How Much Does an Employer of Record Cost in 2025?

Picture this: you’ve found the perfect developer in Sao Paulo and a UX designer in Delhi. But there’s a problem, you don’t have a legal entity in either country. 

An Employer of Record (EOR) can become the legal employer who hires these employees at this point, so you don’t have to jump through local regulatory hoops or spend money on starting an entity in another country.

But you’re shocked by unexpected fees and pricing structures when you first engage with EORs. 

You discover that the pricing of the EOR you decided to use included not only the advertised monthly fee but also charges for benefits administration, currency conversion, and contract amendments.   

This article breaks down EOR costs and pricing models to help you make informed decisions when hiring across borders.

Understanding Employer Of Record Cost Basics

When you’re hiring internationally, you need a predictable, scalable solution. Imagine you’re onboarding five remote developers across three continents. That’s where EOR pricing comes into play.

Typically, EORs charge between $199 and $650 per employee per month. However, location, salary level, and provider expertise can push that number up or down. Let’s explore the models you’ll likely encounter.

Primary pricing models include:

• Fixed monthly fee per employee
• Percentage of employee salary (typically 10-25%)
• Custom pricing models for complex requirements or high-volume needs

EORs add value by ensuring legal compliance across multiple jurisdictions and administrative efficiency. This allows your HR team to focus on strategic work without putting too much into individual research. 

Employer of Record Costs: Components Breakdown

You’re not just paying for paperwork. EOR pricing covers a bundle of legal, financial, and HR services. Let’s unpack what exactly you’re paying for and why.    

1. Basic fees

Fixed monthly fees typically range from $199 to $650 per employee, with predictable billing regardless of salary levels. This model works well if you’re seeking budget predictability.

Percentage-based payroll models charge 10-25% of an employee’s gross monthly salary. This scales with compensation and often includes more comprehensive services for higher-paid roles.

Provider tiers create significant cost variation:

• Budget providers: $199-$400 per employee monthly
• Mid-range providers: $400-$800 per employee monthly
• Premium providers: $800-$1,500+ per employee monthly with white-glove service

2. Additional costs

There are a few additional costs that you may have to factor in:

• Onboarding and setup fees range from $500 to $2,000+ per employee and cover contract creation, compliance verification, and system integration.
• Security deposits commonly equal 1-3 months of employee salary, held to cover potential severance or compliance issues
• Compliance and legal fees may apply for specialized situations like work permits or complex compensation structures.
• Termination and offboarding fees typically range from $300-$1,000 per employee, covering severance calculation, final payments, and legal documentation

3. Country-specific variations

Regional cost differences are substantial:

• US: $350-$700 per employee monthly
• Western Europe: $450-$900 per employee monthly
• Asia-Pacific: $300-$800 per employee monthly
• Latin America: $250-$600 per employee monthly

The complexity of labor law directly impacts pricing, with France, Brazil, and Italy commanding premium rates due to stringent regulations.

Tax complexity in countries with regional variations (like India or Brazil) often increases EOR costs by 10-20%.

Mandatory benefits requirements substantially affect pricing — countries with extensive statutory benefits (like Germany or Sweden) typically have higher EOR costs.

4. Service levels

Not all EORs are created equal. Some offer only basic payroll and tax filing, while others assign a dedicated HR manager, handle benefits administration, and even provide onboarding support.

Do I need full-stack HR help in each region or just compliance coverage? The answer can swing your monthly costs by $100–$300 per employee.

Specialized services like immigration assistance typically add $1,000-$3,000 per case.

Technology platform features range from basic employee portals to sophisticated integrations with your HRIS, affecting overall pricing.

5. Example costs

Expansion to three European countries for a 50-person tech company typically costs $35,000-$50,000 monthly for full EOR services.

Sample monthly costs per employee (all-inclusive):

• United States: $650-$950
• United Kingdom: $550-$850
• Germany: $700-$1,100
• Singapore: $500-$800
• Brazil: $600-$950

Total employment cost calculations must include base EOR fees, statutory benefits costs, onboarding fees, and potential termination reserves.

