What Fractional HR Costs for a Small Business

"How much does it cost?" is the first thing most owners ask me, and it is a fair question. Fractional HR is a part-time, shared-expert version of an HR department. You get a real HR professional for the hours you need instead of hiring someone full-time. Because every consultant packages it differently, prices can look confusing. Here is how it usually works, with my own numbers so you have something concrete to compare against.

The three common ways to pay

1. A monthly plan. You pay a flat fee each month for a set number of hours. This works well when HR questions show up all year: a hiring decision here, a policy question there, an employee issue you need a second opinion on.

2. An hourly rate. You pay for the time you use, with no monthly commitment. This works for a one-off need, like a compliance question or a tricky conversation you are preparing for.

3. A fixed price for a project. You know the cost before you start. A handbook, an HR audit, or a hiring process rebuild often fit here.

What I charge

I am sharing this because I think pricing should not be a mystery. All of it is month-to-month, with no long-term contract:

• HR Basics, $750 a month. For businesses with up to 25 employees. About 4 to 5 hours a month, HR questions answered by email, a compliance calendar so deadlines do not sneak up on you, and one policy or form update each month.
• $1,500 a month. About 10 hours for strategic guidance, compliance questions, and people planning.
• $3,500 a month. About 20 hours of hands-on help, including employee relations, hiring support, and policy work.
• $6,000 a month. About 40 hours of operational support for companies that want a steady HR presence.
• $165 an hour. For specific projects or extra hours beyond a plan.
• Fixed packages. A compliance audit is $2,000, a custom handbook is $1,500, and doing both together is $3,000.

You can see all of it on the pricing page. Hours do not roll over, and you can move between plans or pause when your needs change.

How to think about the cost

A simple way to compare: the HR Basics plan is $9,000 over a full year. For most small businesses, that is well under what a full-time salary plus payroll taxes and benefits would cost. I would not claim the two are the same thing, though. A full-time HR person is on site and can take on daily work. Fractional HR is a better match when you need judgment and structure more than you need someone at a desk every day. I wrote more about that tradeoff in Fractional HR vs Full-Time HR.

It also helps to compare against the cost of getting HR wrong. Back pay for misclassified workers, a late final paycheck, a termination handled without notes, or a handbook that promises more than you meant to promise can each cost more than a few months of support. I am not saying that to scare you. I am saying it because preventing a problem is almost always cheaper than cleaning one up.

What to ask any HR consultant before you sign

Prices only mean something if you know what they include. Ask each person you talk to:

• How many hours are included, and what happens to unused hours?
• What is the hourly rate if I go over?
• Is there a minimum term or a cancellation fee?
• Who actually does the work, you or a junior team member?
• Are employee investigations and terminations included, or billed separately?
• Do you carry professional liability insurance?
• Will you tell me when something needs an attorney? A good HR consultant will.

If the answers are vague, treat that as information.

Fractional HR vs a PEO

A PEO (professional employer organization) is a different product. It usually takes on payroll, benefits, and some compliance, and charges per employee. Fractional HR gives you advice and hands-on help while you keep your own payroll and benefits setup. Neither is better in every case. I put the comparison side by side in Fractional HR vs a PEO if you are weighing both.

Is it worth it for a business your size?

If you have employees and you are the one answering every HR question yourself, you are already paying for HR. You are paying in your own time. A useful test is to ask how many hours last month went to hiring paperwork, policy questions, awkward conversations, or worrying about whether you did something right. If the answer is more than a few, a small monthly plan often pays for itself in time alone.

Frequently asked questions

This article is general information for business owners and is not legal advice. For a specific situation, talk with an employment attorney.