Building Embedded Payroll for SaaS: Gusto Embedded’s Insights

Behind the Paycheck
Design and build payroll for SaaS - Gusto Embedded insights

Innovative SaaS solutions continue to reshape payroll management, which remains a challenge for many small and medium-sized businesses (SMBs). The payroll software market — valued at $16 billion today — is growing rapidly and is projected to reach $46.6 billion by 2028. However, SaaS platforms find it challenging to navigate the opportunity to design and build payroll without the right partner.

Listen to the webinar recording for ‘Designing and Building Embedded Payroll for SaaS Applications’ (20 mins) in full here.

Market Fragmentation and Greenfield Opportunities

However, it’s crucial to note that this market is significantly fragmented. The top 10 players constitute only 55% of the market share, leaving 99% of providers to vie for the remaining 45%. This stark contrast to the accounting industry, where the top 10 providers dominate 95% of the market, presents a unique opportunity for new entrants. 

Additionally, many SMBs still calculate payroll by hand or work with local accountants. These same businesses continue to digitize their business management systems, often hand-in-hand with the rise of modern, purpose-built SaaS solutions that meet their specific needs without requiring a large IT investment for integration. Embedded payroll enhances these solutions and makes it easier for business owners to make the switch to relying on software.

Designing Products That Customers Want From The Start

At Gusto, we have spent more than a decade navigating SMB requirements for payroll and HR. The decision to launch Gusto Embedded was grounded in feedback from customers, partners, and our own market research. 

That research demonstrated that while reliability, ease of use, and best-in-class customer support remain priorities, SMBs seek specialized solutions tailored to their unique customer needs. This shift, accelerated by the move to remote work, has redirected the focus of employee experience initiatives from physical office settings to software-driven solutions. While innovative embedded technologies empower the development of highly personalized payroll experiences, many partners must grasp the intricacies of constructing payroll solutions.

“Our partners often underestimate the complexities of building payroll. They need to consider who their solution caters to, whether it’s a unique problem solver, and how quickly users will see the benefits.”

Yi Liu
General Manager, Gusto Embedded

Navigating Common Challenges and Missteps

The challenges some early adopters face of embedded payroll highlights the importance of choosing the right approach to building in-app solutions. In one case, a prominent player in the accounting industry attempted to build its payroll back end from scratch. Despite their substantial resources, they soon realized that the project required more budget, patience, and expertise than they possessed. After wasting time and money, they ultimately abandoned the initiative in favor of integration with an external payroll provider (Gusto).

In contrast, a smaller private company with 500 employees, although a market leader in HR tech software with over 20,000 customers, opted for a white-labeled integration approach. However, this choice led to an isolated product experience that fell short in terms of customer support and user satisfaction. After investing significant time and resources in evaluation, training, and marketing efforts, they struggled to onboard new customers and eventually discontinued their payroll product.

These stories emphasize the importance of selecting the right infrastructure when venturing into payroll solutions. The consequences of choosing the wrong partner can be substantial, including damaged brand reputation, wasted investments, and a loss of trust from customers. Therefore, it is vital for partners to make informed decisions to ensure the success and sustainability of their payroll business.

“When choosing a partner, you need to think about your brand’s reputation, the wasted investment, and the trust of your customers. It takes a long time to build trust but only a short time to lose it,”

Yi Liu
General Manager, Gusto Embedded

Supporting Your Payroll Business

To build a thriving payroll business, partners must engage key stakeholders and emphasize that they are creating a comprehensive payroll business, not just a product. This includes:

  • Revenue Leaders: Enabling teams to sell and service the new product while improving systems and processes over time.
  • Product Leaders: Partnering to create a tailored, differentiated customer experience that enhances platform stickiness.
  • Engineering Leaders: Providing an easy-to-use set of APIs or out-of-the-box UI that enables quick market entry while allowing customization to meet industry-specific needs.

Build a Business, Not Just Launching a Product

At Gusto Embedded, our approach is built on several critical steps:

  1. Market Fit Assessment: We employ user experience (UX) research, surveys, and interviews to understand market needs and pain points, ensuring that partners develop solutions based on validated trends.
  2. Target Segmentation: We help partners define initial target segments and product scopes, allowing for a successful launch and iterative expansion based on customer feedback.
  3. Industry Usage Data: We leverage data from our core platform to understand industry-specific requirements and nuances, ensuring that partners build features relevant to their markets.
  4. Customization: Our APIs and UI flows allow partners to create integrated, customized payroll solutions that align with their customer base’s unique needs.
  5. Legal Compliance: Our expert legal compliance teams keep partners informed about changes in legislation to ensure compliant payroll operations, such as automatic updates to tax forms.

“The Gusto Embedded multidisciplinary teams are all dedicated to ensuring partners can build, support, sell, and grow their payroll solutions effectively and invested in partner success.”

Avery LaBerge
Head of Solutions Architecture, Gusto Embedded

Gusto Embedded Partner Success Teams

Technical Solutions Customer Experience Partner Growth

Technical Solutions

Customer Experience

Partner Growth

Deep technical expertise to assist partners in navigating the complexities of launching and managing payroll. Help partners provide exceptional customer support and grow customer satisfaction. Equipping partners with sales and marketing tools and strategies to ensure long-term success.

Partner Case Studies

Our success stories include partners like GroundCloud, which streamlined payroll for transportation and logistics businesses using a hybrid approach. They created a unique solution that integrated seamlessly with their platform, saving users time and avoiding errors. Read the press release.

Another example is Archy, an all-in-one patient practice and employee management system for dental entrepreneurs. Archy leveraged our APIs to tailor their payroll product to the dental industry, incorporating unique earning types. Read the press release.


In the ever-evolving landscape of SaaS applications, Gusto Embedded is committed to helping partners design, support, sell, and grow their payroll businesses. We offer a comprehensive approach to developing customized payroll solutions that meet the unique needs of your customers, ensuring your success and growth in this dynamic market. Together, we can unlock the potential of embedded payroll for SaaS applications.

Learn more. Listen to the entire Designing and Building Embedded Payroll for SaaS Applications: Gusto Embedded’s Expert Insights

Updated: October 5, 2023

Brian Busch Brian is currently Head of Marketing at Gusto Embedded; the only payroll API with 10 years of experience and actionable data behind it. Before joining Gusto, Brian held leadership positions at Cloud Elements, Kapost, and Captricity. He holds a BS in finance and a BA in philosophy from Boston College and an MBA from the Cal Berkeley Haas School of Business.
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