How Does Gusto Make Money? Business Model of Gusto

How Does Gusto Make Money

Gusto (formerly known as ZenPayroll) is a cloud-based payroll, benefits, and human resources management platform for small and medium-sized businesses. It helps businesses across all industries pay their employees and capture data for reporting and compliance through a single system — which is cheaper than the cost of maintaining and running multiple systems, and it reduces the hassle and increases productivity.

But how does Gusto make money? That’s the question we are going to answer in this article. We’ll dig into their business model and find out how Gusto generates its revenue.

Gusto operates on a SaaS business model as an HR/payroll platform. It makes money by providing software subscriptions and benefits for HR-related services to small businesses.

About Gusto

Gusto has managed to weather the storm of the COVID-19 pandemic due to the leadership of its CFO Mike Dinsdale and its reliable methods of making money. If anything, the pandemic has actually increased the need for the services that this platform has to offer.

These services include:

  • Payroll
  • Employee onboarding
  • Time tracking
  • Retirement
  • Health insurance


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:

  • Small Business Financial Relief
  • Employee Tax Calculator
  • Burn Rate Calculator
  • Salary Comparison Tool
  • New Hire Checklist
  • Small Business Guides



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 own accounting due to the payroll services that it provides.

Finally, due to the nature of what Gusto does, they probably have to maintain their own HR staff as well as several other experts in fields related to their various services.


Plan for Profit

Gusto’s plan for profit is to follow the leadership of CFO Mike Dinsdale. His plan is to keep expenses as low as possible while keeping employee morale and customer service as high as possible. This is the “pandemic plan”.

As soon as there is national and global recovery, Dinsdale plans to expand with aggressive marketing.


How Does Gusto Make Money?

As an HR/payroll platform, Gusto makes money through its various services in the form of three main revenue streams:

  • Subscriptions packages
  • Benefits packages
  • Tax-advantaged Spending Accounts packages


Subscription Fees

Gusto has four paid software subscription packages as revenue streams:

  • Core
  • Complete
  • Concierge
  • Contractor



The Core package is built for smaller teams. It is $6/month per person plus an additional $39/month base price.

  • Full-service payroll across all 50 states
  • Employee self-service and profiles
  • Workers’ comp administration
  • 2-day direct deposit
  • Paid-time-off policies
  • Best-in-class support
  • Employee onboarding tools
  • Accounting and time tracking integrations
  • Payroll on Autopilot
  • Health insurance administration
  • Employee access to Gusto Wallet
  • Employee offers and document management



The Complete package is $12/month per person plus an additional $39/month base price. The Complete package has all of the same tools as the Core package but also has the following additional tools:

  • Next-day direct deposit
  • PTO policies and time-off requests
  • Customizable employee onboarding tools
  • Permissions
  • Employee directory and surveys
  • Time tracking
  • Project tracking and workforce costing



The Concierge package is $12/month per person plus an additional $149/month base price. The Concierge package has all of the same tools as the Complete package but also has the following additional tools:

  • Certified HR pros
  • HR resource center



The Contractor package is $6/month per person and has no additional base price.

The Contractor package is different from the other three packages in that it is geared more towards businesses that hire 1099 contractors than businesses that hire employees. It includes the following:

  • Unlimited contractor payments
  • Contractor self-service
  • Form 1099 creation and filings


Benefits Packages

In addition to paid subscriptions, Gusto offers benefits, both paid and unpaid, that act as revenue streams in one way or another:

  • Workman’s Comp
  • Gusto Wallet
  • Health Insurance
  • Health Reimbursement
  • 401K Retirement
  • 529 College Savings


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 or not 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 free way for the employees of clients “to track, save, and access their money”. There are no account minimums or overdraft fees. Even though the client and the employee do not pay, the website does not disclose whether or not 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 or not 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 eligible employee health premiums each month. The benefit costs $15/month per employee and the user can pick a monthly contribution up to a maximum.


401K Retirement

Gusto has integrated 401K plans through their partner Guideline. They claim to have some of the lowest fees in the industry. The particulars of their relationship with Guideline and whether or not they receive a referral fee from Guideline has not been made public on their website.

Gusto’s 401K Retirement benefits package starts at $49/month plus $8 per participating employee. There is no setup fee. No setup fee.


529 College Savings

Gusto’s College Savings benefits package also offers tax-advantaged savings accounts through their partner Gradvisor. In that way, employees can save for the education of their children. The particulars of their relationship with Gradvisor and whether or not they receive a referral fee from Gradvisor has not been made public on their website.

Gusto’s College Savings benefits package starts at $6/month per participating employee plus $18 per month minimum. There is no setup fee.


Tax-advantaged Spending Accounts

Gusto customers also have access to tax-advantaged spending accounts. In addition to monthly payments, there is one $200 annual service charge that covers all three account types:

  • Health Savings Accounts (HSAs)
  • Commuter Benefits
  • Flexible Spending Accounts (FSAs)


Health Savings Accounts (HSAs)

Gusto’s Health Savings Accounts (HSAa) package has pre-tax savings accounts for qualified health expenses. Customers pay $2.50/month per participant. There is no minimum.


Commuter Benefits

Gusto’s Commuter Benefits package has pre-tax spending accounts for commuting costs. Customers pay $4/month per participant. There is a $20/month minimum.


Flexible Spending Accounts (FSAs)

Gusto’s Flexible Spending Accounts (FSAs) package has pre-tax spending accounts for qualified health expenses (Health FSA) and qualified dependent care expenses (Dependent FSA). Customers pay $4/month per participant. There is a $20/month minimum.


Gusto Funding, Valuation, and Revenue

From 2019, funding has been steady for Gusto. For 2021, funding for Gusto has been $25 million less than the previous two years, but the year is not over yet.

Included investors are:

  • T. Rowe Price
  • Fidelity
  • Franklin Templeton
  • Generation Investment Management (Al Gore’s UK-based firm focused on sustainable investing)
  • General Catalyst
2019$200 M
2020$200 M
2021$ 175 M

Total funding from Seed to present is at $691.1 million.

In the past two years, Gusto’s valuation has more than doubled from where it was in 2019. An IPO is anticipated for 2022.

2019$3.8 B
2021$9.5 B

Since 2018, Gusto has nearly doubled its revenue to $200 million. It now has over 200,000 customers worldwide.

2018$100 M
2021$200 M


Is Gusto Profitable?

Gusto is profitable, growing, and scalable. Gusto has a highly capital-efficient business model that allows it to deliver services to customers at a very low cost while passing its savings on to employees.

According to CFO Dive, Gusto “can eke out profitability as a result of disciplined cost-cutting by their CFO Mike Dinsdale as a result of the COVID-19 pandemic.


Conclusion: How Does Gusto Make Money?

Wrapping up this article, we hope that it has provided you with useful information about how Gusto works and makes money.

We want to thank you for getting this far. This article represents hours of work and digging through various sources to bring you this information. If you have any questions, comments, or thoughts, please feel free to drop us an email. We’d love to hear your thoughts.

Also, we would love it if you could help us spread the word about our blog by sharing it with your colleagues and on various social networks.

Have a wonderful day!

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