MSP Quarterly Business Review Template

Last updated: April 2026

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Quick Answer

Most MSPs (63%) are general-purpose providers, according to a 2023 survey of 1,091 respondents.
Businesses using managed IT services can reduce IT costs by up to 40%.
MSPs typically use pricing models like per-user, per-device, or tiered bundles.
New technologies and IT Process Automation can help MSPs reduce costs and increase efficiency.

MSPs face a changing landscape where new technologies create fresh opportunities. Small and midsize businesses (SMBs) are increasingly looking to managed service providers for help with digitalization, streamlining operations, and strengthening cybersecurity efforts. To meet this demand, MSPs must become more advanced in their operations and technology. A 2023 Kaseya MSP Benchmark Survey, which gathered insights from 1,091 respondents, highlighted these shifts, with 83% of participants coming from the Americas. Understanding various pricing models, such as per-user or per-device, is key for MSPs to ensure profitability and customer satisfaction. Businesses that partner with the right MSP can reduce their IT costs significantly, sometimes by as much as 40%.

What Are the Latest Trends for MSPs?

The managed services industry is always evolving, with new technologies constantly reshaping how providers operate and what clients expect. MSPs that quickly adopt these advancements can gain a competitive edge in the market. This proactive approach helps them stay ahead of the curve.

Embracing New Technologies for Efficiency

New and revolutionary technologies are replacing older systems and tools, which creates fresh opportunities for MSPs worldwide. Providers who embrace these technologies quickly can stay ahead of the curve and gain a competitive advantage. For example, technologies like IT Process Automation and a fully integrated IT ecosystem help MSPs reduce costs, increase efficiency, and streamline processes. By automating tasks such as patching, handling standard tickets, and simple incident response, MSPs can address labor shortages. This also allows them to provide more responsive customer service and unlock new revenue channels, which increases customer satisfaction and loyalty. Integrating core tools helps MSPs streamline operations, reduce costs, and make better decisions faster.

Meeting the Demands of SMBs

Small and midsize businesses (SMBs) represent the most lucrative client base for MSPs. These businesses are turning to MSPs to accelerate their digitalization efforts, streamline their operations, and strengthen their cybersecurity. This demand holds true whether the economy skirts a potential recession or dives deep into one. To meet these growing client needs, MSPs must step up their game. They need to become more operationally and technologically advanced. This means investing in tools and training that allow them to offer more sophisticated and efficient services.

Survey Insights

Our analysis of the 2023 Kaseya MSP Benchmark Survey Report provides valuable insights into the industry. This survey included 1,091 respondents from around the world. The largest portion of these respondents, 83%, came from the Americas. About 11% were from Europe, the Middle East, and Africa (EMEA), and the remaining 6% were from the Asia Pacific (APAC) region. The findings from this report help us understand the current state of MSP pricing and profitability. You can find more details in the Kaseya's 2023 Global MSP Benchmark Survey Report. The survey helps us examine what affects the pricing of managed solutions and what MSPs can do to boost profitability in 2023 and beyond.

Operational Advancement

For MSPs, operational advancement means more than just using new software. It involves optimizing internal workflows, improving service delivery, and enhancing client communication. By integrating core tools, MSPs can streamline operations, reduce costs, and make better decisions faster. This leads to a more robust service offering and a stronger competitive position. For example, automating routine tasks allows technicians to focus on more complex issues, providing higher value to clients. This approach also helps in addressing labor shortages, a common challenge in the IT industry, by maximizing the efficiency of existing staff.

Strategic Growth Opportunities

The shift towards digitalization and enhanced cybersecurity among SMBs represents a significant growth opportunity for MSPs. By positioning themselves as strategic partners, rather than just service providers, MSPs can offer more comprehensive solutions. This includes not only day-to-day IT management but also strategic consulting on technology roadmaps and security postures. MSPs who embrace these technologies quickly can stay ahead of the curve and gain a competitive advantage. This strategic approach helps in increasing customer satisfaction and loyalty, which are crucial for long-term business success.

How Are MSPs Paid and What Pricing Models Do They Use?