Cost Comparison: EOR vs. Local Entity vs. Contractors

Let’s look at all three options for hiring and payroll to help you determine which way to go. 

Upfront costs

Cost Category	EOR	Local Entity	Contractor
Initial setup	Onboarding fees only	$20,000-$150,000	$0
Legal fees	Included	$5,000-$30,000	$0
Registration	Included	$1,000-$10,000	$0
Banking setup	Included	$1,000-$5,000	$0
Implementation time	Immediate	2-12 months	Immediate

Ongoing annual costs 

Cost Category	EOR	Local Entity	Contractor
Per employee	$2,388+ ($199+ monthly)	$200-$500 (payroll admin only)	1-5% payment processing fees
Compliance	Included	$10,000-$50,000	$0
Accounting & tax	Included	$5,000-$20,000	$0
Local director	Included	$3,000-$15,000	$0
Office space	Optional	$5,000-$50,000	$0
HR staff	Included	$40,000-$100,000+	$0

Risk factors 

Risk Category	EOR	Local Entity	Contractor
Legal compliance	Managed by EOR	Company responsibility	High misclassification risk
Financial exposure	Predictable costs	Unpredictable costs	Potential penalties of 20-100% of unpaid taxes
Operational control	Medium	High	Limited
Scaling complexity	Low	High	Low

Break-even analysis

• EOR becomes more expensive than a local entity at 15-25 employees in most markets
• European markets: Break-even at around 15 employees
• Asia-Pacific markets: Break even at around 20 employees
• North American markets: Break-even at around employees
• The contractor model remains the cheapest but carries the highest compliance risk

EOR Pricing Models in Detail

Your EOR pricing choice directly impacts your bottom line when hiring internationally. 

Compare these three approaches to make a cost-effective decision.

Fixed monthly fee

Consider this: A fintech startup hires a German senior developer earning €85,000 annually. The CFO selects Deel’s fixed fee model. “We need budget certainty,” she explains. The €599 monthly fee provides predictable costs regardless of salary fluctuations.

Provider	Monthly fee per employee
Tarmack	$199
Remofirst	$199
Deel	$599
Remote	$599
Oyster	$599

This model works best when you need predictable expenses, hire high-salary employees, and want transparent pricing. Avoid this approach with large teams or when hiring in low-cost regions where percentage models cost less

Percentage of payroll

Picture this: A digital agency employs a Philippines-based design team. They choose Velocity Global’s percentage model. With designer salaries at $30,000, they pay just $450 monthly per employee with the 18% model, significantly less than fixed-fee providers.

Typical providers include Velocity Global (18% of total salary costs) and regional providers (10-15%, depending on location).

Cost Comparison:

For a $120,000/year software engineer:

• 18% model: $21,600/year
• 10% model: $12,000/year
• Deel fixed fee: $7,188/year

For a $30,000/year customer support rep:

• 18% model: $5,400/year
• 10% model: $3,000/year
• Deel fixed fee: $7,188/year

This model works best when hiring primarily in lower-wage countries, needing comprehensive services included, or employing mainly junior positions. Avoid this approach when hiring senior executives or when highly predictable costs are required.

Custom pricing

A custom agreement can cut EOR costs as you scale. Providers often mix fixed fees for executives, percentage rates for support roles, and volume discounts across countries.

Custom pricing usually includes tiered rates, SLAs, and dedicated account managers. It’s ideal for teams of 50+ or multi-country hiring with complex compliance needs, but it’s less suited for fast rollouts or smaller teams with limited leverage.

Decision framework: calculate your total cost

List all international hires’ locations and salaries to select the right model. Calculate costs under each model: fixed fee × number of employees, percentage × total salary costs, or request a custom quote. Factor in additional services and your growth projection for the next 12-24 months.

Your EOR pricing decision ultimately depends on team size, growth plans, salary levels across your global workforce, countries where you hire, and your need for services beyond basic EOR functions.

