Editor’s Note: This Research Journey was completed in 2023. To access the complete findings, including data, frameworks, and best practices, visit the TSIA Portal.

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Pricing managed services effectively isn’t just a finance conversation; it’s a growth conversation. At TSIA, we’ve launched a dedicated Research Journey focused on managed services pricing to help tech companies like yours overcome the most common pitfalls, and unlock long-term profitability in the managed services industry.

If you're responsible for pricing managed services within your organization, you’re likely facing a familiar challenge: balancing competitive rates, strong margins, and client satisfaction without sacrificing growth.

Through our Research Journey, we’re asking and answering the big questions:

• What managed services pricing models are companies using today?
• Which models support long-term growth and SaaS profitability?
• How can your company shift from legacy approaches, such as setting a price by adding a margin, to modern, value-based strategies?

Let’s walk through where we are on this Research Journey and what it means for you.

Define the Problem: Why Managed Services Pricing Needs a Rethink

It’s no secret: cost-plus pricing is still the norm. Many service providers calculate internal costs and prices simply by adding a fixed amount or percentage. While this seems safe, it introduces two significant issues:

• It hides inefficiencies or poor operational efficiency.
• It leads to pricing that does not reflect the market and cannot meet leadership’s margin expectations.

This leaves you with a model disconnected from market demands, and frankly, unsustainable for growth and profitability. Our Pricing Managed Services Research Journey is designed to rethink pricing from the ground up.

Our Research Framework: How We’re Solving This

Our Research Journey is structured, hands-on, and built around actionable insights. Here’s how we’re approaching it:

• Define the Problem: The dominance of traditional models, such as cost-plus pricing, is holding providers back from scaling their profits.
• Launch Discovery: We’re using benchmarking, quick polls, and 1:1 interviews to gather insights directly from tech providers.
• Develop the Theory: Once we understand what works (and what doesn't), we begin modeling new, profitable ways to price managed offerings.
• Guide the Industry: As we validate findings, we share them through research papers, webinars, and conference presentations.

Every step is collaborative. Every insight is rooted in real data. And every output is designed to help you take clear next steps and price their services more effectively.

Common MSP Pricing Models

There is no one-size-fits-all model, but understanding your various pricing options is the first step toward achieving. Here's a snapshot of the most common managed services pricing models.

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Best Practices for Mastering Managed Services Pricing Strategy

A successful MSP business strategy starts with alignment. Your pricing model should directly support your broader business goals, whether increasing margins, improving retention, or scaling into new markets.

It also needs to reflect the value of the services you deliver. Different segments prioritize different outcomes, so your pricing should speak to those needs, not just your internal cost structure.

While discounts might win deals in the short term, sustainable profitability should always be the focus. Low pricing can erode margins and strain delivery teams, so balancing value and cost is critical.

Make pricing reviews a regular habit. Your pricing should adapt as your services portfolio evolves and the market shifts. Before making changes, model different scenarios using real data to understand how adjustments will impact revenue and margin. Smart, strategic pricing isn’t just about numbers but long-term growth.

Related: Unlocking Growth through Managed Services Pricing Methodologies

How To Transition Between Managed Services Pricing Models

Shifting from a legacy pricing model to a modern or value-based approach takes planning, but when done right, can be one of the most impactful changes you make. Start by auditing your current pricing structure to understand what’s working and where gaps exist. From there, segment your client base to identify which customers are best suited for the new model. Instead of rolling it out immediately, pilot the new approach with a smaller group to gather insights and reduce risk.

Clear communication is key. Ensure your team and clients understand why the change is being implemented and how it will benefit them. Finally, track performance metrics to guide your rollout, refine your strategy, and measure success. Transitioning takes effort, but the payoff for clarity and customer alignment is well worth it.

Related: The Evolution of Pricing Models for Managed Services

Common Managed Services Pricing Mistakes: Do’s and Don'ts

• Do focus on market value, not just costs associated with internal delivery.
• Don’t rely solely on cost-plus models. These often overlook the actual value of your services and fail to align with customers' willingness to pay.
• Do revisit your strategy regularly.
• Don’t let pricing sit untouched for years. As your service offerings grow, so should your pricing. Staying static can ruin profitability and relevance.
• Do build pricing around customer expectations and outcomes.
• Don’t ignore the customer’s perspective. Misalignment can lead to sticker shock, confusion, or dissatisfaction, especially during renewals or upsells.
• Do assign value to every component of your offering.
• Don’t undervalue consulting, onboarding, or support. These services drive client success and should be reflected in your pricing model.
• Do ensure cross-functional alignment.
• Don’t create pricing in silos. Sales, finance, and service delivery must align for your strategy to succeed.

Avoiding these common pitfalls helps eliminate unnecessary pricing friction and positions your business for stronger, more sustainable growth.

Future Trends in Managed Services Pricing

Here’s where the future is heading and how to prepare:

• AI and automation are reducing delivery costs. Smart MSPs use these savings to create more competitive, higher-margin pricing models.
• Outcome-based pricing is gaining traction among clients who demand results, not just uptime.
• Integrated SaaS + services pricing is becoming a must-have, not a nice-to-have.
• Usage-based and tiered subscriptions are allowing more flexibility and client control.
• Payment methods are also evolving in tandem with the delivery process.

To stay relevant, you should modernize your approach to pricing managed services.

Related: The Current Landscape of Pricing in Managed Services

Pricing as a Lever for SaaS Profitability

One of our strongest findings to date is that when managed service pricing is aligned with value and paired with a SaaS product, it becomes one of the most powerful levers for enhancing the profitability of managed services.

We’re already seeing how modern pricing strategies support integrated, higher-margin offerings. If a Research Journey continues to confirm one thing, how you price managed services matters more than ever.

The shift from growth at all costs to sustainable, scalable profitability is underway, and your pricing model is a critical lever for navigating that shift. Whether you're still relying on cost-plus pricing or exploring more modern approaches—such as value-based or tiered models—now is the time to reassess, recalibrate, and realign.

We’re working alongside you to find pricing solutions that best suit your needs. With every insight we publish, our goal is to make your next pricing decision easier, more confident, more profitable, and fully aligned with the direction of the managed service provider industry.

We will update, share insights and benchmark data, and provide real-world examples as the journey unfolds. If you’re ready to rethink your approach, this is your chance to join the conversation and participate in our Research Journey, following each phase.

Your participation helps drive the industry forward and gives you a first-hand view of what’s working in the real world. Let’s develop pricing strategies that serve customers, maximize margins, and foster long-term growth.