Pricing is a critical factor that directly impacts an MSP's profitability and overall revenue. Therefore, it requires careful consideration and a strategic approach. MSPs need to evaluate various factors, including the customer profile and demand patterns, before deciding which pricing systems to implement.

Factors Influencing Pricing Models

A strong pricing model is one that aligns with the business's current needs but also has the capability to scale and adapt to future demands. This flexibility is essential in a rapidly changing technology landscape. MSPs have a choice of multiple pricing models they can implement to bill clients for their services. The choice of pricing model often varies depending on the industry focus of the MSP and the specific region it serves. For example, an MSP serving a highly regulated industry might adopt a model that emphasizes compliance and security features, which could influence pricing. Similarly, geographic location can affect labor costs and market rates, impacting pricing strategies.

Popular Pricing Models

Some of the most popular pricing models used by MSPs include a combination of per-user and per-device billing, as well as tiered bundles for managed services. These models offer different advantages for both the MSP and the client.

Per-User Pricing

With a per-user pricing model, clients pay a flat fee per employee. This fee typically covers all of that employee's devices, such as a laptop, desktop, and mobile phone. This approach simplifies billing for the client, as they know exactly how much they will pay per person, regardless of the number of devices that individual uses. It works well for organizations with predictable headcounts. As the client's team grows, their costs grow proportionally. This model is often favored for its simplicity and ease of understanding.

Per-Device Pricing

In a per-device pricing model, each managed device carries its own fee. This includes workstations, servers, and mobile devices. For example, an MSP might charge $100 per workstation and $250 per server each month. This fee remains consistent regardless of how much support each device actually requires. Billing is tied to the inventory of devices rather than usage. This model is also straightforward, with clients easily understanding how their bill is calculated. It offers predictable revenue for MSPs and can reduce payment disputes. We will dive deeper into this model in the next section, but for more information on MSP pricing and profitability insights, you can refer to this resource.

Flat-Rate, All-Inclusive Pricing

Some MSPs offer flat-rate, all-inclusive pricing. This model provides a single, predictable monthly fee that covers a comprehensive suite of IT services, regardless of the number of users or devices. The appeal of this model is its simplicity and budget predictability for clients, as they avoid unexpected costs. For MSPs, it requires a thorough understanding of the client's infrastructure and needs to ensure the flat rate is profitable. This model is particularly attractive to businesses seeking to stabilize their IT budgets and avoid the fluctuations often associated with usage-based billing. It fosters a proactive relationship between the MSP and the client, as the MSP is incentivized to prevent issues rather than just fix them.

Tiered Bundles

Tiered bundles offer different levels of service at varying price points. For example, an MSP might offer a "Basic," "Standard," and "Premium" package, each with a different set of services and support levels. This allows clients to choose the package that best fits their needs and budget. This model provides flexibility and caters to a wider range of client requirements. It also allows MSPs to upsell clients to higher tiers as their needs evolve. Each tier typically outlines specific services, response times, and covered technologies, making it clear what clients receive for their investment.

Strategic Pricing Considerations

When defining and adjusting prices, MSPs often face the temptation to follow competitors. However, this can be a risky approach because MSPs have different cost structures, service offerings, and value propositions. Instead, focusing on target profit margins is often advocated. A strong pricing model should be suited to your business's current needs and should also be capable of scaling and adapting to future demands. This strategic approach ensures long-term profitability and sustainable growth. Understanding how much an MSP costs is only part of the picture. To make the smartest investment, businesses also need to understand what their total IT budget should look like, how to prioritize spending, and how to ensure every dollar works toward their business goals.

What is Per-Device Pricing and When Does It Work?

Per-device pricing is a billing structure where clients are charged based on the number of managed devices within their IT environment. This model has been a long-standing method for MSPs to bill their clients. It provides a straightforward and often predictable revenue stream.

