How Much Should MSPs Charge in 2026?

Last updated: April 2026

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Quick Answer

In 2023, 63% of Managed Service Providers (MSPs) identified as general-purpose, while 18% focused on managed security services (MSSPs).
Businesses that partner with managed IT services providers can reduce their IT costs by as much as 40%.
MSPs often bill clients using per-user, per-device, or flat-rate all-inclusive pricing models.
Implementing new technologies like IT Process Automation helps MSPs cut costs and boost operational efficiency.

For managed service providers (MSPs), determining the right pricing strategy in 2026 involves navigating evolving client needs and technological advancements. We see a landscape where small and midsize businesses (SMBs) increasingly rely on MSPs to accelerate their digitalization efforts, streamline operations, and bolster cybersecurity defenses, as highlighted in Kaseya's MSP Pricing Guide. These demands push MSPs to become more advanced both operationally and technologically. Our analysis shows that a well-chosen pricing model is crucial for profitability and customer satisfaction. While traditional models like per-device pricing have offered simplicity and predictable revenue, the market is shifting. We found that 63% of MSPs in 2023 identified as general-purpose providers, according to the Kaseya 2023 Global MSP Benchmark Survey Report, which surveyed 1,091 respondents. This diverse market requires flexible and scalable pricing approaches to meet varied client needs and ensure long-term success.

What Is an MSP and Why Do SMBs Need Them?

An MSP, or Managed Services Provider, delivers a variety of outsourced support services for businesses, but the right MSP can also help strategically grow a business. Small and midsize businesses (SMBs) are increasingly turning to MSPs to accelerate their digitalization efforts, streamline their operations, and strengthen their cybersecurity efforts. To meet this growing demand, MSPs must step up their game and become more operationally and technologically advanced.

The Role of an MSP in Modern Business

A Managed Services Provider (MSP) is an organization that remotely manages a customer's IT infrastructure and end-user systems. These services can range from network monitoring and security to data backup and disaster recovery. In today's fast-paced digital world, many SMBs lack the internal resources or expertise to manage complex IT environments effectively. This is where MSPs become invaluable. They offer specialized knowledge and tools that allow businesses to maintain robust IT operations without the overhead of an in-house IT department. By outsourcing these critical functions, businesses can focus on their core competencies while ensuring their technology infrastructure is secure, efficient, and up-to-date. MSPs help businesses navigate the complexities of modern IT, providing proactive management and support to prevent issues before they arise.

Driving Digitalization and Efficiency

One of the primary reasons SMBs engage MSPs is to accelerate their digitalization efforts. Digital transformation is no longer an option but a necessity for businesses to remain competitive. MSPs facilitate this by implementing and managing new technologies, cloud solutions, and automation tools. For instance, technologies like IT Process Automation and a fully integrated IT ecosystem allow MSPs to reduce costs, increase efficiency, and streamline processes. By automating routine tasks such as patching, handling standard tickets, and managing simple incident response and remediation, MSPs can address labor shortages within their own operations. This automation not only makes MSPs more efficient but also enables them to provide more responsive customer service, which in turn increases customer satisfaction and loyalty. The integration of core tools further helps MSPs streamline operations, reduce costs, and make better decisions faster, which directly benefits their clients by improving overall IT performance and reliability.

Strengthening Cybersecurity Defenses

Cybersecurity is another critical area where MSPs provide essential support. With the increasing sophistication of cyber threats, SMBs are particularly vulnerable due to limited resources and expertise. MSPs offer advanced cybersecurity solutions, including threat detection, prevention, and response, helping businesses protect their valuable data and systems. The importance of security is reflected in the growth of specialized providers; Managed Security Service Providers (MSSPs) increased their share of the respondent base to 18% in 2023, up from 17% in 2022, according to the Kaseya 2023 Global MSP Benchmark Survey Report. This trend underscores the heightened focus on cybersecurity within the managed services industry. By partnering with an MSP, businesses gain access to enterprise-grade security measures and expert monitoring, significantly strengthening their defenses against cyberattacks. This proactive approach to security is vital for maintaining business continuity and protecting reputation in an increasingly risky digital landscape. The strategic growth that an MSP can provide extends beyond just operational efficiency; it encompasses a robust and secure technological foundation that allows businesses to thrive and adapt to future challenges.

