You've researched Latin American software developer salaries and know that senior engineers cost $55,000-$70,000 in base compensation. But what's the actual fully loaded cost when you factor in EOR fees, statutory contributions, and mandatory bonuses?
Most companies discover the true cost after signing the contract. The $500 monthly fee advertised on the provider's website balloons to $1,200 once you add currency exchange markups, onboarding charges, and the statutory employer contributions no one mentioned during the sales call.
The EOR cost formula
Total employment cost = Base salary + statutory employer contributions + mandatory bonuses + provider fees
A $65,000 senior engineer typically costs $95,000-$110,000 in total employment cost. Here's where that extra $30,000-$45,000 comes from.
Understanding the total cost of ownership for engineering teams helps you budget accurately beyond just salary and EOR fees.
Typical LatAm fully loaded cost ranges
When budgeting for LatAm hires, expect these additions to base salary:
- Statutory contributions: 20-33% of base salary
- Mandatory bonuses: 15-25% of base salary annually
- Provider fees: $299-$1,500/month or 8-20% of salary
- Rule of thumb: Base salary × 1.4-1.7 (varies by country and provider model)
Most HR teams focus only on the headline EOR fee. They miss the statutory costs that, in many countries, can exceed the service charge. Understanding the difference between what you pay the provider versus what you pay local governments is critical for accurate budgeting.
Pass-through costs vs. service fees
The EOR service fee pays for administration and compliance management. Pass-through costs are the actual employer obligations you'd pay regardless of whether you use an EOR or establish your own entity.
Employer payroll contributions are taxes paid on top of gross salary, not deducted from employee take-home pay. A $65,000 salary in Mexico carries an additional $17,875 in statutory contributions (27.5%) before you add any EOR fees or optional benefits. These percentages apply to every paycheck, every month.
Your EOR partner should monitor regulatory changes and adjust payroll calculations automatically to maintain compliance. Learn more about how EOR contracts work in Latin America to understand the legal framework behind these obligations.
Understanding EOR fee structures
EOR pricing models fall into three categories: flat monthly fees, percentage-based charges, or hybrid combinations. Each model works better for different team compositions and salary ranges.
Flat fee models
Flat fee providers typically charge $299 to $1,500 per employee monthly. This offers predictable budgeting regardless of salary level. The model works well when hiring senior engineers with six-figure salaries, but becomes expensive for lower-wage roles.
Average pricing clusters around $400-$600 monthly for standard service levels in Latin America. This covers payroll processing, tax filing, benefits administration, and compliance monitoring. It excludes the actual cost of employment.
Percentage-based models
Percentage-based models charge 5% to 25% of gross salary. Most providers land between 8% and 20% depending on country complexity. A $65,000 engineer at 15% costs $9,750 annually in EOR fees alone, before any statutory contributions.
Howdy uses a 15% comprehensive service fee that covers everything beyond statutory requirements: EOR administration, workspace, equipment, benefits, performance coaching, and community programming. Unlike traditional EORs that charge a base fee plus pass-through costs for workspace and equipment, Howdy's 15% comprehensive fee eliminates those add-ons.
The total employment cost still includes base salary plus statutory contributions and mandatory bonuses required by local law. For a $65,000 engineer, the Howdy service fee is $9,750 annually, but the fully loaded cost would be approximately $102,000-$110,000 including all statutory obligations.
Industry benchmarks show companies choosing the wrong pricing model often overspend by 20-40%. Those who match their model with their workforce profile avoid this waste.
Hybrid models
Hybrid models combine a base monthly fee with a smaller percentage, like $200 plus 5% of salary. These attempt to balance predictability with fairness across salary bands. They add complexity to cost comparisons.
When evaluating hybrid models, calculate the total annual cost across your expected salary ranges. A model that looks attractive for junior roles may become expensive for senior engineers.
One-time setup and onboarding costs
Onboarding fees typically run $500 to $2,000 per employee. This covers compliance checks, employment contract drafting, payroll system enrollment, and local registrations. Countries with complex labor codes like Brazil push toward the higher end of this range.
Some providers require refundable deposits of one to three months' salary. These cover potential severance obligations or unpaid invoices. The deposits get returned after contract termination, but they tie up capital during the employment relationship.
Offboarding fees range from $150 to $400. They handle exit paperwork, final payroll processing, and compliance with local termination requirements. Providers rarely advertise these upfront, so ask explicitly during vendor evaluation.
