What outsourced payroll costs per employee per month

The mistake most SMME owners make when shopping for outsourced payroll is treating the quote as a simple per-employee number. You see "R85 per employee per month" and compare it to "R120 per employee per month" across three providers, then pick the cheapest. What you actually end up comparing are three entirely different service scopes — and cheap quotes often hide what's been left out.

Understanding the anatomy of payroll pricing means knowing what work the provider is actually doing, what they're not, and what costs hide in the fine print.

The base: processing and SARS compliance

Every payroll quote begins with a core fee for running the calculation itself — taking your raw attendance or timesheet data, applying salary scales, deductions and statutory contributions, and producing payslips. This includes processing the PAYE, UIF, SDL and other statutory withholdings, and reconciling those liabilities for SARS. Most providers bundle this as their headline per-employee rate.

But this is where clarity matters. Some providers include quarterly SDL reconciliation or annual tax certificate generation in that base rate. Others invoice separately for each of these. Ask whether the quoted figure includes everything needed for SARS compliance month-to-month, or whether you'll get additional invoices when tax certificates are due or when SDL adjustments are calculated.

What triggers higher rates: complexity and setup

Your actual cost per employee scales with what your payroll actually requires. A business with five full-time salaried staff pays one rate; a business with five full-timers plus ten part-time contractors plus commission-based sales staff pays another. Variable components — commissions, tips, shift allowances, deductions for union fees or loans — add processing time.

Providers sometimes quote lower for simple, stable payrolls (fixed salary, standard deductions, no commission) and higher for anything that changes month-to-month or requires more data entry. Some charge a fixed setup or monthly admin fee on top of per-employee pricing; others absorb setup into their ongoing rate. A quote that looks cheap may apply only to straightforward monthly runs, then jump sharply if your payroll becomes more complex.

Onboarding is another hidden cost driver. Some providers charge a one-time setup fee to import your staff records, configure tax thresholds and deductions, and test the first run. Others factor this into the monthly rate. If a provider's quote is very low, check whether setup is already included or whether you'll pay for that separately.

Inclusions and exclusions that reshape the true cost

The per-employee figure only covers the payroll calculation and SARS submission. What does not usually sit inside it:

• Year-end and reconciliation work: tax certificates, IT34 reconciliation, SDL annual adjustments, and any SARS queries triggered by your payroll data.
• Staff changes and documentation: every time someone joins, leaves, gets a salary increase, or changes their tax status, the provider processes that change. Some providers build this into the monthly fee; others charge per change.
• Payslip delivery: whether payslips are printed, emailed, or accessed via a portal may incur additional costs depending on the provider's model.
• Data backup, archiving and audit trails: compliance-grade record-keeping often carries a separate monthly fee, especially if you need to retain data for a set period.
• Integration with your accounting software: if you want the provider's system to feed automatically into your QuickBooks, Xero or in-house ledger, that may be a separate integration or API fee.
• Reporting and analytics: access to payroll dashboards, cost centre reports, or salary trend analysis is sometimes free, sometimes charged monthly.

How to compare without being misled

When you request a quote, specify your exact payroll structure: number of full-time employees, number of part-timers, whether you have contractors or commission staff, and whether salary changes are frequent. Then ask the provider to list what is included in the quoted rate and what incurs additional fees. Request an example invoice for a typical month — not the base monthly charge, but the total you'll actually pay, including setup (amortised if it's one-time), compliance, and any per-transaction fees.

Compare not the headline per-employee rate, but the total monthly cost for your actual payroll structure, plus any quarterly or annual charges. A slightly higher per-employee quote that includes year-end work and data integration may cost less overall than a bargain quote that layers on hidden fees.

When you're ready to move forward, Strove's verified payroll providers have published their pricing and scope transparently — you can ask them directly to itemise what's included and benchmark several options with confidence.