Managed Service Providers (MSPs) serve as indispensable resources for their clients. In a world that is rapidly becoming more reliant on technology every year, it’s no wonder why the MSP industry is thriving.
Despite the inherent market value of managed services, running an MSP is no simple task and often proves to be more costly than many entrepreneurs expected prior to owning a business. And while everyone wants to save money, MSPs often struggle to control operating costs while maintaining high service quality.
Reducing operating costs can significantly enhance an MSP’s profitability and competitive edge, freeing up capital to invest in growing the business. When you cut business costs, your MSP can go from barely treading water to swimming laps around your competition.
At Print Partner, we’ve worked with hundreds of MSPs across the United States and Canada. We’ve heard about the many successes and failures of our partners, and we’d like to share our experience with you! `
In this article, we’ll explore four effective strategies MSPs can adopt to reduce operating costs.
When was the last time you took a critical look at your MSP’s stack?
We know that changing tools can be painful, which is why many MSPs stick to the same stack for years longer than they should.
Imagine you’re currently using separate tools for remote monitoring and management (RMM), professional services automation (PSA), and endpoint security. Each tool might excel in its specific function, but they likely operate independently, requiring manual integration or duplicate data entry. This fragmented approach can lead to inefficiencies, data discrepancies, and, most importantly, additional overhead costs.
On the other hand, newer integrated suites are designed to streamline MSP operations. These suites consolidate RMM, PSA, endpoint security, and sometimes backup and disaster recovery (BDR) into a single platform.
For example, Kaseya's platform allows MSPs to manage and secure endpoints, automate routine tasks, and streamline service delivery—all from one unified interface. Similarly, ConnectWise’s ASIO platform integrates PSA, RMM, remote control, and billing capabilities, facilitating seamless service delivery and client management.
This integration reduces the number of tools MSPs need to manage, enhances data consistency, simplifies workflows, and provides a holistic view of client environments.
But choosing the right suite requires careful consideration. MSPs should evaluate factors such as scalability, ease of integration with existing systems, vendor support, and alignment with their specific business needs and client requirements.
Conducting thorough research, seeking peer recommendations, and even trialing different platforms can help ensure that the chosen suite meets both your current and future needs.
How diligent are your current bookkeeping practices? If your answer isn’t an enthusiastic “very!” it may be time for you to have a conversation with your accountant and get a crystal clear picture of every recurring expense, whether it be monthly, quarterly, or annuall.
While expense tracking might seem like common sense, MSPs are loaded with recurring costs associated with managing their businesses. Much like consumers struggle with managing their subscriptions, some MSP owners have no clue about what they are actually paying for—they only know the dollar amount that needs to be paid every month.
MSPs need robust infrastructure to manage their clients' IT environments effectively, and this setup comes at a price. This may include servers, networking equipment, storage systems, backup solutions, RMM, PSA, endpoint protection, security and any other parts of your stack. And many of these include required software and licensing fees, which can add up quickly.
Also, consider the security requirements in your field and the recurring costs involved in staying compliant with them. Insurance, investing in compliance audits, security assessments, and cybersecurity measures are essential to the long-term success of your MSP, and they aren’t free.
Beyond IT-related expenses, MSPs also bear the costs of general business operations. This includes insurance, legal fees, accounting services, and administrative expenses. Managing operational overheads efficiently is crucial for maintaining profitability and sustainable growth.
Navigating these costs requires transparency and a thorough assessment of both immediate and long-term financial impacts. Once you’ve thoroughly investigated all of your recurring expenses, consider reaching out to your providers and negotiating for better rates.
Many times, customers sign up for services, only to find out years later that they were missing out on a better available service just because they never asked for it. It’s just like calling your Internet or phone provider - if you don’t ask for the discount, you won’t get it.
If your MSP operates out of a brick-and-mortar office, you must be familiar with several steep overhead costs.
When juggling rent, utilities, property taxes, insurance, etc., in-person operations can take out a massive slice of your profit.
So ask yourself, is it worth it? Consider the real value that the space offers.
Nowadays, many larger MSPs operating across the country are virtual. The COVID-19 pandemic proved that many businesses could operate over Zoom just as effectively as they could in an office.
If you ask around, you’ll find that many 200+ employee MSPs barely have a physical footprint, with the majority of their staff operating remotely.
Every business owner knows the invaluable importance of the comradery and community that an in-person space facilitates. However, it’s always important to consider alternatives.
Should you convert to an online-only business, the expenses saved could free up significant capital for investing in other pieces of your business.
Most small to mid-sized MSPs can greatly benefit from outsourcing non-core operations functions. Functions like accounting, human resources, and marketing don’t always require a full-time employee’s attention, meaning you can contract professionals to spend a few hours a week balancing your checkbooks and planning campaigns.
One common area MSPs outsource is staffing services. For more information, read: MSPs: Benefits of Using a Third-Party Staffing Agency
Outsourcing allows MSPs to benefit from specialized expertise without the overhead costs of hiring and managing full-time staff, such as benefits, 401k, etc. Instead of spending 50 hours trying to navigate financial jargon, you can instead pay an accountant for 10 hours a week to do the same amount of work headache-free.
This logic can be applied to any part of your business that, while necessary, won’t require a full-time staff member to handle.
Reducing operating costs is crucial for MSPs to remain competitive and profitable in the rapidly evolving IT landscape.
By embracing the steps mentioned above, your MSP will be equipped to significantly reduce its operating expenses and free up resources.
At Print Partner, we want nothing more than for our partners to find success. That’s why we offer our managed print services to your clients, taking the burden of print off of your shoulders.
When you work with Print Partner, we offer you three core benefits:
So what are you waiting for? Start referring clients today by partnering with us, a Print Partner you can trust.