If you’re running an MSP and you’ve ever thought about improving your margins, or even considered what your business might be worth if you sold it one day, there are a handful of things that make an outsized difference.
None of them are complicated. But most MSPs I work with aren’t doing all of them, and some aren’t doing any.
Here are six that will move the needle.
1. Move away from break-fix
This one comes first because it matters most.
If the majority of your revenue still comes from ad-hoc break-fix support, it’s going to hold back both your profitability and your valuation. Buyers and investors want predictable, recurring revenue. They want to see a business that generates income whether or not something breaks on a Tuesday afternoon.
Break-fix revenue is unpredictable by nature. It’s hard to forecast, hard to staff for, and it positions you as reactive rather than strategic. If you’re still predominantly break-fix, transitioning to managed services contracts should be your number one priority.
2. Get customers onto annual (or longer) contracts
Monthly rolling agreements are a step up from break-fix, but they’re not great for valuation purposes either. A buyer looking at your business wants to see committed, contracted revenue that’s going to stick around.
The higher your percentage of clients on 12-month or longer contracts, the more predictable your revenue looks, both to a potential buyer and to your own cashflow planning. It also gives you a much stronger foundation for planning investments in your team and technology.
If you’re nervous about asking clients to commit, consider this: most clients who are happy with your service won’t bat an eyelid at an annual contract, especially if there’s a small incentive to do so.
3. Track support margins and project margins separately
This is one of the most common gaps I see.
Most MSPs have one set of accounts that blends everything together. Support revenue, project revenue, all the costs, one big number at the bottom. The problem is, you can’t tell whether your recurring support business is genuinely profitable on its own.
And that matters, because when someone values your business, they’ll look at the recurring support revenue with a much higher multiple than project work. Project revenue is lumpy and unpredictable. Support revenue, if it’s profitable and growing, is where the real value sits.
Separating these out doesn’t require a new accounting system. It just requires some discipline in how you allocate costs and report your numbers. Once you can see both margins clearly, you’ll make better decisions about where to focus, what to price, and what to fix.
4. Know your per-customer profitability
Not all customers are equal. Some are profitable, some are breaking even, and some are actively costing you money once you factor in the support time, the scope creep, and the constant back-and-forth.
Most MSPs have never properly worked this out. They have a general sense of who the “difficult” customers are, but they haven’t put actual numbers against it.
Until you do, you can’t make good decisions about pricing, retention, or where your team’s time is best spent. You might find that your largest customer by revenue is actually one of your least profitable. Or that a smaller client you’ve been neglecting is quietly delivering excellent margins.
This is also where customer scoring becomes useful. By rating clients across factors like profitability, payment behaviour, cultural fit, and growth potential, you can make objective decisions about who to invest in, who needs a pricing conversation, and who might be better served by someone else.
5. Stop selling a menu of services
Too many MSPs present their services like a restaurant menu. Network monitoring, backup, helpdesk, security, cloud services, all listed out and priced individually. The client picks what they want, compares your menu to someone else’s, and chooses on price.
That’s commodity positioning, and it kills your margins.
Instead, package your services around the outcomes your clients actually care about. They don’t want “network monitoring” as an abstract concept. They want their systems to work reliably so their team can focus on their jobs. They want to know they’re protected and that someone competent is handling the technology so they don’t have to think about it.
When you sell outcomes rather than ingredients, the price conversation changes completely. You’re no longer being compared line-by-line against a cheaper competitor. You’re being evaluated on the value of the result you deliver.
6. Build in an annual price review process
If you haven’t raised prices in two or three years but your costs have increased by 15-20% (salaries, licensing, tools, insurance, the usual), you’re effectively earning less every year. Your margins are being quietly eroded and most MSPs don’t even notice until it’s painful.
Building an annual pricing review into your business isn’t just good practice, it’s essential. And communicating it properly makes all the difference. Give clients proper notice, explain what you’re investing in, focus on the value they continue to receive. Don’t apologise for it.
Most clients expect annual increases. The ones who leave over a reasonable adjustment probably weren’t great clients to begin with.
Where does your MSP stand?
Most MSPs I work with are technically excellent. They deliver great service and their clients genuinely value what they do. But they’re competing as if they’re a commodity, because they haven’t addressed the positioning, pricing, and packaging issues that separate a good MSP from a premium one.
Small changes in these areas can make a 30-50% difference to profitability. And if you’re ever thinking about selling, they can significantly increase what your business is worth.
I’ve built a free 5-minute assessment that scores your business across five key areas: value positioning, pricing power, growth engine, operational leverage, and technology adoption. It’ll show you exactly where you’re strong and where you’re leaving money on the table.
👉 Take the free assessment here
And if you’re an MSP with £500k+ in revenue and you already know you need to address some of these issues properly, the Value Transformation Assessment might be a better starting point. It’s a structured review of your business across ten dimensions, with specific recommendations and a clear implementation roadmap. It’s how most of my client projects begin.
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