By Karla Santos | 4 March 2026
The real question isn't how much outsourced payroll costs. It's how much you're already spending on payroll without realising it
I process payroll for dozens of Australian businesses every week. Some have five employees. Some have fifty. And the conversation almost always starts the same way: they want to know the price per person before they'll consider outsourcing. Fair enough. But by the time we unpack what they're actually spending on doing it themselves - the hours, the software, the compliance risk, the super penalties they didn't know about - the cost comparison looks nothing like they expected
So here's a straight breakdown of what outsourced payroll actually costs in Australia in 2026, what's included at each price point, and how it stacks up against the real cost of running payroll in-house. If you want the broader picture on what managed payroll involves beyond pricing, we've written a complete guide to outsourced payroll services in Australia
What outsourced payroll costs in Australia right now
Most outsourced payroll providers in Australia charge on a per-person-per-pay-run basis. The range across the market sits between $5 and $20 per employee per pay run, depending on what's included
- $5 to $8 per person (basic processing). Someone calculates gross-to-net, generates payslips, and produces an ABA file for your bank. That's it. You still manage leave, handle employee queries, sort out award interpretation, process Single Touch Payroll (STP) lodgements, and chase superannuation payments yourself
- $10 to $15 per person (end-to-end processing). Payslip generation, STP lodgement, superannuation guarantee calculations, leave management, and basic compliance support. Some providers include modern award interpretation at this level. Others charge extra for it
- $15 to $20 per person (fully managed payroll). Everything above, plus award interpretation across multiple awards, onboarding and termination processing, payroll tax calculations, workers' compensation reconciliation, and dedicated support from a named payroll specialist who knows your business. This is where most serious outsourced payroll services sit because this is what it actually takes to keep a business compliant
At Digit, our managed payroll service starts from $12.50 per person per pay run + GST. That covers the full scope - STP, super, leave, award compliance, payslips, employee queries, and a dedicated payroll specialist assigned to your business. No base fees, no setup charges, no lock-in contracts. You pay for the employees you process in each run
What drives the price up or down
Not all payrolls are created equal. A five-person professional services firm paying monthly salaries with no award coverage is a fundamentally different job from a 30-person hospitality business running weekly pay across three modern awards with casual loadings, split shifts, and public holiday penalties
- Pay frequency. Weekly costs more than fortnightly, which costs more than monthly - because you're running more pay cycles per year
- Number of modern awards. A single-award payroll is straightforward. Multiple awards with different penalty rates, allowances, and overtime triggers adds complexity and time
- Employment types. A mix of full-time, part-time, casual, and contractor arrangements means different calculation rules for each person in every pay run
- Timesheet and rostering integration. If hours need to be imported from rostering software like Deputy or Tanda, that adds a data processing step and increases the time per run
Terminations and onboarding are the other hidden variable. Processing a termination properly - calculating final pay, unused leave, notice periods, issuing a payment summary, updating STP - takes real time. Some providers include this in the per-person rate. Others charge $50 to $150 per termination event. Ask before you sign
The software question nobody asks early enough
Outsourced payroll pricing almost always assumes a specific payroll platform. Your provider runs your payroll on their software, and the subscription cost is either bundled into the per-person rate or charged separately
If you're already on Xero, the payroll module is included in your plan from 1 June 2025 onwards - Xero bundled payroll and automated super into all business plans at no extra charge. So for Xero users, the software cost is already covered. Your outsourced provider just needs access to your file
If your provider uses a standalone payroll platform, expect additional costs on top of the processing fee. Employment Hero, for example, charges from $6 per employee per month for standalone payroll, but most businesses end up on an all-in-one plan at $20 to $60 per employee per month depending on the tier - plus a $100 per month minimum regardless of headcount, $0.30 per employee for each super payment, and around $100 per employee in setup costs to get onto the platform. Other platforms like KeyPay or Microkeeper have their own fee structures. Some outsourced providers absorb the software cost. Others pass it through. Either way, you need to know which platform you'll be on, what the total cost looks like once software fees are layered in, and whether you retain access to it if you change providers. Portability matters
What in-house payroll actually costs (the honest version)
This is where the comparison gets uncomfortable for businesses running payroll themselves. Because the per-person cost of outsourcing looks expensive until you add up what you're actually spending internally
A dedicated payroll officer in Australia earns between $65,000 and $85,000 per year depending on experience and location. Add 12% superannuation, workers' compensation insurance, leave accruals, and the overhead of a desk, a laptop, and software licences, and you're looking at $80,000 to $105,000 in total employment cost. For a business with 30 employees on fortnightly pay, that works out to roughly $100 to $135 per employee per month - before you account for training, professional development, or what happens when that person takes leave
The Australian Payroll Association's benchmarking data puts the average in-house cost at over $36 per payslip for businesses with fewer than 200 employees. That's not a typo. When you factor in the salary, the software, the compliance overhead, and the opportunity cost of whoever else gets pulled in to cover when the payroll person is away, that number is realistic
And then there's the risk cost nobody budgets for
The compliance cost that doesn't show up on an invoice
Since 1 January 2025, intentional wage underpayment has been a criminal offence under the Fair Work Act. The penalties are severe. For companies, fines of up to $8.25 million or three times the underpayment amount, whichever is greater. For individuals - directors included - up to ten years' imprisonment
The law draws a clear line between honest mistakes and intentional conduct. But the definition of 'intentional' includes continuing to underpay after becoming aware of a problem. And with STP data flowing directly to the ATO every pay run, discrepancies between what you report and what lands in employee super accounts are easier to detect than ever. The ATO raised $1.73 billion in superannuation guarantee charge (SGC) liabilities in a single year and issued nearly 20,000 director penalty notices
From 1 July 2026, payday super makes this even more urgent. Super must be paid within seven business days of each payday - not quarterly. Miss that window and the SGC penalties kick in automatically. Late payment offsets are being abolished. The ATO has flagged a first-year grace period for low-risk employers, but the compliance obligation is real from day one
This is the cost that never appears in a payroll pricing comparison. What does it cost if you get an award interpretation wrong and underpay overtime for six months? What does it cost when a director penalty notice makes you personally liable for unpaid super? What does it cost when your payroll officer leaves and nobody else understands the system?