Factors That Impact EOR Pricing

We’ll dive into what really impacts EOR pricing, so you can estimate what the cost will likely add up to for you. For a detailed look at every country, consult our global hiring playbook. 

Country/Jurisdiction

The country where you hire plays a major role in determining EOR pricing. Among the top factors are statutory benefits, labor law complexity, taxation, and market maturity.

Countries with generous, government-mandated employee benefits (like healthcare, paid leave, and pensions) often lead to higher EOR costs. These benefits add to the total employment cost and require more complex administration.

For example, hiring in Sweden costs more than in Singapore due to Sweden’s extensive government-mandated benefits like universal healthcare, paid parental leave, and pensions. 

These statutory obligations raise both the total employment cost and the administrative complexity, resulting in higher EOR fees.

Country	Statutory Benefits Level	EOR Cost Impact
Sweden	Very High	💰💰💰
Germany	High	💰💰💰
France	High	💰💰💰
Singapore	Low	💰
UAE	Low	💰

The more complicated the labor laws are, the higher the EOR cost is due to the legal expertise needed for compliance.

Country	Labor Law Complexity	Notes
Brazil	Very High	Heavy documentation, regional rules
France	High	Strong worker protections
Italy	High	Rigid termination requirements

Labor law complexity and its impact on EOR costs by country

Tax complexity increases both the administrative burden and the need for specialized support.

Country	Tax System Type	EOR Cost Impact
India	Regional variations	10–20% cost increase
Brazil	Complex & local	High compliance fees
UK	Standardized	Lower admin overhead

In saturated markets, EOR providers compete on pricing. In emerging markets, fewer options often mean higher prices.

Region	Market Status	Pricing Trend
US / UK	Mature	Competitive / Lower
Africa (varies)	Emerging	Premium / Less flexible
Eastern Europe	Developing	Mixed / Moderate

Number of employees

Volume discounts are standard industry practice, with most providers offering tiered pricing that decreases as employee count increases. 

Many providers use threshold pricing, which creates cost advantages when reaching certain employee counts. These thresholds vary by provider but often occur at round numbers representing meaningful scaling points.

Employee salary levels

In percentage-based models, higher salaries mean higher EOR fees, making them costly for roles like executives or senior engineers. For example, a 20% EOR fee on a $10,000/month salary equals $2,000/month in EOR costs.

Some providers address this with salary caps or tiered rates to control costs for high-paid roles.

Scope of services required

Basic service tiers may offer limited support hours and self-service options, while premium tiers include dedicated account managers, faster response times, and more hands-on assistance.

Technology platform capabilities affect pricing, too, with more sophisticated systems offering better integration options, employee self-service portals, and reporting capabilities at higher price points.

Potential hidden costs

EOR fees can go beyond the monthly rate. Watch for these common add-ons:

• Currency exchange fees: 2–10% per transaction. Example: Paying a developer in Argentina may incur a 6% FX fee on top of salary

• Document processing: Charges for visas, work permits, or local contracts, especially in countries like Brazil or China
• Benefits admin fees: Extra costs for managing non-standard benefits or statutory-heavy markets like Germany
• Contract changes: Some providers charge for modifying terms after an initial free allowance — for example, role changes or bonus additions

EOR Services: What You’re Paying For

Here’s what you need to know!

Legal employment relationship management

EORs act as your legal employer. They handle employment verification, contracts, renewals, terminations, and documentation to avoid misclassification and compliance issues.

Payroll processing and administration

EORs calculate salaries, bonuses, and taxes, issue payslips, maintain payroll records and pay employees in local currencies. They ensure all this is done on time and in line with local laws.  

Tax compliance and filings

EORs handle income tax withholding, social security contributions, and other mandatory deductions specific to each location. They manage tax registrations, file employer tax returns, issue employee tax documents, and stay current with changing tax regulations. 

Benefits management and distribution

EORs handle benefits enrollment, claims processing, and ongoing administration, allowing you to offer competitive packages without establishing relationships with multiple local providers.

Regulatory compliance across jurisdictions

EORs monitor employment law changes and ensure ongoing compliance with evolving regulations. They manage working hours, overtime rules, and leave entitlements according to local standards. 

