# MSP Pricing

Getting your MSP pricing right is the single most important lever you have for building a sustainable, profitable services business. It is not just about covering your costs or matching the guy down the street; it is about reflecting the true value of the outcomes you deliver to your clients.

Getting your **MSP pricing** right is the single most important lever you have for building a sustainable, profitable services business. It is not just about covering your costs or matching the guy down the street; it is about reflecting the true value of the outcomes you deliver to your clients. When pricing is structured correctly, it funds your ability to hire top-tier talent, invest in the best security stacks, and provide the proactive service that keeps clients for a decade.

For many MSP owners, pricing feels like a dark art. You might worry about being too expensive and losing deals, or being too cheap and leaving money on the table while your team burns out. Luis Navarro, the founder of MSP Agenda, spent over 15 years navigating these exact challenges while building Totality Services from a startup into a highly profitable MSP that eventually achieved an eight-figure exit. He learned that pricing is less about technical specifications and more about commercial clarity and client trust.

**MSP pricing** refers to the strategic models managed service providers use to bill for their technology management, support, and cybersecurity services. Most modern MSPs favor a **Per-User** or **Per-Device** recurring revenue model, often bundled into tiered packages that provide predictable costs for the client and stable, scalable margins for the provider.

- **Per-User Pricing:** A flat monthly fee for every employee the client has, covering all their devices and support needs.
- **Per-Device Pricing:** Billing based on the number of endpoints (PCs, servers, network gear) under management.
- **Tiered Bundles:** Packaging services into "Good, Better, Best" options to simplify the sales process.
- **Value-Based Pricing:** Setting rates based on the business impact and risk mitigation provided rather than hours worked.

## Understanding the Core MSP Pricing Models
There is no one-size-fits-all approach, but there are definitely models that scale better than others. In the early days of the industry, everything was break-fix or block-hour. Today, the most successful providers focus on recurring revenue that aligns the MSP's goals with the client's goals: keeping things running smoothly.

### The Per-User Model
This has become the industry standard for a reason. It is simple. If a client hires three new people, the bill goes up. If they downsize, it goes down. It accounts for the fact that one user might have a laptop, a desktop, a tablet, and a smartphone—all of which need securing and supporting. 

**Pros:** Predictable for the client, easy to audit, and covers the "human" element of support which is often the most time-consuming.

### The Per-Device Model
Some MSPs prefer to bill per endpoint. This works well for environments with high device counts but low user interaction, such as manufacturing floors or retail. However, it can become complex to track as users switch between multiple devices. 

**Pros:** Direct correlation to the number of licenses and agents you are paying for; very easy to calculate technical costs.

### Tiered Pricing Bundles
Typically structured as "Silver, Gold, and Platinum." The goal here is to guide the client toward the level of risk management they are comfortable with. We often recommend a "Standard" and "Advanced Security" tier to make the choice clear for the business owner.

| Pricing Model | Primary Benefit | Best Suited For |
| --- | --- | --- |
| **Per-User** | Scalability and simplicity | Professional services (Law, Finance, Creative) |
| **Per-Device** | Technical precision | Retail, Logistics, Lab environments |
| **Flat Fee (All-in)** | Absolute budget certainty | Small, stable businesses with little change |
| **Value-Based** | Highest possible margins | High-compliance industries (Healthcare, Defence) |

## Factors That Influence Your MSP Pricing
You cannot set your prices in a vacuum. You need to understand your "cost to serve." This isn't just the price of your RMM agent or your endpoint protection; it includes the salary of your engineers, the rent for your office, and the time your account managers spend in QBRs.

### The Stack Cost
Your "stack" is the collection of tools you use to deliver service. This includes your PSA, RMM, backup solutions, and security tools. If your stack costs you $40 per user, and you are only charging $100 per user, you are already losing a significant chunk of your margin before you even pay a technician to answer a phone call.

### Labour and Overhead
Labour is the most expensive part of an MSP. You must track how much time is being spent on each client. If a "noisy" client is taking up 20 hours of support a month but only paying $1,000, your effective hourly rate is $50—which likely means you are losing money on that contract.

### Geographic Market
MSP pricing in New York City or London will naturally be higher than in smaller rural markets. However, with the rise of remote work and global security threats, the "local market" argument is weakening. Clients are increasingly willing to pay for expertise over proximity.

## The Shift to Security-Centric Pricing
Security is no longer an "add-on." It is the foundation of the modern MSP relationship. Luis Navarro’s experience building Totality Services showed that when you lead with security, the pricing conversation changes from "how much do you cost?" to "how do we protect our business?"

### Bundling Advanced Security
Including things like MDR (Managed Detection and Response), SOC-as-a-Service, and regular vulnerability scanning into your core **MSP pricing** allows you to command a premium. It also protects your business. If a client refuses security and then gets hit by ransomware, you are the one who has to deal with the fallout.

### The Role of Security Reviews
One of the best ways to justify your pricing is through consistent, high-quality Security Reviews. By showing a client exactly where their risks lie and how your recommendations mitigate those risks, you turn a technical service into a business necessity. This is exactly why we built MSP Agenda—to take those complex technical findings and turn them into a commercial conversation that justifies your value.

#### Why Clients Pay for Outcomes, Not Tools
- They want **uptime**, not a specific brand of firewall.
- They want **compliance**, not a checklist of logs.
- They want **peace of mind**, knowing that their data is safe.
- They want **accountability**, knowing exactly who is responsible when things go wrong.