Understanding Per-Device Pricing

In this model, the MSP charges a set monthly fee for each type of device they manage. This can include desktops, laptops, servers, printers, or mobile phones. For example, an MSP might charge $100 per workstation and $250 per server each month. This fee typically covers specific services such as monitoring, patching, and antivirus protection for that device. The billing is tied directly to the inventory of devices rather than the actual usage or the amount of support each device requires. If a client adds a new device, their invoice goes up; if they remove one, the cost drops. This simplicity is a key appeal of per-device pricing for both MSPs and their clients. Clients can easily understand how their bill is calculated, which often leads to fewer payment disputes. For MSPs, it generally means predictable revenue.

When Per-Device Pricing Works

Per-device pricing works particularly well for smaller organizations or those with predictable headcounts and a stable number of devices. In such environments, the IT inventory is relatively constant, making billing straightforward and manageable.

Predictable Environments

For businesses that have a consistent number of workstations, servers, and other hardware, per-device pricing offers clarity. The MSP can easily track the devices and bill accordingly. This model is also beneficial when the scope of services per device is clearly defined and consistent. It simplifies the onboarding process for new clients, as the device count can be quickly assessed to generate a quote. This predictability helps both the MSP and the client with budgeting.

Simplicity and Transparency

The appeal of per-device pricing lies in its simplicity. Clients can easily understand how their bill is calculated, which fosters transparency in the relationship. For MSPs, it often means predictable revenue and fewer payment disputes. This straightforward approach allows for easier forecasting of income and resource allocation. It also reduces the administrative burden of tracking minute usage details or support tickets, allowing MSPs to focus more on proactive management.

Legacy Systems

Many MSPs have used per-device pricing for years, and it has served them well. It's a traditional model that is deeply ingrained in the industry. For MSPs just starting out or those with a client base accustomed to this model, it can be a comfortable and effective choice. It also works well when the primary focus of the managed services is on hardware maintenance and software updates for individual machines.

Challenges and Considerations

While per-device pricing offers simplicity, the needs of today's clients are changing. Factors like hybrid work environments, multi-device use per user, and outcome-based expectations are pushing providers to reevaluate traditional billing models. What once felt straightforward may now seem outdated in complex environments. For instance, a single user might use a laptop, a tablet, and a smartphone, all requiring management. Charging per device might become complex or less appealing if the user-centric services are more critical.

Hybrid Work and Multi-Device Use

With the rise of hybrid work models, employees often use multiple devices—both company-issued and personal—to access corporate resources. In such scenarios, a pure per-device model might not fully capture the value provided to the user. This shift has led some MSPs to explore alternatives like per-user pricing or a combination of models. Understanding how managed services pricing models work, including MSP per-device pricing models, is crucial for making an informed decision about your billing strategy.

Scalability Issues

As an organization grows, its costs grow proportionally with a per-device model. While this is predictable, it might not always be the most cost-effective or value-driven approach for larger, more dynamic businesses. Modern tools, such as MSP-specific billing software, can support a shift toward more adaptive billing approaches, allowing MSPs to manage hybrid models more effectively.

Evaluating the Model

Whether you're just starting out or looking to update your current model, evaluating if per-device pricing still aligns with your growth plans is important. It requires a close look at your client base, the services you offer, and your operational efficiency. While it remains a viable option for many, MSPs should consider its limitations in today's evolving IT landscape.

What are the Benefits of Managed IT Services for Clients?

Hiring a managed service provider (MSP) can feel like a significant step for small and mid-sized businesses. However, the benefits often far outweigh the initial concerns, leading to substantial cost savings and improved operational efficiency.

Cost Reduction and Efficiency Gains

One of the most compelling benefits for clients is the potential for significant IT cost reduction. Partnering with the right MSP can save businesses more than it costs. In fact, businesses using managed IT services reduce IT costs by up to 40%. This substantial saving comes from various factors, including economies of scale, proactive maintenance that prevents costly downtime, and access to specialized expertise without the overhead of hiring full-time staff. MSPs can also help streamline operations by implementing efficient systems and processes, which further reduces operational expenditures. For instance, automating routine tasks, as MSPs often do, frees up internal staff to focus on core business activities, boosting overall productivity.

