Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Lower annual cost option
Outsourced
In-house payroll annual cost
$4,840
Outsourced payroll annual cost
$3,380
Annual difference
$1,460
Breakeven headcount
16.7
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How to use this
- 1Enter number of employees.
- 2Enter pay runs per year.
- 3Enter in-house hours per pay run.
- 4Enter loaded hourly rate of person doing payroll ($).
- 5Enter in-house payroll software annual cost ($).
- 6Enter outsourced provider base fee per run ($).
- 7Enter outsourced provider fee per employee per run ($).
- 8Read your lower annual cost option on the right — it updates as you type.
- 9Hit Share to keep the scenario or send it to someone.
About this calculator
Running payroll in-house costs staff hours plus software subscription fees, while outsourcing to a payroll provider charges a per-employee monthly fee but frees your team's time and shifts compliance risk to the provider. This tool compares the fully-loaded cost of in-house payroll processing time against a provider's base and per-employee fees to show which is cheaper at your headcount.
Worked example
Using the values the calculator loads with:
Inputs
- Number of employees: 15
- Pay runs per year: 26
- In-house hours per pay run: 4
- Loaded hourly rate of person doing payroll: 35 $
- In-house payroll software annual cost: 1200 $
- Outsourced provider base fee per run: 40 $
- Outsourced provider fee per employee per run: 6 $
Results
- Lower annual cost option: Outsourced
- In-house payroll annual cost: $4,840
- Outsourced payroll annual cost: $3,380
- Annual difference: $1,460
- Breakeven headcount: 16.7
What each field means
Inputs
- Number of employees
- The number of employees used in the calculation. Starts at 15 so you have a working example on load.
- Pay runs per year
- The pay runs per year used in the calculation. Starts at 26 so you have a working example on load. Accepted range: 1–52.
- In-house hours per pay run
- The in-house hours per pay run used in the calculation. Starts at 4 so you have a working example on load.
- Loaded hourly rate of person doing payroll ($)
- The loaded hourly rate of person doing payroll used in the calculation, measured in $. Starts at 35 $ so you have a working example on load.
- In-house payroll software annual cost ($)
- The in-house payroll software annual cost used in the calculation, measured in $. Starts at 1200 $ so you have a working example on load.
- Outsourced provider base fee per run ($)
- The outsourced provider base fee per run used in the calculation, measured in $. Starts at 40 $ so you have a working example on load.
- Outsourced provider fee per employee per run ($)
- The outsourced provider fee per employee per run used in the calculation, measured in $. Starts at 6 $ so you have a working example on load.
Results
- Lower annual cost option
- Returned as a plain value and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- In-house payroll annual cost
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Outsourced payroll annual cost
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Annual difference
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Breakeven headcount
- Returned as a whole number. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Does outsourcing reduce compliance risk?
Yes — most providers guarantee tax filing accuracy and absorb penalty risk from their own errors, a real but hard-to-price benefit not captured in the raw dollar comparison.
Why does the cost gap shrink as headcount grows?
In-house time per run doesn't scale linearly with employees as fast as per-employee provider fees do, so larger companies often find in-house or a flat-fee enterprise plan cheaper.
What about benefits and HR features bundled in?
Many outsourced providers bundle benefits administration and HR support into the per-employee fee, which can offset separate software costs you'd otherwise pay for in-house.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
Related tools
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). In-House vs Outsourced Payroll Cost Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/in-house-vs-outsourced-payroll-cost
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/in-house-vs-outsourced-payroll-cost" target="_blank" rel="noopener">In-House vs Outsourced Payroll Cost Calculator — RevenueLab</a> (2026).</p>
Source: [In-House vs Outsourced Payroll Cost Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/in-house-vs-outsourced-payroll-cost) (2026).