For most small businesses, outsourced payroll isn't just cheaper. It's safer
A real comparison: 20 employees, fortnightly pay
Let me run the numbers on a scenario we see constantly. A trades business with 20 employees paid fortnightly, covered by a single modern award with a mix of full-time and casual workers
In-house, that business is spending at minimum: a part-time payroll person (or more likely, the business owner spending half a day every fortnight doing it themselves), a payroll software subscription, time chasing super payments quarterly, and the mental load of keeping across award changes, STP requirements, and leave calculations. Conservatively, that's $1,200 to $2,000 per month in direct and indirect costs - and that's before a single compliance error
Outsourced at $12.50 per person per fortnightly run, that same business pays $250 per pay run, or $500 per month + GST. They get a dedicated payroll specialist, full STP compliance, super processing, award interpretation, payslips, and someone to call when an employee disputes their leave balance at 4pm on a Friday
The outsourced option costs roughly a third of the in-house alternative. And the business owner gets half a day back every fortnight to actually run the business
What to look for beyond the price
Price is the first question everyone asks. But in twelve years of doing this, I can tell you it shouldn't be the only one
- Named specialist or ticket queue. When something goes wrong on payday - and eventually it will - you want someone who already knows your business picking up the phone. Not a support team reading your file for the first time
- Legislation changes. Modern award rates update every July. Super rates have been changing annually. Payday super rewrites the payment timeline from July 2026. Your provider should be across these changes before they take effect, not reacting after the fact. If the first time you hear about a compliance change is from your provider's newsletter the day before the deadline, that's not managed payroll. That's a processing service with a mailing list
- Platform access. Will you have access to view payslips, leave balances, and reports yourself? Can your employees access their own payslips and submit leave requests? Self-service access reduces admin queries and gives your team transparency without creating extra work for anyone
- Contract terms. Lock-in periods of 12 months or more are common in the industry. We don't do them. If the service isn't working, you should be free to leave. Providers who lock you in are telling you something about their retention rate
- What's not included. Setup fees, per-termination charges, year-end processing fees, STP finalisation fees - these extras can add 30% or more to the headline rate. A $6 per person rate that comes with $100 termination charges, $500 year-end fees, and a $200 monthly base fee is not actually cheaper than a $12.50 all-inclusive rate. Read the schedule of services, not just the price
When outsourcing doesn't make sense
I'll be direct about this. If you have two employees on salary with no award coverage, paid monthly, and you're comfortable in Xero - you probably don't need to outsource payroll. The processing is simple enough that it takes 30 minutes a month. Your risk profile is low. The cost of outsourcing, even at the entry level, may not be justified
But the moment you add a third employee under a modern award, or you start running weekly pays, or you hire your first casual, or you notice that the super hasn't been reconciled in two quarters - that's when the complexity outpaces what most business owners can safely manage alongside everything else they're doing
The threshold isn't a specific employee count. It's the point where payroll stops being a simple task and starts becoming a compliance risk you're managing alone
What it actually buys you
The value of outsourced payroll isn't just the processing. It's the transfer of compliance risk to a team that lives inside payroll legislation every day. It's knowing that when the annual wage review changes your award rates, someone has already updated them before your next pay run. It's knowing that when payday super takes effect, your systems are ready on day one because your payroll team has been preparing for six months
For most Australian businesses with five or more employees, the maths works. The cost is lower, the compliance is tighter, and the time comes back to you. That's not a sales pitch. It's what the numbers say when you lay them out honestly
If your payroll is getting harder to manage, or you're spending time on it that should be going somewhere else, talk to our payroll team. We'll look at your setup and tell you whether outsourcing makes sense for your business specifically - and what it would cost