How Are MSPs Paid and What Are Common Pricing Models?

MSPs are typically paid through various pricing models, with the choice depending on factors like industry focus, regional demands, and the specific services offered. Pricing is a crucial aspect of an MSP's profitability and revenue, and as such, it requires careful consideration to ensure both business viability and customer satisfaction. A strong pricing model should not only suit an MSP's current needs but also be capable of scaling and adapting to future demands.

The Importance of a Strategic Pricing Model

Choosing the right pricing model is not just about setting a number; it's about defining the value an MSP provides and ensuring that value is accurately reflected in the cost to the client. We have observed that MSPs must consider the customer profile and demand patterns before deciding which pricing systems to use. For instance, a small business with predictable IT needs might benefit from a different model than a rapidly growing enterprise with complex, evolving requirements. The goal is to create a pricing structure that is transparent for clients, sustainable for the MSP, and flexible enough to accommodate changes in technology and business needs. Without a well-defined pricing strategy, MSPs risk underpricing their services, leading to reduced profitability, or overpricing, which can deter potential clients. This balance is key to making an MSP profitable while still making it the top choice of customers in the market.

Popular MSP Pricing Models

MSPs have a choice of multiple pricing models they can implement to bill clients for their services. The pricing model of choice usually varies with industry focus and the region the MSP serves. However, some of the most popular pricing models are:

Per-User or Per-Device Pricing

This model is one of the most common approaches. Costs scale based on the number of users or devices under management. With a per-user pricing model, clients pay a flat fee per employee, and that fee typically covers all of their devices. For example, an MSP might charge $100 per user per month, covering that user's desktop, laptop, and mobile phone. Conversely, with a per-device model, each managed device (workstation, server, mobile device) carries its own fee. An MSP might charge $100 per workstation and $250 per server each month, as noted in Flexpoint's MSP Per-Device Pricing Analysis. Both approaches work well for smaller organizations or those with predictable headcounts because as a team grows, costs grow proportionally. This model offers simplicity and predictable revenue for MSPs and easy understanding for clients.

Flat-Rate, All-Inclusive Pricing

Flat-rate, all-inclusive pricing involves a single, fixed monthly fee that covers all managed IT services. This model is appealing to clients because it provides budgeting certainty, removing the fear of unexpected costs. For MSPs, it requires a thorough understanding of the client's IT environment and potential support needs to set an appropriate price. This model often includes unlimited support, proactive monitoring, and management for a predictable monthly cost. It simplifies billing and can foster a stronger client relationship by removing transactional barriers to seeking support. However, MSPs must accurately assess the scope of work to ensure profitability, as excessive demands from a client can quickly erode margins if not properly accounted for in the initial agreement.

Tiered Bundles for Managed Services

Another popular approach is offering tiered bundles. MSPs create different service packages, each with a varying level of services and corresponding price points. For instance, a basic tier might include monitoring and patching, while a premium tier could add advanced cybersecurity, disaster recovery, and strategic IT consulting. This model allows clients to choose the level of service that best fits their needs and budget, providing flexibility. It also enables MSPs to cater to a wider range of clients, from those needing minimal support to those requiring comprehensive IT management. Tiered pricing can also be combined with per-user or per-device models, creating hybrid structures that offer even greater customization. For example, an MSP might offer a "silver" bundle at $X per user and a "gold" bundle at $Y per user, each with different service inclusions. These flexible models help MSPs align their offerings with specific customer demands and market segments.

Ultimately, the choice of pricing model is a strategic decision that impacts an MSP’s revenue, client relationships, and ability to scale. Gaidar Magdanurov of MSP Notes highlights this challenge, stating, "The most common question from MSPs is how to define and adjust their prices. There is a trap to go down the rabbit hole of following the competition, as customers shopping for rates most likely will do a comparison. However, this is a risky approach, as MSPs have different cost structures, different services and different value they provide." This emphasizes the importance of understanding an MSP's unique value proposition and cost structure when setting prices, rather than simply mimicking competitors.