What pass-through costs actually include
Pass-through costs are mandatory employer obligations that exist independently of your EOR provider. Understanding these helps you budget accurately and compare quotes fairly across vendors.
For a detailed breakdown of compliance requirements, see our payroll and benefits compliance guide for US startups.
Statutory employer contributions by country
A $55,000 annual salary in Brazil carries an additional $18,150 in statutory employer contributions. This comes before you add the EOR service fee or any optional benefits. These aren't negotiable costs—they're legal requirements that apply whether you hire through an EOR or your own entity.
Outside LatAm: Employer costs can run higher. Germany requires 18-20% for pensions and healthcare; France pushes to 45% of gross salary. India's gratuity accrues at 4.81% monthly as a growing liability.
Mandatory benefits and bonuses
13th-month salary requirements exist throughout Latin America. This adds significant cost beyond base pay. It isn't a discretionary bonus—it's a statutory requirement paid annually, typically in December.
Health insurance, pension plans, and leave tracking require ongoing management. Your EOR coordinates with insurers, state pension programs, and compliance audits across multiple countries.
Hidden fees to watch for
Currency exchange fees typically range from 2-10% of transaction amounts when paying employees in local currencies. A 5% FX markup on a $55,000 salary costs $2,750 annually. That's more than many EOR service fees.
VAT or sales tax may apply to EOR services, with rates varying by country. This can add 10-20% to your service fees depending on your company's tax registration status and ability to claim input credits.
Minimums and term commitments: Some providers require 12-month terms, minimum monthly fees, or minimum headcount. These can change your effective per-employee cost if hiring slows or you need flexibility.
Watch for vague contract language like "additional administrative charges may apply." It's not uncommon for total costs to land 20-60% above initial expectations when FX markups, onboarding fees, and add-ons aren't disclosed upfront.
Fully loaded cost breakdowns: Real engineer examples
Understanding total cost requires adding salary, statutory contributions, mandatory bonuses, and EOR fees together. Start with current LatAm salary benchmarks for your target roles, then add the additional costs below.
Latin America engineer costs
A $55,000 base salary in Mexico breaks down as:
- $55,000 salary
- $15,125 employer contributions (27.5%)
- $12,375 Aguinaldo and vacation premium (22.5%)
- $8,250 EOR fee (15% model)
- $90,750 total employment cost
These bonus percentages are modeled averages for budgeting; actual statutory bonus costs vary by policy, tenure, and employer obligations including profit-sharing rules.
Senior engineers with $65,000-$70,000 base salaries push total costs into the $102,000-$116,000 range. Total annual costs for senior engineers typically range from $102,000-$116,000 including EOR fees.
With Howdy's 15% comprehensive service fee, the provider charge on a $65,000 engineer is $9,750 annually. This fee covers workspace, equipment, benefits, performance coaching, and community programming that traditional EORs charge as separate pass-through costs. The total employment cost would still include the $65,000 salary plus statutory contributions and mandatory bonuses required by local law.
Cost comparison: LatAm vs. US hiring
US engineers average $160,000 total cost. This makes LatAm hires 60-65% more affordable for equivalent skill levels. This isn't about finding cheaper labor—it's about accessing comparable talent at market rates that reflect local cost of living.
For a detailed analysis of cost savings and quality considerations, see our CTO's guide to calculating the true ROI of nearshore development vs. US hiring.
A senior engineer in Canada costs $156,076 annually including EOR fees. This delivers the same real-time collaboration as a San Francisco counterpart at $36,000 in savings. The time zone advantage makes LatAm particularly attractive for US companies compared to Asian or European markets.
Companies like Workrise scaled their engineering team through LatAm hiring while maintaining quality standards and achieving significant cost savings compared to US-only recruitment.
When EOR beats entity setup
Establishing a local entity costs $20,000-$150,000 on average. This doesn't include maintenance fees, hiring costs, and ongoing legal expenses. Setting up an entity in France takes 4-6 weeks and costs €5,000-€15,000 in legal fees, while an EOR activates compliant payroll in 48-72 hours.
EOR typically beats entity setup when you have fewer than 10-15 employees per country. Beyond that threshold, the fixed costs of entity setup spread across enough employees to make it cheaper than ongoing EOR fees.
Organizations in Canada with fewer than 500 employees spend an average of $1,289 CAD on HR per full-time employee. This totals $386,700 for a team of 300, excluding payroll staff. An EOR consolidates these costs into a predictable per-employee fee.
EOR service tier comparison
Service tiers determine support quality, response times, and included features. Understanding the differences helps you pay for what you need without overspending on unused services.
