Payroll outsourcing in Australia typically costs between $5 and $40 per employee per month. That range is so wide it's almost useless without understanding what each tier includes — and more importantly, what it excludes.
Self-service platforms where you configure Awards, enter data, and process pay runs yourself. The software calculates, generates payslips, and lodges STP. You carry all compliance responsibility. This tier includes platforms like Xero Payroll, MYOB, and KeyPay at their standard pricing. Best for: very simple payrolls with one Award, all full-time employees, and no casual or penalty rate complexity.
A bureau or service that processes your pay runs from the data you provide. They enter timesheets, calculate pay, generate payslips, and lodge STP. However, they typically rely on your Award configuration — if the setup is wrong, the outputs are wrong. They're processing accurately, but accuracy depends on correct inputs. Best for: businesses that understand their Awards and need someone to handle the mechanics.
End-to-end payroll management including Award interpretation, employee classification review, rate configuration, processing, STP lodgement, super submission, and ongoing compliance monitoring. The provider carries meaningful responsibility for the accuracy of Award interpretation and pay calculations. Best for: businesses with complex Awards, casual employees, penalty rates, multiple locations, or shift-based rosters.
Even within these tiers, common add-ons inflate the base price:
For a 15-employee business:
| Tier | Monthly Cost | Annual Cost | What You Get |
|---|---|---|---|
| Software only ($8/emp) | $120 | $1,440 | Tools — you do the work |
| Processing ($15/emp) | $225 | $2,700 | Processing — they do the mechanics |
| Managed ($30/emp) | $450 | $5,400 | Full service — they do everything |
The difference between Tier 1 and Tier 3 is $3,960 per year. One Award misinterpretation error across 15 employees over 12 months can easily exceed $20,000 in underpayment liability. The $3,960 premium for managed payroll is arguably the most cost-effective compliance investment available to an Australian SME.
Put differently: if managed payroll prevents even one classification error on one employee over two years, it has paid for itself several times over.
Payroll outsourcing should be evaluated in the context of your total back-office cost, not in isolation. Many businesses pay $450/month for managed payroll AND $2,500/month for bookkeeping AND $1,500/month for IT support — three separate providers totalling $4,450/month. An integrated back-office provider handling all three (plus HR compliance) typically costs $4,000–7,000/month, providing more coverage for a similar or lower total cost.
The pricing difference between Tier 2 (processing) and Tier 3 (managed) payroll is typically $10–20 per employee per month. For a 15-employee business, that's $150–300/month or $1,800–3,600/year. Here's what that premium buys:
Award interpretation liability transfer. A Tier 2 processor applies the rates you've configured. If the configuration is wrong, you carry the liability. A Tier 3 managed service takes responsibility for correct Award interpretation, backed by professional indemnity insurance. The liability transfers from you to the provider.
Proactive rate management. After every Annual Wage Review, a Tier 3 provider updates your rates before the first affected pay run — without you needing to remember, request, or verify. A Tier 2 processor updates their rate tables but may not verify that your specific configurations are correct.
Classification review. A Tier 3 provider periodically reviews whether employee classifications remain accurate as roles evolve. This catches classification drift — the gradual gap between an employee's actual duties and their Award classification — before it becomes a liability.
Compliance peace of mind. The value that's hardest to quantify but most important to business owners: the confidence that your payroll is correct. Not "probably correct" or "correct as far as I know," but verified, managed, and monitored by specialists.
Per-employee pricing is straightforward, but complexity multipliers affect what you'll actually pay. Weekly pay runs typically cost 50–100% more than fortnightly because each pay run requires processing time. Multiple Awards within one business add complexity premiums. Casual-heavy workforces with variable hours require more processing time per pay run than fixed-hours salaried workforces. Shift-based operations with overtime calculations take longer to process than standard Monday-to-Friday schedules. And businesses in Fair Work priority enforcement industries (hospitality, fast food, horticulture) may attract a small premium reflecting the higher compliance scrutiny.
Check your Award Complexity Score first — it helps both you and any provider understand the real scope of your payroll. Then book a free payroll review with Valont.