By Corbitt Grow, Director, Business Development
You’re a business owner or manager, and you’ve decided it’s time to seek professional IT support. You’re already stretched thin, juggling countless responsibilities, and the mere thought of navigating the world of IT services is daunting. You start your search, hoping for clarity and straightforward solutions. Instead, what do you find? A baffling array of wildly different prices from Managed Service Providers (or MSPs) that—at first glance—you can’t even tell apart.
MSP pricing is, to put it bluntly, broken. Today, we’re exploring why.
The MSP Pricing Problem
The global MSP market was valued at almost 300 billion USD in 2023, appealing to businesses—especially small and medium-sized ones—thanks to their blend of affordability and expertise. In an increasingly saturated industry like ours, it’s natural to encounter varying costs.
But, unlike economy and first-class flight tickets, the reasons behind differences in MSP price tags are harder to identify. This pricing puzzle leaves many businesses scratching their heads. Are you getting the IT equivalent of a five-star meal or just a fancy wrapper around a subpar service?
To make matters worse for businesses MSPs aren’t beholden to a single governing standard. This is great news in terms of service flexibility, and the possibility of finding that perfect team who just gets your business is certainly enticing. It’s far less welcome, though, when it comes to figuring out which MSP is worth your money.
How Do MSPs Decide Their Prices?
Like any business, MSPs have to consider multiple factors when determining their pricing structures. While the cost-of-service delivery, overheads, and staffing play significant roles, several other elements contribute to your final fee.
1. Pricing Models
MSPs take varying approaches to pricing models. They might use one or more of the following:
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Per-Device Pricing
Flat fees based on the number of devices—like servers, computers, and mobile devices—managed.
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Per-User Pricing
Flat fees determined by the number of users supported. This is typically billed monthly.
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Tiered Pricing
This model provides pre-packaged service bundles at different price points. As the scope of services increases, so does the tier (and the cost).
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Flat-Fee/Value-Based Pricing
A set price for a comprehensive suite of IT services. Essentially, you pay for a fully outsourced IT department who’ll take care of all your current and future needs.
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À La Carte Pricing
A rarer option, this model allows clients to pick and choose individual services to create an entirely tailored plan.
Contract length can impact pricing, too. Longer contracts often come with lower monthly costs, while shorter-term agreements (which are growing in popularity) may have higher rates but offer more flexibility.
2. Service Offerings
The range and depth of services provided by an MSP will also significantly affect pricing:
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Full-Service vs Specialized
MSPs offering a wider array of services—for example, managed cybersecurity, cloud solutions, IT strategy, telephony, network solutions, and so on—may have different pricing compared to those specializing in, say, just infrastructure management.
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Standard vs Bespoke Solutions
Compared to a standardized tech stack, customized solutions often come at a premium. For businesses with more niche needs, the cost of a better-fitting IT environment is more than worth it.
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Remote vs On-Site Support
On the surface, remote-only support might seem like the better value option. But while on-site support options can be higher (to account for travel costs), they also mean faster, more personal service, potentially leading to longer-term partnerships for businesses in a shared community.
3. Client Base and Specializations
We’d be remiss not to mention how the nature of an MSP’s client base can also influence their prices. MSPs serving certain industries (like healthcare and financial services) can justify charging more due to their sought-after expertise in highly complex, sector-specific regulatory requirements. Similarly, with the increasing demand for security services, MSPs with advanced cybersecurity certifications may command higher fees than those without.
The Business Strategy Factor
When it comes to MSP pricing, there’s another crucial element at play that often goes overlooked: the MSP’s own business strategy and growth stage. These factors can significantly influence pricing structures and service offerings, creating even more variability in the market.
Long-Term Strategies: Private Equity vs. Founder-Owned
The MSP landscape has seen a shift in recent years, with private equity (PE) firms entering the market in force. This trend has created two distinct camps of MSPs with very different approaches to pricing and growth:
1. PE-Backed MSPs Some of these providers are focused on rapid portfolio growth, which, on occasion, can come at the expense of margins. Their goal? To increase the overall value of the business for a potential sale in the near future. According to Abraham Garver, managing director at Focus Investment Banking, there are more PE buyers than MSPs willing to sell—but as sale costs are rising, that could change before long.