Basic tier: What's included
Budget EORs charging $200-$400 monthly offer ticket-based support with core payroll and compliance services. You submit requests through a portal and wait for responses, typically within 24-48 hours for non-urgent matters.
Basic tiers handle statutory requirements like payroll processing, tax filing, and mandatory benefits administration. They don't provide proactive guidance on employment strategy, compensation structuring, or policy development.
The industry standard shows one full-time admin per 40-50 employees. This labor cost is built into EOR fees. Basic tiers achieve efficiency through self-service portals and standardized processes that work for straightforward employment situations.
Premium tier: Additional features
Add-on services and their costs
Immigration support costs $100-$300 monthly extra. This handles visa applications, work permits, and relocation assistance. It becomes essential when hiring foreign nationals or supporting employee relocations.
Supplemental benefits administration adds 5-20% on top of base fees. This covers supplemental health insurance, retirement plans beyond statutory minimums, and custom perks like gym memberships or education stipends.
Custom reporting, API integrations, and white-label services typically require enterprise pricing negotiations. Providers rarely publish these costs publicly, preferring to quote based on specific requirements and company size.
Regional cost variations in Latin America
Latin America isn't a monolithic market. Statutory costs, compliance complexity, and EOR pricing vary significantly across countries, affecting total employment costs.
For a comprehensive comparison of hiring markets, see our guide to the top South American countries for hiring developers. Review detailed salary benchmarks by country before calculating total EOR costs.
Mexico EOR pricing and statutory costs
$400-$600 monthly EOR fees are standard in Mexico, plus 25-30% employer contributions for IMSS, Aguinaldo, profit-sharing, and other statutory requirements. Mexico's labor laws are well-established but complex, requiring careful compliance management.
Brazil's complex cost structure
Brazil adds approximately 33% in statutory contributions plus 13th salary and FGTS. This makes it pricier than neighboring countries. The tax system's complexity drives higher EOR fees as providers invest more in compliance expertise.
FGTS (Fundo de Garantia do Tempo de Serviço) requires employers to deposit 8% of monthly salary into a government-managed account for each employee. This functions as a forced savings program that employees access upon termination or retirement.
Colombia and other LatAm markets
Colombia offers moderate compliance complexity with competitive talent pools. Statutory costs run lower than Mexico or Brazil, typically 20-25% in employer contributions. This makes it attractive for cost-conscious companies.
Argentina, Chile, and Uruguay provide strong technical talent with varying cost structures. Argentina's economic volatility creates currency risk but offers highly educated talent. Chile's stable economy and business-friendly regulations make it a regional hub.
Costs typically range from $299-$650 monthly, with percentage models charging 10-15%. The regional variation reflects differences in labor law complexity, local market conditions, and provider infrastructure.
Vendor checklist for evaluating LatAm EOR providers
Comparing EOR providers requires structured evaluation across pricing, compliance, technology, and service quality. Use this checklist to assess vendors systematically and avoid costly mistakes.
1. Pricing transparency requirements
Request detailed fee breakdowns from 3-5 providers using identical employee profiles for fair comparison. Provide the same salary, location, and benefits requirements to each vendor and compare the total fully loaded costs.
Transparent EOR providers clearly disclose all fees upfront. This includes onboarding, FX rates, and offboarding costs to enable accurate budgeting. Opaque pricing structures signal potential surprise costs down the road.
Ask explicitly about currency exchange rates and markups. A provider offering "competitive FX rates" without specifying the actual markup percentage is hiding costs. Request the exact spread over mid-market rates.
2. Compliance and legal infrastructure
Verify whether the provider operates through owned entities or third-party partners in target countries. Owned entities generally mean faster service and better compliance assurance, but higher pricing.
Non-compliance can result in fines up to €500,000 or lawsuits. This makes compliance history a critical evaluation factor. Ask for documentation of their compliance track record, certifications, and how they stay current with regulatory changes.
Top EORs cover 150+ countries, but depth matters more than breadth. Confirm owned entities versus partners in key locations to avoid subcontracting risks where the provider lacks direct control over service quality.
Understanding how EOR contracts work in Latin America helps you evaluate provider agreements and identify potential compliance gaps.
3. Country coverage and local expertise
Strong local expertise includes familiarity with regional employment practices, cultural expectations, and nuances of local labor laws beyond basic coverage. A provider with 100 countries but no in-country staff can't deliver the same service quality as one with local presence.