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. This model typically includes desktops, laptops, servers, printers, or mobile phones, with each device type having a set monthly fee that covers specific services. We find that this model works particularly well for smaller organizations or those with predictable headcounts, offering simplicity and predictable revenue for both the MSP and the client.

Understanding the Per-Device Model

In a per-device pricing model, the cost is directly tied to the client's inventory of IT hardware. For example, an MSP might charge a distinct monthly fee for each workstation, a higher fee for each server, and separate fees for other devices like network printers or mobile phones. The fee for each device usually covers a defined set of services, which can include monitoring, patching, and antivirus protection, as detailed in Flexpoint's MSP Per-Device Pricing Analysis. This means that if a client has 10 workstations, 2 servers, and 5 mobile phones, their monthly bill would be the sum of the individual fees for each of those devices. The appeal of this model lies in its straightforward nature; clients can easily understand how their bill is calculated, and for MSPs, it often translates to predictable revenue and fewer payment disputes. Adding a new device directly increases the invoice, while removing one causes the cost to drop, making it a clear, inventory-based billing system rather than one tied to usage.

Advantages of Per-Device Pricing

The simplicity of per-device pricing is its greatest strength. For MSPs, it simplifies billing and allows for easier forecasting of revenue, as the number of devices under management is a tangible metric. This model also makes it relatively easy to onboard new clients or adjust services as their device count changes. For clients, the transparency is a major benefit; they know exactly what they are paying for on a per-device basis, which helps with budgeting. This predictability is particularly valuable for businesses that have a stable and easily quantifiable IT environment. Furthermore, it encourages clients to keep their device inventory up-to-date and potentially retire older, less efficient hardware, as each device incurs a cost.

When Per-Device Pricing is Most Effective

Per-device pricing is particularly effective in specific scenarios. It works well for smaller organizations that have a clear and consistent inventory of devices and predictable IT needs. For these businesses, the simplicity and transparency of the model align perfectly with their operational demands. Organizations with predictable headcounts also benefit, as the scaling of costs is directly tied to their physical IT assets. This makes it easier for them to manage their IT budget in conjunction with their growth plans. For MSPs just starting out or those primarily serving clients with traditional, on-premise IT setups, the per-device model can be a simple and effective way to structure their services. It provides a solid foundation for managing a client's hardware infrastructure, ensuring that essential services like monitoring and maintenance are consistently applied across all managed devices.

Limitations and Evolving Market Needs

Despite its advantages, per-device pricing faces challenges in today's evolving market. The rise of hybrid work models, multi-device users, and outcome-based expectations are pushing providers to reevaluate traditional billing models. A single user might now access company resources from a laptop, a tablet, and a personal mobile phone, blurring the lines of what constitutes a "device" in a billing sense. If an MSP charges per device, a single user could generate multiple charges, which might seem less cost-effective to the client compared to a per-user model that covers all devices for one fee. What once felt straightforward may now seem outdated in complex environments. This shift means that while per-device pricing still has its place, many MSPs are exploring alternatives or hybrid models that better accommodate the dynamic nature of modern IT usage. The key is to evaluate whether per-device pricing still aligns with an MSP's growth plans and the changing needs of their target clients, potentially using MSP-specific billing software to support more adaptive billing approaches.

What Are the Benefits of Using Managed IT Services?

Partnering with the right Managed Service Provider (MSP) can bring significant benefits to businesses, most notably through cost savings, increased efficiency, and enhanced security. Our analysis indicates that businesses using managed IT services can reduce their IT costs by up to 40% while simultaneously boosting overall efficiency and security. This makes MSPs a strategic investment rather than just an operational expense.

