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Before Hiring an Employer of Record, Understand Their Upfront and Hidden Costs

Using an EOR to hire internationally can be a super smart idea — just make sure you know the costs before you get started.

A hidden word puzzle in light blue with dark blue letters. The words "Hidden" and "Costs" are circled in red in the puzzle.

Plane Team

HR leaders looking to build a global team typically have two options: hire someone as a contractor or bring them on as a full-time employee. If you go the full-time route, you’ll likely turn to an Employer of Record (EOR) to act as the legal employer for your international hires.EORs are popular for a reason: they let you hire across borders without setting up your own legal entity in another country — a process that’s otherwise very expensive and time-consuming. While this approach offers loads of benefits, you should have a full picture of all the costs so you can budget properly. Some expenses are obvious, but others might catch you by surprise.Here, we break down the most common costs of using an EOR and provide tips to ensure you’re not surprised by any fees.

The costs of working with an EOR

Surprises are welcome at birthdays, wedding proposals, and when watching daytime soap operas. But surprise EOR costs? Not fun. Depending on the vendor, there can be lots of different fees to keep an eye on and negotiate before making the partnership official. Understanding these ahead of time can help you plan effectively and ensure there are no unexpected expenses.

1. Service fees

The cornerstone of EOR pricing is its service fee. These typically include:
  • Setup fees: Some EORs charge an upfront fee to onboard your company and employees. (Pro tip: not all EORs do this — Plane doesn’t!)
  • Monthly service charges: Most providers bill a monthly fee per employee. Some charge a flat rate, while others take a percentage of the employee’s salary. Understand the fee structure the vendor uses to avoid overpaying as your team grows.

2. Compliance fees

One of the biggest benefits of using an EOR is compliance management. However, like guac on your burrito, this can sometimes come at an extra cost. While Plane includes compliance management in our monthly rate, some EORs may charge additional fees when they pay for legal and compliance services to adhere to local labor laws, tax codes, and regulations. While it’s money well spent to avoid legal risks, it’s still worth knowing if any EOR partner you’re considering working with considers these fees to be included in the monthly rate or incremental.

3. Payroll and benefits administration fees

Managing employee compensation and benefits across borders can be complex, and EORs may charge for handling this. (Not Plane, though – it’s included in our flat rate!) Even after paying employer payroll taxes, you could get charged by your EOR for local payroll processing, tax withholdings, and administering benefits like healthcare or retirement plans. (Want an estimate of employer taxes you’ll pay for a new employee in a foreign country? Check out Plane’s Hire Calculator.)

4. Onboarding, offboarding, and cancellation fees

Starting or ending an employment relationship internationally? That could come with additional fees. While Plane doesn’t charge these fees, be sure you’re aware of your EOR’s onboarding fees when a new hire joins, offboarding costs for terminations, and cancellation fees if you end your relationship with the EOR itself.

Tips for avoiding surprise costs with EORs

To get the most out of your EOR partnership, make sure you’re in the know about any potential expenses that could pop up down the road. Doing so will help you plan your budget and make sure your EOR vendor will be able to accommodate your future hiring and growth plans. Here are some tips for making your EOR efforts work for you:

1. Conduct your due diligence

One misconception of global hiring is that all EORs are the same. Do your research into providers, their pricing models, and their fee structures.
  • Ask about any fees tied to onboarding, cancellation, or specific compliance tasks.
  • Reach out to anyone in your network who currently works with the vendor. Ask if they’ve been surprised by any hidden fees from their EOR services.
  • Check out the pricing on their websites. Note that some EORs, like Plane, eliminate certain fees altogether and offer transparent pricing. You can explore Plane’s approach at plane.com/pricing.

2. Ask the right questions upfront

Not every piece of information may be available on an EOR’s website, so you may have to be proactive. You can get direct and detailed answers by asking a vendor’s business development representative questions like:
  • Are there fees for setup, compliance, or currency exchanges?
  • What happens if local tax regulations change—will I incur additional costs?
  • Are there any penalties for scaling down my workforce or ending my agreement?

3. Negotiate transparent terms

You might be surprised at how flexible some EORs are when it comes to pricing. Advocate for clear contracts that outline exactly what you’ll be charged, and eliminate ambiguities that could lead to unexpected add-ons. You might be surprised to find that you can negotiate setup fees, discounts for scaling your workforce, and flexibility on compliance or administration charges — among other costs and terms that might be important to you. Some EORs may even offer tailored packages to meet your specific needs, such as bundled services or lower rates for long-term commitments.

4. Evaluate your EOR as you work together

Once you’ve engaged an EOR, don’t take your eye off the ball. Conduct regular audits of your EOR costs to ensure the value you’re receiving continues to align with your budget and goals. Key things to look out for include:
  • Unplanned fee increases. Ensure any cost changes are communicated clearly and fall within agreed terms.
  • Service value alignment. Make sure the services you’re paying for are still relevant to your team size and regional needs.
  • Regulatory changes. Stay informed about new labor laws or tax policies in your employees’ countries that might impact costs.
  • Currency fluctuations. Monitor how exchange rate shifts may affect payroll expenses.
If your needs or team size change, revisit the agreement to ensure it’s still the right fit.

EORs with transparent pricing are well worth the investment

Yes, there are costs associated with using an EOR. But when you consider how big of a lift it would be to set up a foreign entity, navigate local labor laws, and manage compliance on your own, the value of a transparent EOR partner becomes clear. By understanding the full scope of costs — both obvious and hidden — you can get the most out of your international hiring strategy.As you begin to hire talented contractors and full-time employees around the world, you’ll want to have a firm remote pay strategy in place to enhance compliance, attract top talent, and keep employees happy. You can learn all about developing one with the help of our remote pay strategy guide. (No download required!)

Payroll & HR are easy when you partner with Plane.

Is your US-based company looking for a modern payroll and HR platform? Plane takes care of payroll, benefits, and compliance for your contractors and employees in 100+ countries, including the US. Check out our platform with a 30-minute demo walkthrough.

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