Are managed service providers profitable?

MSPs tend to be stable. According to a 2019 survey by Datto, nearly half of surveyed MSPs have been operating for 16+ years and 49\% of them earn above $1 million in annual revenue. They’re also highly profitable; according to a survey conducted by Solar Winds MSP, companies average 31.6\% gross profit margins.

How much do managed service providers make?

How much does a Managed Services Provider make? The national average salary for a Managed Services Provider is $42,366 in United States.

How does an MSP make money?

MSPs are basically like VARs (Value Added Resellers). They resell solutions provided by other technology providers to businesses by adding in their own service and layer of “value”. Small and Mid Sized businesses rarely have the capacity to hire and manage a lot of IT stuff in-house… which is why they hire MSPs.

Why do people buy managed services?

Managed IT services allow organizations to focus on core projects and strategic initiatives, instead of the day-to-day operations. This saves money in the long run, and additionally, many managed services cost less than other traditional services and staff.

What is a good profit margin for MSP?

(Typically, businesses only pay taxes on money that is profit.) That said, Service Leadership INDEX research indicates that the average profit margin for MSPs is 8 percent, while “best in class” MSPs have margins of 18 percent.

How many customers does an MSP have?

On average, MSPs report a client base of 122 clients. However, this number is skewed upward by the relatively few MSPs that serve more than 250 clients (16\%). Most MSPs (69\%) have fewer than 100 clients, up a bit from last year (59\%).

How much should I charge for managed services?

As of March, 2020, the going rate for managed IT services in the United States is between $100 -$150 per person per month. If you include advanced security solutions and consulting it may get as high as $200 – $250 per month per person.

How are managed services priced?

Mid-range IT management services are usually priced based on the number of users you have, or the number of devices you need support for. Typical charges per user range from $50-$200 per user. For per device services, pricing will be based on the type of device. For servers, you could pay between $120-500 per server.

How much do MSP owners make?

Of those who were identified as owners leading managed services companies generating at least $5 million in revenue (3\% of the total respondents), ALL were earning at least $200,000 a year, with the average earning between $300,000 and $400,000 annually.

What are the benefits of a managed service provider?

Managed IT Services Benefits & Advantages

• Predictable & Scalable Spending (OPEX)
• Avoid Sunk & Operational Costs.
• Faster Response Time.
• Expertise and Experience.
• Proactive Monitoring & Issue Fixing.
• Data Compliance Support.
• Cyber Security Support.
• One Point of Contact to Vendors.

What is average margin for managed services?

Overall, companies surveyed average 31.6 percent profit margins on managed services. Those firms that self-identify as MSPs report an average profit on their service engagements of 43 percent (see Figure 6: Services Profit Margin by Model).