What does a managed services contract cost you to deliver?

Most MSPs set a price once and never revisit it. Put a real client's numbers in and this works out your cost to serve, then what you would need to charge to hit the margin you want — per user, per device, or as a flat fee.

The estate

One client, as it stands today.

Your labour

The line most MSPs guess at, and the one that decides whether a contract works.

Tooling and licensing

Per month, your wholesale cost. Backup is pre-filled at our published rates.

Costs you per month
£0
— per user
Labour£0
Tooling and licensing£0
Backup£0

What you would need to charge

Drag to set the margin you want to make.

40%
Per user
£0
per user, per month
Per device
£0
per workstation; servers at 3×
Flat monthly fee
£0
whole contract

How this works out

Cost to serve is labour, plus tooling, plus backup. Revenue needed is cost divided by (1 − margin), so a 40% margin on £1,000 of cost needs £1,667 of revenue, not £1,400 — that is the arithmetic most people get wrong when they work it out in their head.

The number you should not guess

Loaded technician cost. Not the salary, and not what you bill. Take the salary, add employer NI, pension, holiday cover, training, tools, and a share of premises and admin, then divide by the hours that person is actually available. For most UK MSPs it lands well above the hourly figure people assume.

Support hours per user. The default here is 0.6 hours a month, which is a common planning figure, but your real number is in your PSA. Pull three months of ticket time for one client and divide. If you do not bill for scope creep, include it — it costs you whether it is on an invoice or not.

Why three models

The same contract produces different numbers depending on how you package it, and each one fails differently. Per user is easiest to sell and hides server-heavy clients. Per device tracks your cost more closely but invites arguments about dormant laptops. A flat fee is simplest to invoice and absorbs growth you have not priced for.

There is a fuller breakdown of the trade-offs in how to price managed IT services.

Take it away

The spreadsheet version has the same model with the workings visible, so you can adjust the assumptions and run it across your whole book rather than one client at a time.

Download the Excel version

About the backup figures

Backup lines are pre-filled with our published wholesale rates, because we publish them and most vendors do not. Change them to whatever you actually pay. Every rate is on the pricing page and there is a backup-only calculator at the cost calculator.