Strategic IT Budgeting

Understanding what an MSP costs is only part of the picture. To make the smartest investment, businesses also need to understand what their total IT budget should look like. This involves prioritizing spending and ensuring that every dollar works toward specific business goals. An MSP can play a crucial role in this strategic budgeting process, helping clients allocate resources effectively across day-to-day essentials and long-term growth initiatives. They provide insights into where IT investments can yield the highest return, whether it's in cybersecurity, cloud adoption, or infrastructure upgrades. This partnership transforms IT spending from a reactive expense into a strategic investment.

Access to Expertise and Advanced Tools

MSPs provide businesses with access to a broad range of IT expertise and advanced tools that might otherwise be unaffordable or inaccessible. This includes specialized knowledge in areas like cybersecurity, cloud management, and data recovery. Instead of maintaining an in-house team with diverse skill sets, clients can leverage the collective knowledge of an MSP's experts. This also means access to cutting-edge software and hardware that MSPs use to manage and secure client environments, often at a lower cost due to their multi-client licensing agreements. This helps businesses stay competitive and secure without needing to make large capital investments in technology or talent.

Enhanced Security and Compliance

Cybersecurity is a top concern for businesses of all sizes, and MSPs are instrumental in strengthening an organization's defenses. They implement robust security measures, conduct regular vulnerability assessments, and provide rapid incident response. This proactive approach significantly reduces the risk of data breaches and cyberattacks, which can be incredibly costly in terms of financial loss, reputational damage, and regulatory fines. Many MSPs also help clients navigate complex compliance requirements, ensuring that their IT infrastructure meets industry-specific standards and regulations. This is particularly valuable for businesses operating in sectors with strict data protection laws.

Business Continuity and Disaster Recovery

Beyond security, MSPs play a vital role in ensuring business continuity. They implement comprehensive backup and disaster recovery solutions that protect critical data and systems from unforeseen events like hardware failures, natural disasters, or cyberattacks. In the event of an incident, an MSP can quickly restore operations, minimizing downtime and its associated costs. This capability is invaluable for businesses where even short periods of downtime can lead to significant financial losses and operational disruptions. By having a robust disaster recovery plan managed by an MSP, businesses can operate with greater peace of mind.

Focus on Core Business Activities

By outsourcing IT management to an MSP, businesses can free up their internal resources and leadership to focus on core competencies and strategic initiatives. This shift allows employees to concentrate on revenue-generating activities and innovation, rather than getting bogged down by IT issues. For small and mid-sized businesses, this can be a game-changer, enabling them to compete more effectively with larger organizations. The partnership with an MSP allows businesses to leverage technology as a strategic asset, driving growth and achieving long-term objectives.

How Has the MSP Landscape Changed?

The managed services landscape is dynamic, with the Kaseya MSP Benchmark Survey tracking significant shifts in the types of providers operating in the market year over year. These changes reflect evolving client needs and the increasing complexity of IT environments.

Evolution of MSP Profiles

The Kaseya MSP Benchmark Survey provides a snapshot of how MSP profiles have changed over time. In 2023, the survey had 1,091 respondents, with the largest portion, 83%, coming from the Americas. The data shows a notable evolution in the specialization of managed service providers.

General-Purpose MSPs

General-purpose MSPs still make up the largest segment of the market, though their share has seen a slight decrease. In 2023, 63% of respondents identified themselves as general-purpose MSPs, down from 67% in 2022. These providers offer a broad range of IT services, acting as a one-stop shop for many small and midsize businesses. While their overall percentage has slightly declined, they remain the foundational segment of the MSP industry, catering to diverse client needs. Their comprehensive service offerings often include network management, help desk support, and basic cybersecurity.

Rise of Managed Security Service Providers (MSSPs)

A significant trend observed is the increase in Managed Security Service Providers (MSSPs). MSSPs increased year over year to 18% of the respondent base in 2023, up from 17% in 2022. This growth highlights the escalating importance of cybersecurity for businesses. As cyber threats become more sophisticated, companies are increasingly seeking specialized expertise to protect their data and infrastructure. MSSPs focus specifically on security services, offering advanced threat detection, incident response, compliance management, and security awareness training. This specialization allows them to provide deeper, more focused protection against evolving cyber risks.

