MSP Profit Margins 101: Industry Averages & Ways to Improve
Familiarize yourself with MSP profit margin formulas, industry standards, and strategic ways to improve by reducing costs and increasing revenue.
MSP burnout is a common problem for technicians, managers, and business owners. IT professionals who once enjoyed their work and willingly put in overtime find themselves feeling physically and emotionally exhausted, resentful, disengaged, and less productive after months or years of sustained stress. Many quit, think of quitting, or become "quiet quitters"—doing the bare minimum and continuing to collect their paycheck.
Preventing and resolving MSP burnout is possible. It is also necessary to ensure the longevity and well-being of the business. Effective solutions require getting to the root of the problem(s) that are causing unsustainable levels of ongoing workplace stress. You can then implement strategies to immediately and noticeably improve the health and job performance of each team member and the MSP as a whole.
The following are six of the top causes of MSP burnout and effective strategies for correcting them.
Professionals in the IT industry often use inefficient software solutions that provide a far poorer user experience than the software their clients are using. Additionally, talented IT technicians who start their own MSPs often have no training in business management, which only exacerbates efficiency issues.
MSP managers and owners eventually find themselves fielding calls from leads, clients, and vendors while trying to keep track of 20 different projects and tech issues and 30 open tabs on their computers. It's no wonder they end up feeling frustrated and burnt out!
Many MSP owners and technicians are finding that the work of a managed services provider is more complex than it used to be. Larger clients, more frequent changes and updates to programs, and more diversity in the technology stacks used by different clients make it difficult to keep up with everything.
Security threats are an increasing concern (and source of stress) for IT services owners as a greater percentage of workplaces adopt cloud-based solutions for their day-to-day operations. Around 94% of companies in the world use the cloud in 2024. While this increases convenience, collaboration, and portability, it also puts vast quantities of sensitive data at risk and makes businesses more vulnerable to the effects of server downtime.
Clients are reliant on MSPs both to prevent downtime at the client's end due to security breaches and network failures and also to ensure that the entire tech stack functions without interruptions from the MSP's end. There is a justified fear of being held liable by clients' insurance companies for the costs of security issues and interruptions to business operations.
This may actually be #1 on many MSP's "stress lists." Clients who are constantly unsatisfied, changing their minds, or asking for services that are not part of their managed services agreement (MSA) end up becoming a drain on the MSP's time and resources and add an unnecessary layer of stress and frustration. Solving this problem alone is often enough to reduce stress and improve job satisfaction in MSPs.
The supply of sales professionals, technicians, and engineers hasn't met demand as the need for computer support grows exponentially, and we've seen hiring challenges forcing current MSP technicians and managers to work long hours to keep up with the workload. Working longer hours ultimately backfires, however, as the lack of sleep, exercise, adequate nutrition, and downtime hampers IT professionals’ ability to think clearly and worsens job performance.
Many of the same factors that lead to burnout (working long hours, frequent interruptions, and emotional stress) often lead to the development of unhealthy lifestyle habits that further impact well-being. Establishing healthier lifestyle habits should be seen as going hand in hand with workflow improvements, as both are necessary for improving well-being and job enjoyment long-term.
You probably have a fair idea about what constitutes "burnout" if you're reading this article. However, familiarizing yourself with the symptoms of burnout will help you recognize the signs in your team and make the necessary changes in your MSP before the situation becomes harder to fix.
The WHO defines burnout as an occupational phenomenon that arises as a consequence of "chronic workplace stress that has not been successfully managed."
The three symptoms that characterize workplace burnout, according to the WHO, are:
Note:
If you are experiencing unusually severe and ongoing fatigue (a common symptom of what is referred to as "adrenal fatigue" as well as conditions like chronic fatigue, fibromyalgia, and others) in addition to simply feeling "over it," it is important to see a medical professional who is experienced with fatigue conditions. He or she may recommend specific tests, lifestyle changes, and personalized treatments to help you manage or improve your symptoms.
MSP burnout is a very real and serious problem. The good news is that you don't have to fight burnout alone. Countless MSP owners, managers, and employees have experienced burnout before, and many have found effective strategies that helped them come out the other side much happier and healthier than before.
If you or any of your team members are experiencing symptoms of burnout, seek help from colleagues, a mentor, online forums, or a mental health professional. The earlier you deal with the problems, the faster your work enjoyment and satisfaction will improve.
Occupational burnout is common in MSP technicians, managers, and owners. Inefficient systems, increased complexity, security challenges, labor shortages, and difficult clients are just a few factors that add layer upon layer of stress and frustration to already-stretched teams and push them closer to breaking point.
A few strategic adjustments to your offerings, tech stack, onboarding requirements, and client portfolio are often the most effective ways to lighten the mental load enough to turn the situation around. Coupled with the development of lifestyle habits that support physical and mental health, you should soon begin to see a light at the end of the tunnel.
Familiarize yourself with MSP profit margin formulas, industry standards, and strategic ways to improve by reducing costs and increasing revenue.
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