Significant Cost Reductions

One of the most compelling benefits of engaging an MSP is the potential for substantial cost reductions. For small and mid-sized businesses, maintaining an in-house IT department can be incredibly expensive, involving salaries, benefits, training, and equipment costs. By outsourcing to an MSP, businesses can convert what would typically be variable and unpredictable IT expenditures into a predictable monthly operational cost. According to LeadingIT's MSP Cost and IT Budgeting Guide, businesses using managed IT services can reduce IT costs by up to 40%. This significant saving allows businesses to reallocate funds to other critical areas, fostering growth and innovation. MSPs achieve these cost efficiencies through economies of scale, specialized tools, and optimized processes that might be out of reach for individual businesses. They can leverage their expertise to identify and implement cost-effective solutions, such as cloud migrations or software-as-a-service (SaaS) platforms, further reducing a client's capital expenditures on hardware and licenses.

Enhanced Efficiency and Productivity

Beyond cost savings, MSPs play a vital role in boosting operational efficiency and productivity. They provide proactive monitoring and maintenance, which means potential IT issues are often identified and resolved before they can cause downtime. This minimizes disruptions to business operations, ensuring employees can work without interruption. By automating tasks like patching, standard tickets, and simple incident response and remediation, MSPs can address labor shortages within their own teams, but also for their clients, freeing up internal staff to focus on more strategic initiatives. This automation not only streamlines processes but also guarantees that systems are always up-to-date and performing optimally. For example, if a company's internal IT staff spends hours on routine updates, an MSP can automate this, allowing those internal staff members to work on projects that directly impact the business's bottom line. This focus on efficiency translates into more productive employees and smoother business operations, which are crucial for any organization aiming for growth.

Robust Cybersecurity and Compliance

In today's threat landscape, robust cybersecurity is non-negotiable. MSPs offer specialized expertise and advanced tools to strengthen a business's cybersecurity posture. They implement multi-layered security solutions, including firewalls, antivirus software, intrusion detection systems, and regular security audits. This comprehensive approach helps protect sensitive data from breaches, ransomware, and other cyber threats. The increased focus on security is evident in the managed services sector, with Managed Security Service Providers (MSSPs) growing to 18% of the respondent base in 2023, up from 17% in 2022, as indicated by the Kaseya 2023 Global MSP Benchmark Survey Report. Beyond protection, MSPs also help businesses navigate complex regulatory landscapes, ensuring compliance with industry-specific standards and data privacy laws. This reduces the risk of costly fines and reputational damage. By entrusting cybersecurity to an MSP, businesses gain access to a dedicated team of security professionals who are continuously monitoring for threats and adapting to new vulnerabilities, providing peace of mind and a secure operating environment. This level of specialized security is often beyond the reach of most SMBs managing their IT in-house.

Strategic Growth and Future-Proofing

Finally, MSPs offer strategic value that extends beyond day-to-day IT management. They act as strategic partners, advising businesses on technology investments that align with their long-term goals. With new and revolutionary technologies constantly emerging, MSPs who embrace these technologies quickly can stay ahead of the curve and gain a competitive advantage. This expertise allows clients to adopt cutting-edge solutions without having to become experts themselves. Whether we skirt a potential recession or dive deep into it, SMBs will turn to MSPs to accelerate their digitalization efforts. MSPs can help businesses plan for scalability, implement cloud strategies, and adopt new tools that drive innovation. This forward-thinking approach ensures that a business's IT infrastructure is not only robust for today but also resilient and adaptable for future challenges and opportunities. By leveraging an MSP's insights, businesses can make smarter technology decisions that support sustainable growth and ensure they are well-prepared for the digital future.

What Factors Influence MSP Profitability?

Several key factors influence an MSP's profitability, primarily revolving around embracing new technologies, optimizing operational efficiency, and strategically pricing services. MSPs that move quickly to adopt revolutionary technologies, automate their processes, and integrate their core tools often gain a significant competitive advantage and boost their bottom line.

Embracing New Technologies for Competitive Advantage

The managed services landscape is constantly evolving, with new and revolutionary technologies replacing old systems and tools. For MSPs, staying profitable means not just keeping up, but getting ahead. MSPs who embrace these technologies quickly can stay ahead of the curve and gain a competitive advantage. For example, the adoption of IT Process Automation allows MSPs to transform how they deliver services. By automating tasks that are typically manual and time-consuming, such as patching operating systems, resolving standard tickets, and managing simple incident response and remediation, MSPs can drastically reduce their operational costs. This efficiency gain is crucial, especially when facing labor shortages, as it allows existing staff to handle more clients or more complex issues, thereby increasing overall productivity and service capacity. The ability to quickly integrate these new solutions into their service offerings allows MSPs to deliver higher value to clients while maintaining healthy profit margins. This proactive approach to technology adoption is a hallmark of highly profitable MSPs.

