Why is it so hard to compare the cost of EOR providers?

Why is it so hard to compare the cost of EOR providers?

In a recent discussion with others in the Employer of Record space, the leader of one firm told me they estimated there are now 800 companies offering this type of service. Others who were party to the conversation, felt there might be significantly more. So how on earth do those looking to choose an EOR partner go about finding the right one?

One factor which inevitably comes up is the cost. As in all purchases, the buyer has their wish list of things they want from the service, and a price they are willing to pay. When budgets are tight, there may be a necessity to compromise on the wish list in order to make the numbers work. However, choosing a low-cost option isn’t always as straightforward as it may seem.

This article looks at why a fee of a few hundred dollars could actually mean a cost of many thousands.

shallow focus photography of red apples

When a potential buyer of Employer of Record services wants to understand the cost involved, it is vital that they look at the total cost to the bottom line of their business. The EOR provider’s fee is only one factor.

Consider the impact these scenarios would have on the total cost to your business;

You lose your carefully selected candidate during onboarding – Your Employer of Record partner will be involved in a crucial step in the employee lifecycle; their onboarding. Employment contracts should be tailored to the role and sent out promptly. Salient points should be highlighted to the candidate and the contract should be dual language when necessary. The employee should be treated like a human and have their concerns addressed. Does your EOR provider treat the candidates you have identified as well as your own HR team would? Just how big would the cost of re-recruiting be, let alone the potential impact if you missed out on the next superstar to join your team?

You want to terminate an employee but your EOR’s process doesn’t allow it – Sometimes a business has to make a difficult but necessary decision to terminate an employee. And if that employee is causing damage to the business, it may be important that their exit is swift. To find that your EOR’s process is a blocker at this point can be very costly. Does your chosen EOR allow you the flexibility to make your own risk-based decisions?

Every month, you spend a day or more of your time chasing for answers of rectifying mistakes  – What’s your time worth? Is it really a saving if your EOR fees are $100 a month lower but you’re spending countless hours writing emails or making calls to get a response to queries or point out yet another error?

Your employee raises concerns over the accuracy of their pay or the contributions being made to their benefits – When employees receive an incorrect salary, it doesn’t merely cause financial distress, it erodes trust, negatively impacts morale, and could ultimately lead to attrition. It sends a detrimental message that the company might lack the necessary diligence to handle fundamental employee responsibilities, making them question the overall competence and reliability of their employer. Such payroll inaccuracies are even more detrimental for remote workers who are already grappling with the challenges of integrating into a company culture remotely.

Understanding the different fee types charged by global Employers of Record is a challenge in itself (I spent 5 minutes having a think of what I have seen charged by other firms and can list no fewer than 16 different charges!). So do take care to understand exactly what is being proposed by the EORs you have shortlisted. But don’t assume the EOR fee is the biggest factor in what it will ultimately cost your business, to use a given provider.

At Agility EOR, we will charge you a little more for the service we offer. By doing so, we have a greater ratio of our own employees to those of our clients, can afford more qualified and experienced people to join our team and can invest in the development and well-being of those we appoint to look after you. So yes, our fee may be slightly higher, but what we cost your business could be significantly less.

Sam Barnes

Sam Barnes

Sales Director