Payroll Software Costs, Features and 2026 Rules
Payroll software pricing models: per employee per month, base fees, modules and slabs explained
How payroll and HR software is priced in India, from per-employee-per-month and base fees to module bundles, headcount slabs and minimums, with illustrative sums.
Payroll and HR software in India is usually priced per employee per month (PEPM), but the number on the price page is only one part of the bill. Vendors combine PEPM with a base fee or minimum, module bundles, headcount slabs and sometimes per-payslip or per-filing charges. To compare quotes fairly, convert every offer into the same figure: total cost per year for your expected headcount, before GST. This guide explains each model with illustrative arithmetic; all prices are examples, not vendor quotes.
It is part of the payroll and HR software comparison overview. For billing cycles and renewals, see billing, renewal uplift and GST.
The main pricing models
| Model | How it works | Works well when | Watch out for |
|---|---|---|---|
| Pure PEPM | A fixed rupee amount for each employee processed in the month | Headcount is stable and above any minimum | Who counts as "processed": leavers, F&F-only cases, interns, consultants |
| PEPM + base fee | Platform fee per month or year plus PEPM | Mid-size teams where the base fee is small relative to the total | Base fee dominates for very small teams |
| Minimum billing | Billed for at least N employees even if you have fewer | You expect to grow past the minimum soon | Paying for 25 when you have 12 |
| Headcount slabs | One price for 1–25, another for 26–50 and so on | Predictable budgeting | Crossing a slab by one person raises the whole bill |
| Tiered editions | Basic, standard, premium with more features at each level | Clear feature needs | The one feature you need sits in the top tier |
| Module bundles | Payroll, then attendance, leave, expenses, performance as add-ons | Buying only what you use | Add-ons priced on the whole headcount, not just users of the module |
| Flat licence | One price for the software regardless of headcount | Accounting-software payroll, desktop tools | Limits on companies or users; separate annual renewal for updates |
| Per payslip or per filing | Charged per payslip run, return or challan | Outsourced bureaus, seasonal staff | Re-runs and corrections billed again |
Converting quotes into one comparable number
Use the same headcount and the same feature list for every quote. Then calculate the annual cost before GST and the effective PEPM (annual cost ÷ employees ÷ 12).
Illustrative example: 40 employees today.
| Offer | Structure (illustrative) | Annual cost | Effective PEPM |
|---|---|---|---|
| A | ₹110 PEPM, no base fee | 40 × ₹110 × 12 = ₹52,800 | ₹110 |
| B | ₹70 PEPM + ₹3,000 base fee a month | (40 × ₹70 + ₹3,000) × 12 = ₹69,600 | ₹145 |
| C | ₹90 PEPM, minimum 50 employees | 50 × ₹90 × 12 = ₹54,000 | ₹112.50 |
| D | Slab: ₹4,500 a month for up to 50 employees | ₹4,500 × 12 = ₹54,000 | ₹112.50 |
Offer B looks cheapest per head on the price page but is the most expensive at 40 employees. At 100 employees the picture changes: A costs ₹1,32,000; B costs (100 × ₹70 + ₹3,000) × 12 = ₹1,20,000; C costs 100 × ₹90 × 12 = ₹1,08,000; D depends on the next slab. Always calculate at today's headcount and your three-year projection.
Modules and what they usually include
| Module | What it covers | Pricing pattern (illustrative) |
|---|---|---|
| Core payroll | Salary structures, statutory deductions, payslips, challans, return files | Base PEPM |
| Attendance and shifts | Biometric or app punches, shift rosters, overtime calculation | +₹20–₹80 PEPM, or bundled |
| Leave | Leave policies per state, accruals, encashment, approvals | Often bundled with attendance |
| Expenses and reimbursements | Claims, approvals, tax-free reimbursements | +₹10–₹50 PEPM or per user |
| Employee self-service app | Payslips, tax declarations, proofs, requests | Usually included; check mobile access |
| Performance and OKRs | Reviews, goals | +₹50–₹200 PEPM |
| Recruitment and onboarding | Job posts, offer letters, document collection | Per recruiter or flat |
| Contract labour compliance | Contractor records, principal employer checks | Flat or per contractor |
The trap is that many add-ons are charged on the whole headcount, even if only managers use them. Ask whether a module can be licensed for a subset of employees.
One-time charges
- Implementation or onboarding fee: configuring salary structures, policies and approval flows.
- Data migration: importing employee masters and year-to-date figures. See migration.
- Integrations: accounting journal, bank file, biometric devices. See integrations.
- Training and parallel-run support.
- Hardware: biometric or face-recognition terminals if you need them.
Some vendors waive setup for annual contracts; get that in writing.
Statutory updates: included or extra?
Indian payroll changes several times a year: budget changes to TDS, new forms under the Income-tax Rules, 2026, EPF ceiling changes, state minimum wage and PT notifications. Check that statutory updates are included in the subscription and that the vendor commits to a turnaround time. A licence model that charges separately for annual updates can turn a cheap tool into an expensive one. The contract guide has clauses to ask for.
Outsourcing price models
Payroll bureaus typically charge PEPM or per payslip, sometimes with separate fees for annual tasks such as Form 130 certificates or year-end reconciliations. Compare them on the same three-year basis in outsourcing versus software versus in-house.
Checklist for reading a price quote
- Is the price PEPM, per slab, flat or per payslip?
- What is the minimum headcount or minimum billing?
- Which modules are included, and are add-ons charged on the full headcount?
- Who counts as an employee for billing (leavers, F&F-only, consultants)?
- What one-time fees apply, and are any waived?
- Are statutory updates included, with a turnaround commitment?
- Is the price exclusive of 18% GST, and in rupees or US dollars?
Then run the numbers in the cost per employee estimator and the 3-year TCO example.
Frequently asked questions
Is PEPM always the cheapest model for a small company?
Not always. With a minimum headcount or base fee, a 15-person company may pay an effective PEPM well above the list price. A flat licence or accounting-software payroll can be cheaper at that size.
Do vendors charge for employees who left during the month?
Many do, because a final settlement is still processed. Ask how leavers, F&F-only cases and rehires are counted.
Should we pay annually to get a discount?
Annual prepayment often lowers the monthly rate, but it commits you for a year. It makes sense after a successful trial and parallel run, not before.
Are the prices here vendor prices?
No. They are illustrative to show the arithmetic. Check vendors' own current price pages.
Sources
- CBIC GST — GST on software and services
- EPFO — statutory payroll requirements that drive feature needs
- Ministry of Labour and Employment — labour code rules affecting payroll features
- Income Tax Department — salary TDS forms software must produce
