PEPM (Per Employee Per Month)
PEPM, or per employee per month, is the unit PEOs and HR vendors use to quote prices: a fixed dollar amount charged monthly for each active employee.
PEPM pricing makes costs predictable per head, but the contract's definition of "employee" determines the invoice. Proposals differ on whether owners, part-timers, seasonal staff, and employees on unpaid leave count, so two identical PEPM rates can produce different annual costs.
PEPM is also the common denominator for comparing unlike proposals. Convert percentage-of-payroll administrative fees, payroll software subscriptions, and broker fees into PEPM using your actual census and payroll so every option is priced in the same unit. Do the conversion yourself rather than accepting a vendor’s version of the math.