Optimizing Operations Through Integration and Automation

Operational efficiency is a cornerstone of MSP profitability. Beyond simply adopting new technologies, the strategic integration of these tools into a cohesive IT ecosystem is paramount. A fully integrated IT ecosystem helps MSPs streamline operations, reduce costs, and make better decisions faster. When core tools, such as remote monitoring and management (RMM), professional services automation (PSA), and cybersecurity platforms, communicate seamlessly, MSPs eliminate redundant tasks, reduce human error, and gain a clearer, real-time view of their clients' environments. This integration enables a more proactive service delivery model, where potential issues are often detected and resolved before they impact the client. For instance, an automated system can deploy a patch across all client devices based on a pre-defined schedule, freeing up technicians from manually performing this task. This not only improves service quality but also significantly reduces the labor costs associated with routine maintenance. By making their own operations more efficient, MSPs can provide more responsive customer service and unlock new revenue channels through enhanced service offerings, ultimately increasing customer satisfaction and loyalty.

Strategic Pricing and Value Proposition

While operational efficiency is critical, how an MSP prices its services is equally influential on profitability. As Gaidar Magdanurov from MSP Notes advises, "The most common question from MSPs is how to define and adjust their prices. There is a trap to go down the rabbit hole of following the competition, as customers shopping for rates most likely will do a comparison. However, this is a risky approach, as MSPs have different cost structures, different services and different value they provide." This highlights the danger of simply matching competitor prices without understanding one's own cost structure and unique value proposition. Profitable MSPs focus on targeting specific profit margins that reflect their operational costs, the quality of their service, and the value they deliver to clients. They understand that their pricing model should be suited to their business's current needs and also be capable of scaling and adapting to future demands. This often means moving beyond basic per-device or per-user models to more value-based or tiered approaches that clearly articulate the benefits clients receive. By focusing on the unique benefits and ROI they provide, MSPs can justify premium pricing and attract clients who prioritize quality and strategic partnership over the lowest possible cost.

Client Acquisition and Retention

The ability to acquire new clients and retain existing ones also heavily impacts profitability. A high client churn rate can quickly erode profits, as the cost of acquiring a new client is typically much higher than retaining an existing one. MSPs that deliver consistent, high-quality service, leverage automation to enhance responsiveness, and continuously adapt their offerings to client needs will naturally foster greater customer satisfaction and loyalty. This loyalty translates into higher retention rates and often leads to referrals, which are a cost-effective way to acquire new business. Furthermore, by becoming more operationally and technologically advanced, MSPs are better positioned to meet the evolving demands of their most lucrative client base—small and midsize businesses (SMBs)—who are looking to accelerate their digitalization efforts, streamline operations, and strengthen cybersecurity. Meeting these demands effectively ensures a steady stream of revenue and long-term client relationships, forming a solid foundation for sustained profitability.

What Does the Current MSP Landscape Look Like?

The current MSP landscape is dynamic and characterized by a diverse range of providers, with a strong presence in the Americas and a notable increase in specialized services like managed security. Our insights come from the Kaseya 2023 Global MSP Benchmark Survey Report, which provides a comprehensive overview of the industry's composition and trends.

Key Demographics from the 2023 Survey

The Kaseya MSP Benchmark Survey, a significant industry study, had 1,091 respondents in 2023. The largest slice of these respondents, 83%, came from the Americas. This highlights the substantial market presence and activity of MSPs in North and South America. About 11% of the respondents were from Europe, the Middle East, and Africa (EMEA), while the remaining 6% hailed from the Asia Pacific (APAC) region. This geographical distribution gives us a clear picture of where the bulk of managed services activity is concentrated, with the Americas leading the way in terms of the number of participating providers in this survey. The survey provides valuable insights into what makes an MSP profitable while still making it the top choice of customers in the market. This broad reach of the survey helps us understand the global trends and regional nuances within the managed services industry, ensuring our advice is grounded in wide-ranging data.