Howdy operates 10 dedicated offices across Latin America, including Guadalajara, Mexico City, Medellin, Bogota, Buenos Aires, Lima, Montevideo, Cordoba, and Florianopolis. This physical presence enables hands-on support, community programming, and cultural integration that remote-only providers can't match.
4. Technology platform and integration
Modern EOR platforms should use advanced technology for payroll, HR, and compliance tracking. They should sync with existing systems without lengthy adoption times. The platform should be simple to use with real-time data and self-service portals.
AI and automation are streamlining EOR services, from generating compliant employment contracts to automating payroll and onboarding. Providers investing in technology deliver faster service and fewer errors than those relying on manual processes.
Integration capabilities with existing HRIS systems like BambooHR, Workday, or Greenhouse reduce duplicate data entry and ensure consistency across systems. Ask about API availability, supported integrations, and implementation timelines.
5. Volume discounts and scalability
Many EORs offer discounts for larger teams or long-term contracts, especially when committing to certain headcount. Volume discounts are available because hiring one employee in one country costs more per head than hiring 20 employees across multiple regions.
Some EORs offer volume discounts based on future hiring potential. This makes transparency about hiring plans beneficial during negotiations. If you're planning to scale from five to 25 employees over the next year, lead with that information.
When you hire more people through the same EOR, fixed costs get spread out. This makes each person cost less in the long term as processes become more efficient. Ask how per-employee costs decrease with team growth and at what thresholds pricing tiers change.
6. Service level guarantees
Ask about payroll accuracy guarantees and what happens when errors occur. Who covers penalties for late tax filings or incorrect statutory contributions? The provider should carry insurance and accept liability for their mistakes.
Understand penalties for compliance failures or processing delays. If the provider misses a payroll deadline or fails to file required paperwork, what recourse do you have? Service level agreements should specify these terms clearly.
7. Retention infrastructure and support
Beyond compliance and payroll, evaluate what the provider offers to keep your team engaged long-term. 68% of employees say they're more likely to stay with an employer that offers health insurance. Nearly 60% say a solid retirement plan is a key reason to stick around.
Replacing a single employee can cost up to 200% of their salary. Retention investments that slash those costs become highly valuable. Ask providers what they do beyond statutory minimums to support employee satisfaction and longevity.
Companies like Earnest and Truepill have built stable, high-performing teams through this retention-focused model.
EOR vs. alternative hiring models
EOR isn't the only option for international hiring. Understanding alternatives helps you choose the right model for your situation and budget constraints.
For a comprehensive comparison of hiring approaches, see our guide on staff augmentation vs. outsourcing.
EOR vs. staffing agency costs
EOR companies usually have flat fees for solutions, while staffing agencies charge a percentage fee from the annual developer's salary. Staffing agencies typically charge 15-25% of annual salary upfront as a placement fee.
Recruitment agency fees for hiring senior Java developers run approximately $13,200 in Mexico, $16,800 in Poland, and $22,800 in the US. These demonstrate significant regional disparities. These are one-time fees, but they don't include ongoing employment costs.
EOR focuses on legal employment and compliance for long-term hires. Staffing agencies mainly recruit and place temporary or short-term workers. If you need someone for six months, a staffing agency makes sense. For permanent team members, an EOR provides ongoing compliance at predictable monthly rates.
EOR vs. in-house global HR
Managing cross-border teams costs a huge amount for in-house HR. Internal teams struggle with complexity beyond their capabilities. Building expertise across multiple countries' labor laws, tax systems, and compliance requirements requires significant investment.
EORs eliminate entity setup, payroll systems, and compliance costs. This makes them especially cost-effective for small or remote teams. You avoid the fixed costs of legal entity establishment, local HR staff, and country-specific payroll systems.
The smartest companies combine both approaches. They start with EOR to expand fast, then transition in-house once growth stabilizes around 50+ employees. This hybrid strategy balances speed and cost-effectiveness.
Cost-benefit break-even analysis
EOR makes financial sense for one to 10 employees per country. The monthly fees remain lower than the fixed costs of entity setup, local HR staff, and compliance management.
Between 10 and 15 employees, the math becomes situational. If you're confident about continued growth in that market, entity setup starts making sense. If headcount might fluctuate or you're testing the market, EOR remains the safer choice.
Beyond 15 employees in a single country, entity establishment typically becomes more cost-effective. The fixed costs of setup and maintenance spread across enough employees to beat ongoing EOR fees. However, this assumes stable long-term presence and willingness to manage local HR operations.
