Payroll Pricing for Accounting Firms: How to Set Profitable, Competitive Rates

Are you leaving money on the table with your payroll pricing? Or worse, have you priced yourself out of the market without realizing it?.

If you're considering partnering with Whirks for payroll, you may even be asking yourself: "What should I actually charge for payroll services as a Whirks Network Partner?"

That’s a critical decision, and it's one that can impact your profitability, positioning, and long-term growth. It's also where many accounting firms get stuck. 

At Whirks, we've helped dozens of accounting firms build scalable payroll offerings with pricing models that actually work. We know that effective pricing isn't just about covering costs. It's about creating a service that's competitive and profitable.

In this article, you’ll learn how to set the right price for your payroll services by evaluating four essential factors:

1. Your direct costs as a Whirks partner
2. The labor involved in servicing clients
3. What your real competitors are charging
4. How to build in healthy profit margins that scale with your firm

Let’s walk through a framework that puts you in control of your pricing, so you’re not just guessing, hoping, or undercharging.

Why "You Can Charge Whatever You Want" Is the Worst Pricing Advice

While "You can price your payroll services however you want" is technically accurate, it's also a useless answer if you're trying to build a profitable service line.

So instead of asking, “What can I charge?” the better question is, “How do I price this service in a way that ensures profit and positions my firm to grow?”

To build a competitive and profitable payroll offering, you need a clear strategy that’s based on actual numbers, not assumptions.

That’s what we’re going to walk through next: the four essential factors that should drive your payroll pricing decisions.

1. Know Your Direct Costs: What Whirks Charges You and Why It Matters

Before you can set any price, you need a clear understanding of what it costs you to deliver payroll services. This starts with your Whirks partnership.

If you don’t know your cost of goods sold (COGS), you can’t build a pricing model that protects your margins.

Here’s what to review in your Whirks service agreement so you understand exactly what you're paying:

• What's the per-employee-per-month (PEPM) cost?
• Are there setup fees or annual charges?
• What add-on services have additional costs?
• Do volume discounts apply as your client base grows?

Once you've gathered these numbers, break them down on a per-client or per-employee basis. That's your direct cost baseline, and it's the foundation for everything else.

Pro tip: If you don't fully understand the pricing structure, schedule a call with your Whirks partner representative. Getting clarity here can prevent margin-draining mistakes later.

2. Don't Overlook Labor: How to Accurately Calculate the Real Cost of Your Team's Time

Your second major payroll expense (and one of the most overlooked) is the actual time your team spends managing payroll. This cost is often underestimated by accounting firms new to payroll services.

If you skip this step, you're almost guaranteed to underprice your services.

In many accounting firms, payroll isn't handled by an intern or admin. It's typically managed by a skilled bookkeeper, senior accountant, or even a CPA. These are high-value team members with higher hourly rates.

For example, if you have a CPA processing payroll at $75/hour, you can't price your services the same way a competitor would if they're using a $15/hour administrative assistant.

How to Calculate Labor Costs Accurately

Estimate the time your team will spend on the following tasks:

• Initial client setup and data migration
• Ongoing payroll processing (per pay period)
• Answering client questions or correcting errors
• Year-end reporting and reconciliation

Now, multiply those hours by your team member's loaded hourly rate (salary plus benefits plus overhead). That's your labor cost per client.

Your pricing must cover both your direct costs (what Whirks charges) and your labor costs, or you'll quickly find that you're not building a profitable payroll service.

3. Do Market Research: How to Benchmark Your Payroll Pricing Without Undervaluing Your Services

Once you understand your costs, it's time to look outward: What are others in your space charging, and where do you fit in that range?

Before you start Googling, though, make sure you'r looking at the right players.

Don't Compare Apples to Software

DIY platforms like Gusto, QuickBooks Payroll, and Patriot Software are not your competition. Those tools are designed for businesses that want to manage payroll themselves, without personlized support.

You’re offering something very different: expertise, service, and peace of mind.

Instead, benchmark your pricing against:

• National full-service providers like ADP, Paychex, Paylocity, and Paycor
• Local accounting firms offering payroll services
• Regional payroll bureaus that provide hands-on support

These are your true competitors because they offer the same level of professional service you do.

Find Your Pricing Sweet Spot

What you're looking for is the range the market will support. There's a gap between "minimally profitable" and "top of market pricing."

Let’s say you could technically break even at $100/month per client. But if competitors are charging $200 for similar services, that higher range is likely what the market supports.

Pricing too low doesn't make you more competitive; it just erodes your margins.

Use Whirks Direct Pricing as a Reference Point

A helpful starting point is to check out Whirks direct pricing to see how we price services for our direct clients.

If you provide more frequent communication, strategic guidance, or extra support than we do, your pricing should reflect that.

Use our pricing as a floor, not a ceiling.

4. Build Healthy Profit Margins: How to Hit a 60% Gross Margin on Payroll Services

The final piece of the pricing puzzle is making sure your service is actually profitable. Profit is the point.

To grow sustainably, your pricing needs to support real profit. And that means building in healthy margins from the start.

What Healthy Payroll Margins Look Like

Based on research from accounting firms offering payroll services, here are typical margin benchmarks:

• Labor costs: 30-40% of revenue
• Direct costs (what you pay Whirks): 14%-15% of revenue
• Target gross profit margin: At least 60%

If your margins fall below these benchmarks, your pricing is probably too low.

Align Your Billing Structure with Your Costs

One way to simplify profitability is to structure your client billing the same way Whirks bills you. 

If Whirks charges PEPM, consider billing your clients the same way. This makes it much easier to calculate your cost of goods sold and maintain healthy margins as you grow. 

Profit should be built into your pricing, not left to chance.

Your 4-Part Payroll Pricing Framework for Profitable Growth

Here's a quick recap of the four essential factors that should shape your payroll pricing strategy:

1. Know your direct costs: Understand exactly what Whirks charges you
2. Calculate labor expenses: Factor in the true cost of your team's time and expertise
3. Research the market: Identify what full-service competitors are charging
4. Build in profit: Target at least 60% gross margin to ensure sustainable success

When these four factors align, you'll have pricing that's competitive, profitable, scalable, and built for long-term growth.

Pricing Your Payroll Services With Confidence

As you can see, pricing payroll services isn't guesswork. It's a strategic decision based on your actual costs, your labor investment, what the market supports, and the margins you need to grow.

If you're still wrestling with how to price your services, this is exactly the kind of conversation we love having with our partners. Many firms struggle with this, but the solution is simpler than most realize once the right framework is in place.

Evaluate your current pricing against the four factors we’ve outlined. If you're already a Whirks Network Partner, this is a perfect time to reach out to our team and walk through your numbers together.

And if you're exploring what it looks like to grow a payroll service line with real profitability, check out "What to Expect in Your First 90 Days as a Whirks Network Partner" to see how we support partners through implementation and growth.

At Whirks, we help accounting firms like yours build scalable payroll offerings that are profitable from day one. Whether you’re just getting started or refining your strategy, we’re here to help you price with confidence.

Want to talk with someone about pricing for your firm? Schedule a call with our partner team. We’d love to help you get this right.