2. Founder-Owned MSPs In contrast, MSPs still run by their original founders tend to prioritize long-term client relationships and steady, sustainable growth. Their pricing strategies often reflect this, with a focus on fair rates that support quality service delivery over the long haul.
This dichotomy can lead to significant pricing discrepancies. A mid-sized, founder-owned MSP may charge a blended rate for its combination of personalized service and expertise while a PE-backed provider might offer incredibly low rates to rapidly expand its client base.
The Impact of MSP Size and Growth Stage
The size and maturity of the 40,000+ MSPs in the US also play a crucial role in determining their pricing strategies:
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Small MSPs (1-10 employees)
These providers often offer highly personalized service but may struggle with economies of scale. Their pricing can be volatile, sometimes undercutting larger competitors to win business, or charging premium rates for their boutique services.
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Mid-sized MSPs (11-100 employees)
This is where things get interesting. Mid-sized MSPs have formalized their business infrastructure but aren’t yet operating at the scale of enterprise-level providers. They’re large enough to offer a diverse team with senior experience and strategic capabilities, but small enough that each client truly matters. Their pricing often reflects this balance, offering a sweet spot of value and expertise.
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Large MSPs (100+ employees)
These national or multinational outfits benefit from significant economies of scale. They can often offer competitive pricing due to their size, but may lack the personalized touch of smaller providers.
This diversity in size and strategy contributes significantly to the pricing variations we see in the market. A small, founder-owned MSP might charge premium rates for its personalized service, while a PE-backed, mid-sized provider might offer lower rates to rapidly expand its client base.
The IT Landscape’s Impact on MSP Pricing
Over the past few years, businesses have become more aware of evolving cyber risks. The resulting pressure for robust cybersecurity services (a market expected to grow by as much as $49 billion come 2028) has caused MSPs to adapt their service offerings—and their prices.
Consumer preferences for the way services are provided is also undergoing a shift. These days, pay-as-you-go and cloud-based solutions are taking precedence over outright hardware and software purchases. For MSPs who have previously made a significant portion of their money through reselling, adjustments have had to be made.
That’s not even to mention the rising popularity of cyber insurance and rollouts of mandatory compliance frameworks like CMMC 2.0. An increased demand for compliance-driven solutions means the onus is on MSPs to maintain up-to-date knowledge on complex specifications if they want to stay competitive.
As you can imagine, all these factors have facilitated a very inconsistent pricing landscape—one which can be incredibly frustrating for businesses looking for IT support.
So, What Should You Expect to Pay for MSP Services?
Assuming you’re based in the U.S. and need non-specialist support, you can expect to pay anywhere from $50 to $250 per device per month. On average, most SMBs will fall within the $50-$140 range, depending on the complexity of their IT needs and the services included in their package.
For more specialized industries, prices tend to be on the higher end of the spectrum due to the need for compliance with sector-specific regulations, cybersecurity requirements, and overall, more complex IT environments.
An MSP with pricing outside this range shouldn’t necessarily send alarm bells ringing. As you now know, there are a whole host of reasons costs could differ between one provider and the next. However, it’s a good idea to examine where those costs are (or aren’t) coming from before you’re swayed by what appears to be a fabulous bargain.
A lower price tag from a PE-backed MSP might seem attractive, but consider the long-term implications. Will that pricing be sustainable? On the other hand, a higher rate from a mid-sized, founder-owned MSP might come with the benefit of a more stable, personalized relationship.
How to Secure Fair MSP Pricing
MSP fees should be clear and available to you on request. When you partner with a provider, you’ll receive a Service Contract. This will outline the specific services and scope that the MSP guarantees. Crucially, it’ll also lay out where exactly your money’s going.
Choosing the right MSP at the right price point for you ultimately relies on you assessing your business’s specific needs and then really doing your homework. We’ve actually got a free eBook all about how to pick an IT provider—you can download it here.
Don’t panic at the patchwork of managed service pricing. An MSP that fits all your parameters is out there—it just might take some elbow grease to find them.
Anderson Technologies: Real People Creating Business-Changing IT Solutions
For over 25 years, Anderson Technologies has leveraged our expertise for the benefit of our clients, supplying them with suitable, secure IT and strategic guidance for their technological future.
We’re a dynamic team of IT professionals with over 200 years of combined experience and specialist certifications to back up our knowledge. As a trusted advisor, we don’t just focus on today. We strive to take your technology light-years ahead of your competition and scale with your business’s success.
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