How does gusto make money?

In this blog, we will look at “how does gusto earn money.” We will also look at how the firm has evolved through time, the products, and services it provides, and, most crucially, how Gusto generates income.

How does gusto make money

Gusto makes money by charging a monthly fee to its customers. When paying consumers to expand their use of the company’s services or use more of the company’s services, the company makes more money.

What is Gusto?

Gusto is a company that provides services related to payroll and human resource management software businesses for users in America. Gusto processes payments to employees and contractors, as well as the paperwork required to ensure that client-based companies conform with applicable tax, labor, and immigration requirements

History of Gusto

Gusto was a member of the Winter 2012 round at Y Combinator.

Joshua Reeves and Edward Kim formally launched the service on December 11, 2012, in California.

Gusto announced its support for contract employees, which included tax compliance, on June 12, 2013.This was noted as a competitive advantage over competitors like ADP and Paychex, whose payroll software was thought to be inflexible when it came to managing contract workers.Gusto announced in 2013 that it had processed $100 million payments in the previous year and that it would be expanding into Florida, Texas, and Washington state in the coming months.

Gusto has cooperated with over a dozen small and medium-sized business (SMB) back-office service providers since its start in September 2014 and has built an application programming interface (API).

Gusto proclaimed its support for employers that match their employees’ voluntary contributions to charitable causes in December 2014.Gusto stated tha in July 2015, it would be expanding its operations and establishing a new office in Denver, Colorado, among other things.

Gusto announced the establishment of its third location in New York City in 2019. As part of its 2020 strategy, Gusto will make a push to bring on more accounting firms as partners, as well as to earn its People Advisory Certification. In June 2021, Gusto will begin making a portion of its service available to third-party companies through an API. Gusto’s most recent solution, “Embedded Payroll,” enables vertical SaaS businesses to deliver payroll services to their customers through a single platform.

Gusto generates revenue from four paid software subscription packages:

Core ($6/Per Month)

The Core bundle is designed for smaller groups. It costs $6 per month per person, with an additional $39 per month for the base pricing.

·   Employee self-service and profiles are available.

·   Occupational safety and health administration

·   Direct deposit is available within two business days.

·   Policies on paid time off

·   Employee onboarding resources that are unmatched in their sector of expertise

·   Integrations with accounting and time tracking systems

·   The administration of health insurance is handled automatically by payroll.

·   Employees’ ability to access their Gusto Wallet

·   Employee offers and document management are two important aspects of running a successful business.

Complete ($12/Per Month)

The Complete plan costs $12 per person per month plus an additional $39 per month base fee. The Complete package includes all of the tools found in the Core package, as well as the following extras:

·   Direct deposit the following day

·   Policies on paid time off and requests for time off

·   Employee orientation materials that can be customized

·   Permissions

·   Employee directories and questionnaires are also available.

·   Controlling one’s time

·   Monitoring projects and determining labor costs are two important responsibilities.

Concierge ($12/Per Month)

The Concierge plan has a monthly fee of $12 per person, in addition to a base rate of $149 per month. There are no additional fees for the Concierge plan, which includes all of the tools included in the Complete package as well as the following extras:

·   Certified HR pros

·   HR resource center

Contractor($6/Per Month)

The Contractor package is $6 per month per person and includes no additional base fee. The Contractor package differs from the other three in that it is intended toward businesses that hire 1099 contractors rather than businesses that hire employees. It contains the following items:

·   Payments to contractors are virtually limitless.

·   Contractors can generate and submit Form 1099s using a self-service platform.

Workman’s Comp

Gusto charges no administrative fees. The client only pays for premiums. The nature of Gusto’s relationship with the provider in question, and whether Gusto receives a percentage of the premium or some kind of finder’s fee, has not been publicized on Gusto’s site.

Gusto Wallet

The Gusto Wallet is a freeway for the employees of clients “to track, save, and access their money”. There are no minimum balance requirements and no overdraft fees associated with this account. Even though the client and the employee do not pay, the website does not disclose whether Gusto Wallet is monetized in other ways, such as transaction fees and advertising.

Health Insurance

Gusto works through licensed health insurance brokers. Clients and/or employees are charged only for premiums, no administrative fees. It is unknown whether the health insurance brokers pay a referral fee to Gusto.

Health Reimbursement

Health Reimbursement is a flexible health benefit that allows the user to reimburse qualifying employees’ health premiums. It is available to all employees. It costs $15 a month per employee, and the user has the option of choosing a monthly contribution up to a maximum of $100.

401K Retirement Plan

Gusto and their partner, Guideline, have added 401K programs with the help of each other. A lot of people say that these fees are very low. The specifics of their relationship with Guideline, such as whether they get a referral fee from Guideline, aren’t on their site. Gusto’s 401K retirement benefits package starts at $49 a month, plus $8 for each employee who participates in the plan. To get things set up, there’s no charge. On the other hand, there is no start-up fee.

529 College Savings

Gusto’s College Savings benefits package includes tax-advantaged savings accounts supplied by Gradvisor, a company with which Gusto has a partnership. Employees may wish to set aside funds in this manner for the education of their children. There is no information available on their website about the terms of their relationship with Gradvisor, including whether or not they receive a referral fee from Gradvisor. Gusto’s College Savings benefits package starts at $6/month per participating employee plus an $18 per month minimum. There is no setup fee in this as well.