HR support and employee relations

EORs provide varying levels of HR assistance, including onboarding coordination, employee data management, and policy guidance. They often offer first-line HR support for employees on routine matters and may provide employee self-service portals for common HR functions. 

Risk mitigation and liability protection

EORs maintain appropriate employer insurance coverage and handle employment-related litigation if it arises. This creates a valuable buffer between your organization and potential employment-related legal challenges in unfamiliar jurisdictions.

How to Choose an EOR Within Your Budget

Here’s how to assess whether an EOR is realistic for your budget. 

1. Start with your hiring plans

First, look at who you need to hire right now and over the next year. How many people? What countries? What salary levels? This matters because EOR costs vary dramatically based on these factors.

Fixed-fee models will save you money if you hire highly paid-executives or engineers. For entry-level positions, percentage-based pricing might cost less.

2. Consider where you’re hiring

Location affects your costs more than almost anything else. Hiring in France or Brazil? Due to complex labor laws, expect to pay 30-50% more than in Singapore or Estonia. Some countries also take weeks longer to set up.

Think about which markets truly matter for your business goals. Sometimes, paying more for an important market makes strategic sense.

3. Decide what services you actually need

Do you need basic legal compliance and payroll? Or do you need help with immigration, benefits packages, and full HR support?

Basic services come standard. Premium services like immigration support ($100-300/month) or enhanced benefits administration (5-20% extra) add up quickly. Only pay for extras in markets where they truly matter.

4. Set clear budget limits

Calculate the full picture: salary + mandatory benefits + EOR fees + hidden costs.

A $150,000 employee might cost $7,200/year in a fixed-fee model versus $22,500 in an 18% percentage model. Know these differences before you commit.

5. Compare providers thoughtfully

Ask providers direct questions about their pricing for your specific countries. Get clear answers about additional fees beyond the headline rate. Ask how they handle currency conversion and what their termination policies are.

Request quotes from 3-5 providers using identical employee profiles to make fair comparisons. The differences might surprise you.

6. Watch for hidden costs

Currency exchange fees (2-10%), contract change fees ($150-300 per modification), and deposit requirements can significantly impact your actual costs. Don’t let the fine print turn into a fine mess.

7. Consider long-term value

The cheapest option isn’t always the best. Poor service quality or limited geographic expertise can create bigger problems than a higher monthly fee. Balance immediate costs against the value of reliability and expertise, especially for your most strategic hires.

Risks and Considerations of Using an EOR

While EORs take a lot off your plate, there are risks that you run. Here are the key risks to consider:

You’ll give up some control

When you use an EOR, you’re no longer the legal employer. 

You’ll maintain day-to-day management, but formal employment decisions go through the EOR first. Need to terminate someone quickly? There might be a mandatory review process. Want to adjust compensation? That could require approval.

The EOR’s employment policies can also take precedence over yours, sometimes creating friction with your company culture. Be ready for some give-and-take on employment decisions that you’re used to making independently.

Your employee data leaves your control

EORs handle sensitive information such as financial details, personal data, and sometimes health information. This data often crosses borders, moving through jurisdictions with different privacy standards.

Before sharing any employee information, verify the EOR’s compliance with regulations like GDPR and CCPA. 

Ask direct questions about their security practices, data handling, and breach notification procedures. The cheapest option might come with significant data security compromises.

Service quality can vary dramatically

Most EORs deliver inconsistent service across different countries. Your German employees might get excellent support while your Brazilian team struggles with basic requests. Many EORs rely on local partners rather than their own staff in certain regions, creating service gaps.

What happens when an employee has a time-sensitive issue outside business hours? You need to know before it happens.

Your employees will notice the difference

If the EOR’s approach conflicts with your company values or if they can’t provide support in your employees’ preferred languages, you’ll face retention challenges. The employee experience matters just as much as the administrative convenience.

