Managed services pricing charges a fixed monthly fee, usually per user or per device, for ongoing IT support, security, patching, backup and monitoring, on a minimum term. Most MSPs sell three tiers, pass software licenses through at a margin, and price projects separately. Profit depends on tickets per user, a standard security stack and matching your license commitments to your client terms.
Key takeaways
- Managed services combine three of the book's models: Minimum Commitment, Insurance (peace of mind) and Bundled Services.
- Per-user pricing is simplest to sell, but AI and smaller teams may shrink it. Price on devices, sites or outcomes where that fits better.
- Microsoft's New Commerce Experience launched with a 20% premium on monthly-term licenses over annual-term ones. Match your client terms to your vendor commitments.
- One messy client can wipe out a year of margin. Standardize the stack and exclude remediation of non-standard setups.
- From 1 July 2027, plans sold to small businesses on standard terms face new notice and easy-cancellation duties.
In the late '90s and 2000s I worked in IT support.
Back then, nobody sold software by subscription. Every few years Microsoft would release a new version of Windows and customers would pay a few hundred dollars for it. Then a setup fee. Then maybe something extra for support.
IT support worked the same way. Something broke, someone called, we fixed it, we sent an invoice.
Break-fix.
It's a strange business model when you think about it. The IT firm only gets paid when the client's systems fail. So the better you do your job, the less you earn. (Not the healthiest incentive I've come across.)
Managed services flipped that around. The client pays a fixed amount every month. The IT firm earns more when things don't break, because fewer problems mean fewer hours spent fixing them. Everyone wants the same thing.
That's why managed services is one of the cleanest subscription models in any industry. But the pricing still has to be right.
How Does Managed Services Pricing Work in 2026?
Most MSPs use one of five pricing structures, often combined.
| Structure | How it's priced | Pros | Cons |
|---|---|---|---|
| Per user | A monthly fee for each staff member supported | Easy to understand and quote | Shrinks if the client's team shrinks |
| Per device | A fee per laptop, server, firewall or phone | Tracks workload on device-heavy sites | Harder to explain, more admin |
| Tiered bundles | Good-better-best packages per user | Clear upgrade path | Needs clear inclusions |
| All-you-can-eat | One flat fee for everything | Simple for the client | Dangerous with messy environments |
| Block hours | Prepaid hours drawn down each month | Low risk for the MSP | Feels like break-fix with a deposit |
One structural fact shapes MSP economics more than most owners realize. When Microsoft introduced its New Commerce Experience, monthly-term licenses were priced 20% higher than annual-term ones, according to Redmond Magazine's report on the changes. Check current partner pricing, but the principle hasn't changed. That's the book's minimum commitment model at work: commit for longer, pay less. The trap is when you commit to annual licenses while your client can leave on a month's notice.
There's also a warning from software. WiseTech Global removed seat fees from its CargoWise platform in December 2025, arguing that seat-based pricing would be disrupted as AI lets customers do more with fewer people. If your clients' teams get smaller, per-user pricing shrinks with them. It's worth reading how WiseTech killed seat fees and the trade-offs in seat-based pricing.
Which Subscription Models Fit an IT Business?
The book says "IT service desks often have minimum commitment contracts." That's still true, but a good MSP offer blends three models.
| Model | What it means for an MSP | Fit |
|---|---|---|
| Minimum Commitment | A 12- to 36-month agreement with a set number of users | Primary |
| Insurance | Peace of mind: monitoring, response times and recovery when something goes wrong | Primary framing |
| Bundled Services | Helpdesk, patching, backup, security and licenses in one fee | Primary structure |
| Software as a Service | Reselling Microsoft 365, backup, security and other platforms | Built in, at a margin |
| Member Benefits | Priority access, training sessions, quarterly reviews | Tier differentiator |
| Unlimited Content, Boxes, Consumables | Not a fit | Skip |
The insurance model is the emotional sell. Clients don't really want "patching." They want to stop worrying about ransomware, lost files and a dead server on payroll day.