Growth in Network and Data Center Focus

Another area that saw substantial growth was network and data center-focused providers. These MSPs increased to 19% of respondents in 2023, a considerable jump from 12% in 2022. These providers primarily oversee servers, storage devices, and other network components that keep businesses up and running. The increased reliance on robust and always-on infrastructure, especially with the proliferation of cloud services and remote work, drives demand for these specialized services. Their expertise ensures the foundational IT systems are stable, secure, and performant, which is critical for modern business operations. This segment's growth underscores the ongoing need for specialized infrastructure management, even as cloud adoption becomes more widespread.

Specialized by Market Vertical

While not a separate category in the 2023 data provided, in previous years, some MSPs identified as specialized by market vertical, accounting for 4% in 2022. This type of specialization indicates a focus on the unique IT needs and compliance requirements of specific industries, such as healthcare, finance, or legal. Although not explicitly broken out in the 2023 data, the trend towards specialization in other areas suggests that MSPs are increasingly tailoring their services to meet specific market demands. This allows them to offer highly relevant and targeted solutions, building deeper expertise within a particular niche.

Implications for the Industry

These shifts in MSP profiles have several implications for the industry. The growth of MSSPs and network- and data-center-focused providers indicates a move towards greater specialization. This means that while general-purpose MSPs still dominate, there is a growing demand for providers with deep expertise in critical areas like security and infrastructure. MSPs who embrace these technologies quickly can stay ahead of the curve and gain a competitive advantage. This trend suggests that MSPs may need to consider offering more specialized services or partnering with other providers to offer a comprehensive solution to their clients. For more details on these trends, including how much an MSP costs, you can refer to this guide. The evolving landscape demands that MSPs continually assess their service offerings and business models to remain competitive and relevant.

Why Are Strong MSP Service Agreements Important?

Strong MSP service agreements are foundational to building and maintaining successful, long-term relationships with clients. These agreements go beyond simple contracts; they establish clear expectations and foster mutual understanding, which is crucial for a win-win partnership.

Building Trust and Clarity

Building trust is key to running a successful business, and the same applies to MSPs. When you have a mutual understanding with your clients, it's a win-win for everyone. Service agreements, often called Managed Services Agreements (MSAs) or Service Level Agreements (SLAs), are formal documents that outline the scope of services, responsibilities, performance metrics, and terms of engagement between the MSP and its client. Without a clear agreement, misunderstandings can arise, leading to client dissatisfaction, disputes, and potentially the termination of the partnership.

Defining Scope of Responsibilities

One of the primary functions of a service agreement is to clearly define the scope of responsibilities for both the MSP and the client. This includes specifying exactly what services the MSP will provide—such as network monitoring, cybersecurity, data backup, help desk support, and software updates—and what is not covered. This prevents situations where a client asks for something beyond the agreed-upon scope, which can strain the relationship and lead to additional, unplanned costs. For example, if a client requests support for a legacy system not included in the agreement, the document provides a clear reference point for discussion.

Preventing Misunderstandings Regarding Payments

Payment terms are another critical component of a strong service agreement. The agreement should clearly detail how the MSP is paid, the billing cycle, payment due dates, and any penalties for late payments. This clarity helps prevent misunderstandings regarding payments, which are a common source of conflict in business relationships. For MSPs, predictable revenue streams are vital for stability and growth, and a well-defined payment schedule in the agreement supports this. It also outlines the process for invoicing and dispute resolution, ensuring transparency and fairness for both parties.

Moving Beyond Break/Fix

Many MSPs have historically operated on a break/fix model, where they are called in only when something goes wrong. However, this model is ineffective if the goal is to build long-term relationships with clients. Strong service agreements facilitate a shift away from this reactive approach to a proactive, managed services model.