## Common Mistakes in MSP Pricing
Over 15 years in the trenches, Luis saw many MSPs struggle because they fell into the same traps. Avoiding these common errors is the quickest way to increase your bottom line without even adding new clients.

### 1. The "Race to the Bottom"
Trying to be the cheapest provider in town is a losing strategy. There will always be a "man in a van" who can undercut you because he has no overhead. You aren't competing with him; you are competing with the cost of a data breach or a week of downtime.

### 2. Failing to Increase Prices
If you haven't raised your prices in three years, you have effectively taken a pay cut. Your vendors (Microsoft, Datto, Huntress) raise their prices regularly. Your employees expect raises. Your **MSP pricing** must reflect these realities. A simple 3% annual cost-of-living adjustment (COLA) should be standard in every contract.

### 3. "All You Can Eat" Without Limits
Unlimited support sounds great in a sales meeting, but it can be dangerous. Does it include onsite visits? Does it include office moves? Does it include new server deployments? If you don't clearly define what is "in scope" and what is a "project," your recurring revenue will be eaten alive by scope creep.

### 4. Hiding the Value
If the only time a client hears from you is when something is broken, they will eventually wonder why they are paying you every month. You must demonstrate value through regular reporting, QBRs, and strategic guidance. Pricing is only an issue in the absence of value.

## How to Transition to a Higher Pricing Model
If you realise your current **MSP pricing** is too low, you don't have to change it overnight for everyone. Start with new business. Use your new, higher rates for every new proposal you send out. You will likely be surprised at how little pushback you get if your value proposition is strong.

For existing clients, the transition requires a "value-add" conversation. Don't just tell them the price is going up. Tell them you are upgrading their security stack, adding new monitoring capabilities, or providing more frequent strategic reviews. Show them how these changes benefit their business, and the price increase becomes much easier to swallow.

**Pro Tip:** Use a tool like MSP Agenda to run a comprehensive Security Review before a contract renewal. When a client sees a clear roadmap of necessary improvements, they are much more likely to accept a new agreement at a higher price point that includes those improvements.

## Commercial Strategy: Projects vs. Recurring Revenue
While **MSP pricing** focuses heavily on recurring revenue (MRR), don't overlook the importance of projects. Projects are the "spikes" of profit that allow you to invest in the business. However, they should never be the primary way you pay your bills.

Recurring revenue should cover all your fixed costs and your basic payroll. Project revenue is for bonuses, new equipment, and growth. A healthy MSP usually sees a ratio of about 70-80% recurring revenue to 20-30% project/hardware revenue. If your project revenue is higher than that, you are essentially a project house with a side hustle in support, which is much harder to sell for a high multiple later on.

### Pricing Projects for Success
- **Standardise Labour Rates:** Have a clear hourly rate for out-of-scope work.
- **Fixed-Fee Projects:** For common tasks like mail migrations, use a fixed fee based on your average time to complete, adding a 20% buffer.
- **Value the Strategy:** Charge for the design and discovery phase of large projects, not just the implementation.

## The Impact of Pricing on Business Valuation
Luis Navarro’s eight-figure exit from Totality Services wasn't an accident. It was the result of building a business with clean, predictable, and profitable **MSP pricing**. When an acquirer looks at your books, they aren't looking at your technical prowess; they are looking at your margins and the stickiness of your revenue.

A business with 100 clients paying $50/user is worth significantly less than a business with 50 clients paying $150/user, even if the total revenue is similar. Why? Because the second business has higher margins, less operational overhead, and a higher quality of client. High-value pricing is a signal of a high-value business.

## Advanced Insights: Moving Toward Value-Based Pricing
The ultimate goal for a mature MSP is value-based pricing. This is where you stop talking about hours, users, or even security tools, and start talking about business outcomes. You are pricing your service based on the value of the risk you are removing.

For a law firm, the value of preventing a data breach that could lead to disbarment is worth far more than the price of a few antivirus licenses. For a manufacturer, the value of preventing a day of production downtime is measured in hundreds of thousands of dollars. When you can quantify that value, your **MSP pricing** can reach levels that the "per-device" crowd could never imagine.

### Steps to Value-Based Pricing
1. Identify the client's biggest business risk (Downtime, Data Loss, Compliance Failure).
2. Quantify the cost of that risk occurring.
3. Present your solution as the primary mechanism for avoiding that cost.
4. Price the solution as a fraction of the total risk value, rather than a markup on your costs.

## Practical Example: The "Security First" Bundle
Let's look at how you might structure a modern, security-focused per-user price. This isn't just a list of tools; it's a comprehensive managed offering.

| Component | What the Client Gets | Internal Cost (Est) |
| --- | --- | --- |
| **Core Support** | Unlimited remote helpdesk, patching, and maintenance. | $15.00 |
| **Advanced Security** | EDR/MDR, Email Security, MFA Management. | $12.00 |
| **Data Protection** | Cloud-to-cloud backup (M365/Google) and local image backup. | $8.00 |
| **Strategic Advice** | Quarterly Security Reviews and IT Roadmapping via MSP Agenda. | $5.00 (Labour) |
| **Total Cost** | — | $40.00 |
| **Target Price** | **The "Safe Business" Bundle** | **$125 - $175** |

In this scenario, you are achieving a healthy margin that allows for reinvestment while providing the client with a solution that actually protects their business. This is the hallmark of a commercially mature MSP.

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Source: https://mspagenda.com/blog/msp-pricing
Last updated: 2026-07-22