Retention programs and benefits through EORs
EOR providers don't just handle compliance. They can administer retention programs and benefits that reduce turnover and improve long-term ROI.
For broader strategies on keeping top performers, see our guide on how to retain top tech talent in a competitive market.
Statutory vs. optional benefits
EORs manage statutory benefits according to local requirements: mandatory benefits like healthcare, paid leave, and retirement plans, plus optional benefits the client company chooses to offer. The statutory minimums vary dramatically by country.
Health insurance, pension plans, and leave tracking require ongoing management. EORs coordinate with insurers, state pension programs, and compliance audits. This administrative burden grows exponentially when managing employees across multiple countries.
Optional benefits like supplemental health coverage, education stipends, gym memberships, or remote work allowances help companies compete for talent beyond statutory minimums. EORs can administer these through their existing infrastructure, often at better rates than individual companies could negotiate.
Impact on total compensation costs
98% of HR leaders say their wellbeing program reduces turnover. Employees having wellness benefits are almost twice as likely to be happy (61% versus 36%). The upfront cost of better benefits pays for itself through reduced recruitment and training expenses.
Comprehensive benefits reduce turnover by improving job satisfaction and employee wellbeing. Over one-third of organizations have already expanded benefits to retain talent. Work-life balance influences 68% of employees' decision to stay.
| Feature | Basic Tier | Standard Tier | Premium Tier | Howdy Model |
| Monthly cost | $200-$400 | $500-$700 | $800-$1,500+ | 15% of salary (comprehensive) |
| Support model | Ticket-based | Email + scheduled calls | Dedicated account manager | Dedicated support + performance coaches |
| Response time | 24-48 hours | 12-24 hours | 4-8 hours | Real-time local support |
| Payroll processing | ✓ | ✓ | ✓ | ✓ |
| Tax compliance | ✓ | ✓ | ✓ | ✓ |
| Benefits administration | Statutory only | Statutory + basic optional | Statutory + supplemental optional | Premium benefits included |
| Workspace | Remote only | Remote only | Remote only | 10 dedicated offices |
| Equipment | Employee provides | Pass-through cost | Pass-through cost | Included in fee |
| Immigration support | Add-on ($100-$300/mo) | Add-on ($100-$300/mo) | Included | Included |
| Performance coaching | ✗ | ✗ | ✗ | ✓ (10+ years experience) |
| Community programming | ✗ | ✗ | Limited | ✓ |
| Retention rate | Industry avg: 85-90% | Industry avg: 85-90% | Industry avg: 90-95% | 98% |
| Best for | Small teams, straightforward needs | Growing teams, moderate complexity | Large teams, complex requirements | Companies prioritizing quality and retention |
Frequently asked questions
What's the difference between base EOR fees and pass-through costs?
Base fees cover the provider's service for managing employment, compliance, and payroll administration. Pass-through costs are statutory employer contributions and mandatory benefits you'd pay regardless of whether you use an EOR or your own entity.
How much does it cost to hire a senior engineer through an EOR in Latin America?
Total fully loaded cost typically ranges from $102,000-$116,000 annually. This includes salary, statutory costs, bonuses, and EOR fees. Review current LatAm salary benchmarks.
What hidden fees should I watch for when comparing EOR providers?
Currency exchange markups (2-10%), onboarding charges ($500-$2,000), offboarding fees ($150-$400), contract modification charges ($150-$300), VAT, minimums/term commitments, and security deposits often aren't disclosed upfront.
When does an EOR make more sense than setting up a local entity?
Teams under 10-15 employees per country benefit from EOR's lower upfront costs and faster deployment. Entity setup costs $20,000-$150,000 upfront plus ongoing maintenance.
Can I negotiate EOR fees for multiple hires?
Yes. Volume discounts are available when committing to multiple employees or demonstrating future hiring potential. Lead negotiations with your hiring plans for the next 12-24 months.
How do I compare EOR quotes fairly?
Request itemized breakdowns using identical employee profiles from 3-5 providers. Include all setup, ongoing, and offboarding fees plus FX rates.
How does Howdy's pricing model differ from traditional EORs?
Building a global team requires understanding the true cost of international employment. The difference between a $500/month EOR fee and a $110,000 fully loaded cost per engineer lies in the details.
Start with comprehensive LatAm salary benchmarks to understand base compensation, then use this guide to calculate your total employment costs. Want transparent pricing with no surprise add-ons? Book a demo with Howdy to see how our 15% comprehensive service fee covers everything from recruiting to retention.