Tax-Advantaged Spending Accounts

Customers of Gusto can use tax-advantaged spending accounts, as well as get a lot of other benefits. All three types of accounts have to pay a one-time $200 service fee each year. This fee is for all three types of accounts.

·   Health Savings Accounts (HSAs)

·   Commuter Benefits

·   Flexible Spending Accounts (FSAs)

·   Health Savings Accounts (HSAs)

Health Savings Accounts (HSAs)

Among the features of the Gusto Health Savings Account (HSA) package is the ability to set up pre-tax savings accounts that may be used to pay for eligible medical expenses. Customers are charged $2.50 a month for each participant in the package.

Commuter Benefits

Gusto offers pre-tax spending accounts for commuting expenses as part of the Commuter Benefits package. Customers are charged $4 per month per participant. There is a $20 monthly minimum.

Flexible Spending Accounts (FSAs)

Gusto’s Flexible Spending Accounts (FSAs) program includes pre-tax spending accounts for qualified health expenses (Health FSA) and Qualified Dependent Care FSA. Customers pay $4 per participant per month. There is a monthly minimum of $20.

Business Model Of Gusto

The business model of Gusto is that of a SaaS in the HR/payroll sphere. It survives and thrives by keeping costs down while still providing a great SaaS to its users.

Its competitors are:

·   Quickbooks Payroll

·   Square Payroll

·   Justworks

·   Paychex Payroll

·   Wagepoint

·   Coastal Payroll


Gusto is a platform that provides a variety of services as mentioned above. By automating so many different services like payroll and onboarding, Gusto has made it easier for businesses to digitize. Considering the havoc the pandemic and the lockdowns that followed, this digitization assistance could not have come at a better time. Included in the platform itself are the following tools:

·   Financial Assistance for Small Businesses

·   Calculator for Employer’s Taxes

·   Calculator for Calculating Burn Rate

·   Checklist for New Hires

·   Checklist for New Hires

·   Guides for Small Businesses


As a nearly $10 billion unicorn, Gusto has attracted attention. The fact that former US Vice President Al Gore is an investor should also help get the word out. The fact that they have partnerships with accountants, insurance providers, and other essential professionals within the HR, payroll, and benefits industries means that it is in the interest of many professional partners to promote Gusto. Finally, Gusto ranks 25th on the Forbes Cloud 100 and there is excitement being generated about the possibility of a 2022 Gusto IPO.

It should also be noted that although CFO Mike Dinsdale has cut many expenses, he chose not to cut Gusto’s marketing budget. His rationale was that Gusto would need a large marketing presence as soon as the economy begins to eventually recover from the COVID-19 pandemic.


As with any SaaS, Gusto needs to pay for technically skilled staff, their energy expenses, and the maintenance of their equipment. In addition, Gusto has the expenses of any other SaaS:

  • Hosting
  • Payroll for development
  • Sales
  • Marketing

Many of the expenses that would normally be borne by a brick-and-mortar business have been outsourced to their providers. While their providers probably bear the majority of the legal load, Gusto probably still has to pay for various legal services considering their connection to employee health benefits, workman’s compensation, and all manner of forms of employee insurance.

The same can also be said for accounting services. Even though Gusto is in partnership with various accountants, Gusto still probably has to pay for some of its accounting due to the payroll services that it provides. Finally, due to the nature of what Gusto does, they probably have to maintain their HR staff as well as several other experts in fields related to their various services.

In conclusion, this blog discussed the question that is “how does gusto make money”, We found out that Gusto makes money by charging a monthly subscription fee on its services.

Frequently asked questions (FAQ): how does gusto make money

Who funded Gusto?

T. Rowe Price led a $175 million Series E round of funding for the San Francisco-based provider of benefits, payroll, and human resources software. One among those who indicated interest was Ken Chenault, who had recently stepped down as CEO of American Express and was now heading investments for General Catalyst.

Does Gusto cost money?

Starting at $45 per month, Gusto is available in three plans: Core ($39/month + $6 per user/month), Complete ($39/month + $12 per user/month), and Concierge ($149/month + $12 per user/month).

Is Gusto a Fintech?

Gusto is a fintech startup that has achieved tremendous success since it was first established. The California-based company provides technology-based solutions for companies in need of payroll, benefits, and HR software to streamline their internal processes and simplify associated tasks.

How do you get paid on Gusto?

By 5 p.m., PT, Complete, and Concierge customers can run payroll and have their employees paid the next day by direct deposit. We’ll take the money out of your account the next morning, and your employees will receive their direct deposits by 5 p.m. local time the following day.

Is Gusto a payroll company?

Gusto’s payroll, human resources, and HR platform are used by around 100,000 small businesses in the United States. Gusto is also a completely cloud-based platform with software interfaces to platforms such as Xero and QuickBooks.

Can I trust Gusto?

For the second year in a running, Gusto has been named Editor’s Choice for small business payroll services, thanks to its ease of use, personalization, portability, comprehensive set-up tools, and payroll run administration.


Azevedo, M. A. (2019, July 24). Gusto Raises $200M Series D At $3.8B Valuation To Power HR Within Small Businesses. Retrieved from Crunchbase: