How to Benchmark Your MSP
MSPs have a benchmarking advantage over most service businesses: the operational model is consistent enough that benchmarks are genuinely comparable. A plumber and an electrician are both “trades” but their economics are different. Two MSPs serving 50-user SMB clients with managed IT and security are doing essentially the same thing. The benchmarks work because the business model is standardized.
That consistency is also why deviations from the benchmarks are so diagnostic. If your per-user pricing is $150 when the healthy range is $185-$250, that’s not a stylistic choice. It’s a structural problem with a specific cause and a specific fix.
Step 1: Pull Your Numbers
Seven data points from the trailing 12 months. Most of these live in your PSA or accounting software.
| Metric | Where to Find It | Notes |
|---|---|---|
| Total revenue | Accounting software | All sources - MRR, project, hardware, everything |
| MRR | PSA or billing system | Contracted monthly recurring revenue only |
| Per-user pricing | PSA | Average across all managed clients |
| EBITDA | P&L statement | Revenue minus all operating expenses including owner comp |
| Headcount (FTE) | Payroll | Full-time equivalents including owner |
| Total managed endpoints | RMM dashboard | All devices under management |
| Top 3 client revenue | Billing records | Combined revenue from three largest clients |
Calculate: MRR % = (MRR x 12) / Total Revenue. Revenue per Employee = Total Revenue / FTE. Endpoints per Tech = Total Endpoints / Technical Staff FTE.
Step 2: Compare Against Benchmarks
| Metric | Below Average | Average | Healthy | Best-in-Class | Your Number |
|---|---|---|---|---|---|
| Total Revenue (5-10 people) | Below $600K | $600K-$900K | $900K-$1.5M | $1.5M-$2M+ | ___ |
| MRR % | Below 55% | 55-65% | 65-78% | 78-90% | ___ |
| Per-User Pricing | Below $150 | $150-$185 | $185-$250 | $250-$325 | ___ |
| EBITDA | Below 12% | 14-18% | 18-23% | 23-28% | ___ |
| Revenue/Employee | Below $120K | $120K-$140K | $140K-$175K | $175K-$220K | ___ |
| Endpoints/Tech | Above 320 | 280-320 | 230-280 | 200-230 | ___ |
| Top 3 Concentration | Above 45% | 30-40% | 20-30% | Below 20% | ___ |
Step 3: Calculate Your Cost-to-Serve
This is the number most MSPs have never calculated, and it’s the one that matters most for pricing decisions.
Per-user cost-to-serve = (Tool costs + Allocated labor + Overhead) / Total managed users
| Component | Typical Range | How to Calculate |
|---|---|---|
| Security tools (EDR, SIEM, backup, MFA) | $30-$60/user/mo | Sum all per-user tool licensing |
| Monitoring and management tools (RMM, PSA) | $10-$20/user/mo | Platform costs divided by users |
| Allocated labor | $30-$50/user/mo | Tech compensation x time allocation / users |
| Overhead allocation | $10-$20/user/mo | Non-labor operating expenses / users |
| Total cost-to-serve | $80-$150/user/mo | Sum of above |
Now compare cost-to-serve against per-user pricing. If the gap is less than $50/user, margins are too thin to sustain the business. If it’s $80-$120, you’re in healthy territory. If you don’t know your cost-to-serve, that’s the first thing to figure out - before any pricing, staffing, or growth decisions.
Step 4: Read the Gaps
Different gap patterns point to different root causes:
Low per-user pricing, healthy EBITDA: You’re making it work through volume or efficiency, but you’re leaving margin on the table. Price increases of $20-$40/user are likely absorbable by clients without churn.
High MRR %, low EBITDA: Your recurring model is strong but costs are too high. Look at tool sprawl (8-12 tools when 4-6 would cover the same ground), overstaffing (endpoints per tech below 200), or below-market pricing that doesn’t cover delivery costs.
Low MRR %, healthy revenue: You’re running a project business with a managed service wrapper. The revenue might be fine today, but the model isn’t predictable or scalable. Converting break-fix clients to managed agreements is the priority.
High client concentration, everything else healthy: One client departure away from a crisis. Growth must be focused on diversification, not just adding revenue. Use the Revenue Fragility Calculator to model the impact.
Low revenue per employee: Either overstaffed, underpriced, or both. Compare endpoints per tech (overstaffed?) and per-user pricing (underpriced?) to identify which problem is primary.
Step 5: Identify Your Highest-Leverage Move
For most MSPs in this band, the priority hierarchy is:
- If per-user pricing is below $185: Reprice. This is the single highest-ROI action. Every dollar of per-user increase across 500 users is $6K/year in revenue at near-100% margin.
- If MRR is below 60%: Convert break-fix to managed. Shift the revenue mix before trying to grow total revenue.
- If client concentration is above 30% for any single client: Diversify the base. Growth on top of concentration just amplifies the risk.
- If endpoints per tech is above 300: Hire before quality slips. Service degradation causes churn that costs more than the hire.
- If EBITDA is above 22% on all other metrics healthy: You’ve earned the right to invest in growth. This is where marketing spend and sales hiring create real leverage.
Run the full diagnostic with the Business Assessment. The full MSP benchmarks analysis provides the detailed context behind each of these numbers - including the security pricing premium data and contract renewal strategies that separate growing MSPs from stagnant ones.