Little known Facts About MSP Profitability 2024

MSP Profitability and the little known facts surrounding it will be the discussion of today’s article. We all like profits in our business and hopefully some of the following facts will help you focus on areas of your business that can be improved to increase profit margins of your MSP.

While you are here, Take a look at some of our other Computer Consulting related articles below that may interest you:

• MSPs & Dealing with Burnout
• MSPs That Use CRM Tools & the Benefits Compared to Those That Do Not
• Optimizing Documentation Can Improve Profit Margins
• Shocking Antivirus Statistics for MSPs
• Shocking Facts About MSP Income

MSP Profitability Factoids

While it could be argued that service providers have been around since the 1980s they really only started to go mainstream in the early 2000s which was around the time I began an MSP. Below are some facts that will attempt to surprise and intrigue those interested in the exciting world of managed service organizations.

MSP Global Market Size - 2024

The global market size for all managed service providers in 2024 is 284 billion dollars.

Projected Market Size - 2030

700 billion dollars is the expected market size for the global MSP market in 2030. That is a projected doubling of market size in 7 years. Let's hope we are all still around by 2030.

Cost Savings Using An MSP Brings

There is an average cost saving of 30% across businesses that use service providers compared to companies that provide their own inhouse IT department.

Most Profitable MSP Client Sector

Manufacturing is the most profitable industry as far as MSP clients are concerned, followed closely by legal organizations (That is a shock to me!) and then accounting.

Least Profitable MSP Client Sector

With low margins and hyper competitive environments it is no surprise that the retail sector is the least profitable sector. Slightly above retail is hospitality, marketing and then automotive.

Size Of Most Profitable MSP Client

The size of clients that are the most profitable range from 11 staff up to 50 staff with 51 to 120 being the next most profitable.

Most Profitable Service Offerings

Fear sells, it seems, managed security solutions were the most profitable of all services offered by a significant margin followed by a distant second by cloud backups.

Least Profitable Service Offerings

Web designers probably should look at entering another profession as the least most profitable service offering along with managed print providers and marketing services.

MSP Projected Security Market Growth

Global security services growth is expected to go from 33 billion in 2024 to 92 billion by 2030 so an expected near 3 fold growth over 7 years.

Average MSP Service Contract Per Month - 2024

The average MSP contract size across all service providers both large and small is $2500 per month.

Most Popular MSP Billing Method

Per user pricing is the most popular billing method at 22% followed by fixed fee subscription at 14% and then per device at 13%.

Number Of MSPs Without Cyber Insurance

37% of MSPs operate without a cyber insurance policy. Let that sink in! My advice is only do this if you have nothing to lose. Risks are only going one way with service providers.

Number Of MSP Clients Without Cyber Insurance

93% of non MSP businesses (Your clients) do not have cyber insurance policies. I strongly recommend that a requirement of being a client of yours is that they have their own cyber insurance policy. 

Insurance companies are now starting to refuse to do business with service providers because they are seen as too high a risk. Forcing clients to obtain their own cyber insurance policy makes you a more attractive client for insurance companies or at the very least they may cover you.

Gross Profit Margin Of MSPs

The average net profit margin of an MSP ranges from 8% on the low end to 35% on the high end.

Conclusion

The facts relating to MSP profitability above are some of my favorites and could be used by any service provider to focus on areas that are more profitable as well as consider dropping services or business strategies that are not likely to work long term.

We have a number of other I.T Security outsourcing articles listed below that will provide you with more detailed information on a number of related topics:

https://optimizeddocs.com/blogs/consulting/consulting-index-page-01

Our team specializes in strategies for IT provider organizations and we assist in improving profit margins through standardization and consistent record keeping strategies, so you can be confident that our content is tailored to your needs.

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