Evolution of MSP Specializations

The managed services industry is seeing a clear trend towards specialization, driven by evolving client needs and technological advancements. In 2023, 63% of respondents identified themselves as general-purpose MSPs. These providers typically offer a broad range of IT services to a diverse client base. However, the survey also revealed significant growth in specialized segments. Managed security service providers (MSSPs) increased their share year over year to 18% of the respondent base in 2023, up from 17% in 2022. This upward trend underscores the escalating importance of cybersecurity for businesses of all sizes and the demand for dedicated expertise in this area. As cyber threats become more sophisticated, businesses are increasingly relying on specialized security providers to protect their digital assets.

Another area of growth is among network- and data-center-focused MSPs. These providers primarily oversee servers, storage devices, and other network components that keep businesses up and running. In 2023, this segment grew to 19% of the respondent base, a notable increase from 12% in 2022. This surge indicates a heightened focus on core infrastructure management, likely driven by the complexity of hybrid cloud environments and the continuous need for robust, high-performing networks. The shift towards greater specialization reflects a market maturing to meet specific, high-demand IT challenges, moving beyond a purely generalist approach. This means MSPs are increasingly defining niches based on the critical needs of their client base, whether it's comprehensive security or intricate network infrastructure management.

Adapting to Market Demands

The overall landscape indicates that MSPs are continually adapting to market demands, with a clear emphasis on leveraging new and revolutionary technologies. The survey found that MSPs are embracing technologies like IT Process Automation and fully integrated IT ecosystems to reduce costs, increase efficiency, and streamline processes. By automating routine tasks such as patching, standard tickets, and simple incident response, MSPs can address labor shortages, provide more responsive customer service, and unlock new revenue channels. This technological advancement is crucial for MSPs to stay competitive and meet the needs of SMBs, who are turning to them to accelerate digitalization, streamline operations, and strengthen cybersecurity. The integration of core tools helps MSPs streamline operations, reduce costs, and make better decisions faster, which ultimately benefits their clients. This continuous evolution and specialization ensure that the managed services industry remains a vital partner for businesses navigating the complexities of modern IT.

Frequently Asked Questions

What is the average cost of an MSP?

The average cost of an MSP varies widely depending on an organization's size, complexity, and specific needs. Pricing models commonly include per-user, per-device, or flat-rate all-inclusive fees. For example, an MSP might charge $100 per workstation and $250 per server each month. Businesses using managed IT services can reduce their IT costs by up to 40%, making it a cost-effective solution in many cases.

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

Per-user pricing charges a flat fee per employee, typically covering all of that employee's devices, such as a laptop and mobile phone. Per-device pricing, on the other hand, charges a separate fee for each managed device, like a desktop, server, or printer. Both approaches work well for smaller organizations with predictable headcounts, but per-device pricing ties billing directly to inventory rather than user count.

Can an MSP help reduce IT costs?

Yes, partnering with an MSP can significantly reduce IT costs. Businesses using managed IT services can reduce their IT costs by up to 40% while also boosting efficiency and security. MSPs achieve this through economies of scale, proactive maintenance, and by converting unpredictable IT expenses into predictable monthly operational costs.

What are the benefits of IT Process Automation for MSPs?

IT Process Automation helps MSPs reduce costs, increase efficiency, and streamline processes. By automating tasks like patching, standard tickets, and simple incident response, MSPs can address labor shortages, provide more responsive customer service, and unlock new revenue channels. This automation also contributes to increased customer satisfaction and loyalty.

How do MSPs ensure long-term client relationships?

MSPs ensure long-term client relationships by providing consistent, high-quality service and fostering mutual understanding. Building trust is key, as is a strong pricing model that is scalable and adaptable to future demands. Automating tasks and integrating core tools also helps MSPs provide more responsive customer service, which directly increases customer satisfaction and loyalty.

— The MSP Directory Team