO plans list payroll, compliance tools, HR consulting and workers' comp access; PEO Plus adds medical, dental and vision administration. With the software route, you arrange benefits and workers' comp separately, through a broker, a carrier, or in some cases your payroll provider (Gusto, for example, offers both). Second, the CypressHR Pro row uses the founding price, which applies to companies that sign up by December 1, 2026. After that, Pro is $700 a month.

The useful takeaway is the shape of the cost, not the exact dollars. A PEO fee grows with every employee you add. A flat HR software plan price stays the same when you grow, while payroll is priced on its own.

What to ask before you decide

• What exactly is in the fee? Payroll, benefits administration, workers' compensation access, HR consulting, and software may or may not be bundled.
• How does the fee change when I hire? Per-employee and payroll-based fees rise with growth.
• Who is responsible for payroll taxes? Ask for the contract language and, for a PEO, check the IRS certified list.
• How easily can I leave? Ask about contract terms and what happens to your data and benefits plans.
• What do I still have to do myself? With software, you still approve requests and make people decisions.

Where CypressHR fits

If your main goals are tidy people records, time off with approvals, weekly hours, signed documents, and checklists for new hires and exits (Pro), and you are happy with your payroll provider, HR software covers that for a flat price. Using only what is on the CypressHR site:

• Time off requests, manager approvals, and balances (Essentials and Pro)
• Timesheets, an approvals inbox, scheduling, and multi-site (Pro)
• E-sign for handbooks and policies at $1 per completed signature on Pro, plus applicable sales tax
• Welcome and exit checklists (Pro)
• Compliance reminders and a record of who changed what

Want HR help too? Ask us at support@cypresshr.app. CypressHR is software and does not replace your own counsel.

If instead you want one vendor to run payroll, compliance support, and HR consulting together, and on some plans benefits administration, a PEO may be the better fit, and the per-employee cost is the trade for that bundle. Some owners compare both before deciding. If you would rather keep your own payroll provider and benefits carrier and pay one flat price for the HR work, CypressHR is built for that. See the pricing page for exact CypressHR numbers.

Ready to look? Open the CypressHR sample company, see the pricing, or become a founding customer. Free setup includes loading your employee roster, your handbook and your time-off policy, and plans are month-to-month. Questions? Email support@cypresshr.app.