A Sample Three-Tier Managed Services Plan
Here's an illustrative structure for an MSP serving businesses with 5 to 100 staff. Prices are examples only, per user per month, ex-GST.
| Essentials | Secure | Complete | |
|---|---|---|---|
| Price per user (ex-GST, illustrative) | A$65 | A$115 | A$175 |
| Remote helpdesk | Business hours | Business hours | Business hours, plus 24/7 for critical issues |
| Patching and monitoring | Included | Included | Included |
| Microsoft 365 administration | Included | Included | Included |
| Backup | Monitoring of client's backup | Managed cloud backup | Managed backup with quarterly restore test |
| Endpoint detection and response | Not included | Included | Included, with 24/7 monitoring |
| Email security and awareness training | Not included | Included | Included |
| Essential Eight gap review | Not included | Annual | Quarterly, with roadmap |
| Onsite visits | Charged | 2 a year | Monthly |
| Strategy (vCIO) meeting | Not included | Twice a year | Quarterly |
| Licenses | Passed through at cost plus margin | Passed through at cost plus margin | Passed through at cost plus margin |
| Minimum term and size | 12 months, 5 users | 12 months, 5 users | 12 months, 10 users |
Licenses sit outside the per-user fee on purpose. Vendor prices change, and you want those changes passed through cleanly, not eating your margin.
Price your managed service tiers
Enter your tool stack, ticket load, GST and payment fees and the free Subscription Price Calculator shows the per-user price you need.
Is Your MSP Plan Profitable? A Worked Example
Monthly contribution = (Users × Price per user) − Security and tool stack − (Support hours × Loaded cost per hour) − Account management − Payment fees
Worked example: a 25-user client on Secure (illustrative, ex-GST)
Revenue: 25 users × A$115 = A$2,875 a month.
Tool stack (EDR, email security, backup, monitoring, awareness training, documentation): about A$22 per user = A$550.
Support load: 1.2 tickets per user per month at an average of 30 minutes = 15 hours. At a loaded technician cost of A$75 an hour: A$1,125.
Account management and reviews: 2 hours a month at A$100: A$200. Direct debit fees: about A$30.
Contribution: 2,875 − 550 − 1,125 − 200 − 30 = A$970 a month, or 34%, before license margin.
Now the bad month: the client clicks a phishing link and you spend 40 hours on recovery. That's A$3,000 of technician time, roughly three months of contribution gone. That's why incident response beyond a set number of hours, and remediation of anything off your standard stack, should be excluded or capped.
The two numbers to watch every month are tickets per user and hours per ticket. They tell you which clients are on the wrong tier.
Model your own tiers in the Subscription Price Calculator.
Subscription Price CalculatorWork out a profitable monthly price after costs, GST and fees.Open the free tool →How to Launch (or Fix) Your Managed Services Offer
- Measure your current load. Pull twelve months of tickets per client, per user and per device. You'll quickly see which clients subsidize which.
- Standardize your stack. One security suite, one backup product, one RMM. Every exception adds cost you can't price.
- Build three tiers around risk. Essentials keeps things running, Secure protects the business, Complete adds strategy and 24/7.
- Write the exclusions. Projects, hardware, non-standard systems and incident recovery beyond an allowance.
- Charge for onboarding. It's real work. Price it as a fixed project or waive it for a longer term.
- Align vendor and client terms. If you commit to annual licenses, your agreement should cover the cost if the client leaves early, within what's fair.
- Move break-fix clients over. Offer a free security review, show the gaps, and present the tiers.
- Review quarterly. Tickets per user, hours per ticket and margin by client. Move outliers to the right tier.
Five MSP Pricing Pitfalls
All-you-can-eat with a messy client. Unlimited support for an environment you didn't build is how margins vanish. Onboard to your standard first.
License term mismatches. Annual vendor commitments on monthly client terms leave you holding the bill when a client leaves.
Under-pricing security. Security tools are a growing share of the stack. If your per-user price hasn't moved in three years, your margin has.
Silent price rises. When vendors raise prices, tell clients clearly and early, with every option. The ACCC took Microsoft to court in October 2025, alleging it didn't clearly tell Microsoft 365 consumer subscribers about a cheaper "Classic" plan when prices rose. The case is about consumers, but the lesson applies to every subscription: explain all the options.
Client concentration. An MSP with one client at 30% of revenue has a single point of failure. Keep any client below 10%, and your top five below 25%, as the book's MOATS framework recommends.
What Australian Rules Apply to Managed Services Plans?
General information as at October 2026, not legal advice.
Subscription rules from 1 July 2027. Managed services agreements that renew or continue until canceled may be subscription contracts under the Unfair Trading Practices Act 2026. The notice and easy-exit duties protect small businesses on standard form contracts (fewer than 100 employees or under A$10 million turnover), which covers most MSP clients. See Australia's subscription trap laws, then run your sign-up and exit process through the AU Subscription Compliance Checker.
