Staffing Agency vs Payroll Cost Calculator

What each option includes

Agency billing includes worker pay, overtime, and the full agency markup. Agency payrolling uses a lower markup, set at 30% in the starting figures. You recruit the worker, and the agency manages payroll. Direct payroll, excluding benefits, includes employer costs such as FICA at 7.65%, FUTA at an effective 0.6% on the first $7,000 in wages, state unemployment, and workers compensation. The 6.2% Social Security portion applies up to the annual wage base. Direct payroll, including benefits, adds your benefit expenses to employer costs. June 2026 BLS data puts private-industry benefits at 30.0% of total compensation, approximately 43% of wages. Both direct payroll options include your conversion fee.

When conversion fees break even

Divide the conversion fee by the weekly savings from direct payroll with benefits to estimate how many weeks it takes to break even.

Other costs worth comparing

Also account for recruiting, training, and the employer responsibilities you take on when workers move to your payroll. The Independent Contractor Classification & Risk Kit helps you review classification risk. The Staffing Agency Management Kit covers agency arrangements. The Contingent Workforce Headcount & Spend Tracker helps you monitor worker counts and spending over time. In California, willful worker misclassification can carry civil penalties of $5,000 to $15,000 per violation, or $10,000 to $25,000 for a pattern or practice.