Why MSPs Are Busy, Clients Are Happy — and Your Margins Suck
Nothing feels broken. Clients aren't churning. The backlog is full. Projects keep coming. People are working hard. From the outside, this looks healthy. From the inside, it feels like you're constantly pushing, constantly hiring, constantly adding tools. And somehow margin never improves the way it's supposed to.
At some point you stop asking "How do we grow?" and start asking "Why does this feel harder every year?"
That's a margin problem.
Most MSPs Think Margin Is a Pricing Issue
Sometimes it is. Often it isn't.
Margin is usually death by a thousand small decisions, most made with good intent, almost none revisited once they become standard practice. A client's environment got more complex two years ago. Security tightened. Compliance expanded. Tools multiplied. Client expectations shifted. But your agreement didn't. If the work got harder and pricing didn't move, margin didn't disappear. You gave it away.
That said, underpricing is rarely the only problem.
The real issue is usually that your packaging or billing model doesn't fit how work actually happens. You sold a model that sounds clean on paper but breaks in reality. Flat-rate agreements applied to unpredictable environments. Per-user pricing applied to infrastructure-heavy clients. "All-inclusive" language layered on top of constant exceptions. On paper the math works. In delivery, it doesn't. And when delivery doesn't line up with how you price, margin always loses.
Where Most MSPs Start Bleeding
Margin doesn't get destroyed in one big moment. It leaks through behavior.
A tech fixes something because escalating feels slow. A project turns into ongoing support because the client "needs it live." Something out of scope gets done because arguing feels worse than working. Exceptions pile up because "it's just this one client." None of these feel expensive. But margin doesn't care how reasonable a decision felt. It only cares how often it happens.
Now consider tools. MSPs love to blame vendors for tool costs and miss the real issue entirely. The problem is almost never the price of individual tools. It's tool sprawl and weak ownership. You bought overlapping platforms. Half-implemented all of them. You're using 30% of five tools instead of 80% of one. Tools exist with no clear purpose or owner.
Bloated toolsets don't just drain budget. They distract techs. They create alert noise. They increase cognitive load. They slow everything down. Slower delivery equals lower margin. A cheap tool that isn't fully owned will cost you more than an expensive one that actually works.
The Question You Can't Answer Cleanly
Who owns margin?
Not leadership. Not operations. Not everyone.
One person.
If you can't point to a single name on your org chart responsible for margin and profitability, then nobody owns it. When nobody owns something, it erodes. Sometimes that person is you. That's fine. What's not fine is pretending margin will fix itself while everyone stays busy.
Most MSPs don't have a work ethic problem. They have an ambiguity problem.
Ambiguity about what's included in scope. Ambiguity about when exceptions end. Ambiguity about what tools are supposed to replace. Ambiguity about who has authority to say "this stops." Good people respond to ambiguity by doing more. Margin responds by disappearing.
If your MSP is busy, clients are happy, and margins still stink, that doesn't mean you're bad at running a business. It usually means you outgrew the version you originally designed.
Margin isn't an accounting metric. It's a reflection of how clearly the business is run. Once you start looking at it that way, it becomes obvious where the leaks are and why they've been so easy to ignore.