Unfair contract terms. Long automatic renewals, unilateral price changes and large termination fees in standard contracts can be challenged. The ACCC's contracts guidance sets out the regime.
Security frameworks. Many Australian clients now ask about the Essential Eight, the Australian Signals Directorate's baseline mitigation strategies, published through the Australian Cyber Security Centre. Tying your tiers to Essential Eight maturity gives clients a reason to upgrade that isn't just "more support."
GST. Your managed services fees and resold licenses to Australian clients are generally taxable at 10% once you're registered for GST.
The Accountant's Angle: What Recurring Revenue Does for an IT Business
The book's Chapter One makes the point with Slack: subscription businesses are often valued on revenue, while one-off businesses are valued on a small multiple of profit, if they sell at all.
An IT firm living on break-fix and projects is the second kind. An MSP with contracted monthly fees, low churn and spread-out clients starts to look like the first.
Watch three things in your own numbers:
- Recurring revenue share. What percentage of revenue is under contract?
- Gross margin by client. Some clients are almost certainly unprofitable.
- Cash timing. Annual license commitments can create big cash outflows that monthly client fees take a year to recover.
See how converting break-fix clients changes revenue, cash flow and value with the Subscription vs One-off Profit Calculator.
Free Subscription Profit Review
Australian business owners can book a free 30-minute review with a BPAG Accountants adviser. An honest conversation about:
- whether a subscription model could work for your business
- how recurring revenue could cover your fixed costs each month
- how it could lift what your business is worth
No cost, no obligation. General information only until we understand your situation.
What to Do Next
Take your three biggest clients and work out their real margin for the last twelve months, including every ticket and every hour.
If one of them is below 20%, that's your first repricing conversation. If you still have break-fix clients, that's your first sales conversation.
And ask yourself the question I wish more IT firms asked: do we get paid more when our clients' systems work, or when they break?
Frequently asked questions
Should an MSP charge per user or per device?
Per user is easiest for clients to understand and fits cloud-first businesses where each person has a laptop, phone and Microsoft 365 account. Per device suits sites with shared machines, servers or equipment. Many MSPs charge per user for support and add per-device fees for servers and network gear. Pick the unit that tracks your actual workload most closely.
What should be excluded from a managed services agreement?
Common exclusions are projects (migrations, new offices, major upgrades), hardware, remediation of systems that weren't on your standard stack, recovery from incidents caused by a client refusing recommended security controls, and after-hours work on lower tiers. Price each exclusion on a rate card or as a fixed-price project, and list them in the agreement.
How do MSPs handle vendor price increases?
Write a pass-through clause into the agreement so license price changes from vendors can be passed on with notice. Tell clients about every option when prices change, including cheaper plans if they exist. The ACCC's 2025 case against Microsoft over Microsoft 365 consumer price rises shows the risk of not explaining all the options clearly.
Is an onboarding fee normal for managed services?
Yes. Bringing a new client onto your standard stack takes real work: audits, documentation, agent deployment, security baselines and cleanup. Many MSPs charge a one-off onboarding fee, often around one month's fee, or waive it in exchange for a longer minimum term. It also filters out clients who aren't serious.
What's a good minimum term for a managed services agreement?
Twelve months is common, because onboarding costs need time to pay back and many licenses are committed annually. Some MSPs offer 24 or 36 months for a lower rate. After the term, roll monthly with 30 to 90 days' notice. In Australia, very long lock-ins and heavy exit fees in small business standard form contracts can be challenged as unfair.
General information only, current as at October 2026. It isn't legal, tax or financial advice and doesn't consider your circumstances. Speak to a qualified adviser before acting.
Talk it through with a BPAG adviser
Free for Australian business owners: a 30-minute Subscription Profit Review on whether a subscription suits your business.
Robert Coorey, MBA
Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.
Sources
- Redmond Magazine: Microsoft details New Commerce Experience model changes (7 December 2021)
- ACCC: Microsoft in court for allegedly misleading millions of Australians over Microsoft 365 subscriptions (27 October 2025)
- WiseTech Global, 1H26 results investor briefing scripts (February 2026)
- Australian Signals Directorate, Australian Cyber Security Centre (Essential Eight)
- Competition and Consumer Amendment (Unfair Trading Practices) Act 2026 (No. 64, 2026)
- ACCC: Contracts and unfair contract terms
Facts and prices checked 27 October 2026. Spotted something out of date? Tell us.