Proactive Service Delivery

A managed services agreement emphasizes proactive monitoring, maintenance, and management. This means the MSP is continuously working to prevent issues before they arise, rather than just fixing them after they occur. This proactive approach benefits clients by minimizing downtime, improving system performance, and enhancing security. For the MSP, it allows for more efficient resource allocation and a more stable workload. The agreement sets expectations for this proactive engagement, including scheduled maintenance windows, regular reporting, and strategic IT planning.

Fostering Long-Term Relationships

By clearly defining services, setting performance standards (like response times and uptime guarantees), and establishing transparent communication channels, service agreements build a foundation of trust. This trust is essential for fostering long-term client relationships. When clients understand what they are paying for and see the value in the proactive services provided, they are more likely to remain loyal. These agreements also provide a framework for regular business reviews, where the MSP can demonstrate value, discuss future needs, and strengthen the partnership. A comprehensive guide to MSP service agreements can provide more insights into structuring these crucial documents, as discussed in this resource.

Ensuring Compliance and Accountability

Service agreements also play a crucial role in ensuring compliance with industry regulations and establishing accountability. They can include clauses related to data protection, privacy, and specific industry standards that the MSP must adhere to. This is especially important for clients in regulated sectors like healthcare or finance.

Performance Metrics and Reporting

The agreement typically includes Service Level Objectives (SLOs) and Service Level Agreements (SLAs) that define measurable performance metrics. These might include uptime guarantees, response times for support tickets, and resolution times for critical issues. Regular reporting on these metrics, as outlined in the agreement, ensures accountability. It allows clients to see that the MSP is meeting its commitments and provides a basis for ongoing performance evaluation. This transparency reinforces the value of the MSP's services and strengthens the client's confidence in the partnership.

Legal Protection

From a legal standpoint, a well-drafted service agreement protects both the MSP and the client. It clarifies legal obligations, limits liability, and outlines dispute resolution mechanisms. This legal framework minimizes risks for both parties and provides a clear course of action should any disagreements arise. It's an essential document that provides peace of mind, allowing both the MSP and the client to focus on their respective core businesses without undue legal concerns.

Frequently Asked Questions

What is an MSP?

An MSP, or Managed Services Provider, is a third-party company that remotely manages a customer's IT infrastructure and end-user systems. MSPs offer a variety of outsourced support services for businesses, ranging from network management and cybersecurity to data backup and cloud services. The right MSP can also help strategically grow a business. They typically operate on a proactive model, aiming to prevent IT issues before they occur, rather than just fixing them reactively.

How does per-user pricing differ from per-device pricing?

Per-user pricing charges a flat fee per employee, covering all of that employee's devices. For example, one employee might use a laptop, phone, and tablet, all covered under a single per-user fee. In contrast, per-device pricing charges a separate fee for each managed device, such as $100 per workstation and $250 per server each month. While per-user pricing scales with headcount, per-device pricing scales with the number of managed IT assets.

What are some common MSP pricing models?

MSPs use several pricing models to bill clients for their services. The most popular models include a combination of per-user and per-device pricing, where costs scale based on the number of users or devices. Another common model is tiered bundles for managed services, offering different levels of service at varying price points. Some MSPs also offer flat-rate, all-inclusive pricing, providing a comprehensive suite of services for a single monthly fee.

Why are MSP service agreements important?

Strong MSP service agreements are crucial because they build trust and clarity between the MSP and its clients. They clearly define the scope of responsibilities, preventing misunderstandings about what services are covered and what is beyond scope. These agreements also outline payment terms to avoid disputes and move the relationship from a reactive break/fix model to a proactive, long-term partnership. They also ensure accountability through performance metrics and provide legal protection for both parties.

How can MSPs boost profitability in 2023 and beyond?

MSPs can boost profitability by embracing new technologies like IT Process Automation, which helps reduce costs and increase efficiency by automating tasks such as patching and incident response. Integrating core IT tools can streamline operations and improve decision-making. Focusing on the lucrative small and midsize business (SMB) market, which seeks help with digitalization and cybersecurity, also presents growth opportunities. A 2023 Kaseya survey found that 63% of respondents were general-purpose MSPs, highlighting the broad market for managed services.

— The MSP Directory Team