You’ll depend on their expertise

Your company will rely on the EOR’s compliance knowledge in unfamiliar markets. If their expertise is inadequate, you won’t know until problems arise. And since knowledge transfer is limited, your team won’t develop internal expertise to spot issues.

5 Smart Ways to Cut Your EOR Costs

Evaluate whether you need an EOR by following these steps. 

Firstly, compare multiple providers with identical scenarios

Don’t just take the first quote you receive. Create standardized employee profiles with specific countries, salary levels, and service requirements, then request quotes from at least 3 to 5 providers.

Ask these critical questions:

• What’s your pricing model for Germany, Singapore, and Brazil specifically?
• What fees exist beyond your base rate?
• Which services cost extra beyond your standard package?
• How do you handle currency conversion, and at what cost?
• What happens if we need to terminate the contract early?

Document everything, not just the headline rates. Setup fees, termination costs, currency exchange markups, and administrative charges often reveal the true cost differences between providers.

Secondly, negotiate better terms

EORs are often willing to negotiate. Request tiered pricing that automatically reduces your per-employee costs as you add more team members. Instead of accepting standard brackets (5, 10, 25 employees), negotiate thresholds aligning with your growth plans.

Share your full global hiring roadmap to secure advanced discounts based on projected headcount. A 12-month commitment typically earns you a 10-15% discount that might outweigh the flexibility of month-to-month terms if your plans are stable.

Thirdly, minimize required deposits

Many EORs require substantial deposits when entering new countries. Negotiate staged deposits instead of full upfront amounts. After establishing a payment history, request deposit waivers for additional countries.

Explore bank guarantees or letters of credit instead of cash deposits for significant expansions. If substantial deposits are unavoidable, request interest-bearing escrow accounts rather than letting the provider hold funds interest-free.

Fourtly, use cost calculators wisely

EOR-provided calculators offer a starting point, but you should verify the figures with independent research. Calculate total employment costs like mandatory benefits, taxes, and statutory requirements that might not appear in initial quotes.

Include both initial and ongoing fees in your calculations. Account for potential annual increases and factors in currency fluctuation risks, especially for volatile regions. 

Develop best-case and worst-case scenarios to avoid surprises, including potential termination costs if your plans change.

Finally, consider EOR broker services

Brokers can leverage volume across multiple clients to secure substantial discounts, often ranging from 15-40% off standard rates. They typically have pre-negotiated terms that eliminate setup fees and reduce deposit requirements.

Their market knowledge can connect you with specialized regional providers offering better rates in specific countries. Before engaging brokers, clearly define your requirements and target countries and request transparent disclosure of their compensation structure.

Make an Informed EOR Decision

Tarmack offers EOR services across 150+ countries, enabling companies to hire international talent without establishing local entities. Our platform provides compliant employment across major markets in North America, Europe, Asia-Pacific, and select regions in Africa and the Middle East. 

Our pricing (starting at $199 per employee monthly) is significantly lower than industry averages. 

Beyond core EOR functions, we offer global payroll services for both EOR employees and contractors. Our global HR compliance advisory services help navigate employment regulations across multiple jurisdictions.

Frequently Asked Questions (FAQs)

What is the cost of an Employer of Record (EOR)?

EOR services typically cost between $199 and $1,500 per employee per month, depending on provider, location, and service level. 

Costs vary significantly by country, with complex jurisdictions commanding higher fees. Additional pricing factors include contract length, number of employees, and pricing model.

What is the tax credit for EOR?

There is no specific “EOR tax credit” in most jurisdictions. However, EOR fees are generally tax-deductible as business expenses. Consult with a tax professional regarding specific deduction opportunities in your jurisdiction and how EOR services might impact your overall tax position.

Are there hidden costs when working with an EOR?

Common additional costs include currency exchange fees (1-5%), contract modification charges, supplemental benefits administration fees, and termination costs. Some providers require security deposits equivalent to 1-3 months of employee salary. Implementation fees ranging from $500 to $2,000 may apply to specific providers.

With Tarmack, you don’t have to worry about hidden costs. Our pricing is transparent, with no surprise fees or fine print.