By
Mendy Green
June 9, 2021
•
20 min read
Business
The MSP Business Model Fallacy
In any business where you’re not billing Time and Materials, the amount of time you spend on a project directly correlates to how profitable you are. In an MSP, this applies even more. MSP Businesses were designed years ahead of their time, bringing into practice concepts such as recurring revenue, outsourcing, efficient resources, and more; before people even realized the value. It’s the reason that today the MSP Businesses are blowing up with everyone you meet starting their own. Unfortunately, there’s a complex side to the framework of an MSP that is very often overlooked, especially by those just starting out.
Let’s discuss how the MSP business model is built. MSPs pitch to their prospective clients that they can provide the same level (or often times better) IT Services to their organization than they themselves can find if they go with someone internally. They ask for less money, and offer a bigger team with greater experience. These same MSPs then have to turn around and hire the same people that would have been hired directly, and not just one, but two or three or more depending on the size of the MSP.
MSPs have to pay the same salary with a smaller budget. How can these numbers possibly work?
This is where efficient resources come in; an MSP needs to stack multiple clients reusing the same resources for each client so that together all the clients combined pay enough money for the MSP to pay the technicians salary and make a profit. The income also needs to cover all base expenses of the MSP which includes infrastructure such as an RMM, PSA, Email, Phones, over-night team for emergencies and so on.
With an internal IT resource, that resource would be solely focused on the business they were working for and getting paid a full salary of say $52k/year, now the same resource at an MSP is getting paid $52k/year and needs to stay on top of not one company IT needs, but actually 3 or 4 (or more depending on the contract size of each). This kind of expectation is unreasonable and when maintained results in high-stress work environments and eventual burn out for the technician. The saying “trial by fire” is very applicable to the technicians who work at an MSP. They are under constant barrage of tickets and stress, jumping from company to company each ticket wildly different from the next. This makes them unusually skilled and also rapidly exposes them to a wide range of experience they may not have received working for just one company. A good MSP technician of the lowest tier can easily go head to head in ability (if not knowledge) to a mid-tier internal IT resource.
Now keep in mind that when MSPs started we were a new phenomenon. There was no standard to follow, no existing business to copy, except for the existing internal IT department within a Company. We didn’t know what kind of pay structure was fair to offer a Tier 1 or Tier 2 technician because there was no “average pay” metric. The only thing we did know is that we are building a business with a stress on smaller dollar amounts per client, and more total clients. This means what we paid our technicians had to be less too, or that we keep the MSP as lean as possible with only the amount of technicians truly needed. Following the 80/20 rule we determined that 80% of the time with our clients running smoothly we would be fine and only 20% of the time when some kind “perfect storm” would occur we would need to motivate our technicians to put in more effort (or what was generally called “figure something out”).
What’s being described is not a sustainable long term plan. Simon Sinek likes to stress that business is an Infinite Game and that those who are not playing by those rules are doomed to failure eventually. The only way to stay in the game is by having resources, and the will to keep playing. We’ve already established that MSPs do not have the same pockets as a normal business, not without drastically imposing upon “will”, our employees, making them work in stressful environments and constantly being battered by the next broken issue.
The fix for this is easy, and its an iteration of what we already started. Efficient use of resources. Efficiency can help us spend less time per ticket, less time per client, and improve our technicians stress in the environment. There are two side to the efficient use of resources, one of which we already started (Sharing resources among companies) but the other is often overlooked “Work load management”. If we can make our work load efficient we can easily improve upon all the issues we just brought up. Here are some ideas that can be used to help facilitate the efficient workload.
Efficient resources is way more than just sharing resources. Making your workload efficient is just as important. Remember how profitable you are directly correlates to how efficient you can be
- Proactively addressing age of client equipment
- Proactively addressing ticket trends over time to help improve underlying issues
- End User technology training for better understanding of the tools they use
- Breaking Client’s business vertical into separate teams to allow for familiarity of Line of Business applications and setup
- Building an MSP supported technical standard as your “stack” to ensure familiarity with technical infrastructure
- Establishing formalized business processes for your MSP Teams so they know where to find information and how to proceed
- Building an Automation First environment allowing you to offload work from your team to your technology decreasing the amount of time spent on tickets.
Remember, in the MSP business time isn’t a loss of potential profit, its actual profit lost as your contracted rate is the same every month. Automation and bulk actions are extremely important as the less time you spend doing something the more your Per Hour amount goes up.
I'm passionate about IT, driven by a dual love for solving complex problems and a commitment to transforming the stereotype of technical support into a positive and enjoyable user experience. For over 13 years, I've been deeply involved in the MSPGeek community, lending my expertise to various Managed Service Providers (MSPs), while also serving as the CTO at IntelliComp Technologies.
My journey in the tech world is fueled by a passion for teaching others. I find great satisfaction in imparting problem-solving and critical thinking skills, and offering practical guidance during the troubleshooting process. It's this enthusiasm for mentorship and improvement that led me to my current venture.
Today, as the founder of Rising Tide, I'm focusing on the MSP industry, dedicating my time to coaching and assisting both individuals and businesses. At Rising Tide, we're not just about providing solutions; we're about nurturing growth, fostering innovation, and building a community where everyone can rise together. Whether it's through hands-on problem solving or strategic planning, my goal is to make the IT experience not just efficient, but also empowering and enjoyable
See some more of our most recent posts...
Chapter-by-Chapter Discussion Questions for The Go-Giver by Bob Burg: Chapter Five - The Law of Compensation
Can success scale without selling out? Chapter 5 of The Go-Giver says yes: serve more people, serve them better. Explore the “rich vs. good” myth, what to do when generosity gets taken for granted, and how practiced improvisation (“you just make it up”) guides real-time decisions that create value at scale.
Read post
About this Series
This discussion guide is part of Rising Tide’s Fall 2025 book club, where we’re reading The Go-Giver by Bob Burg and John David Mann.
If you’re just joining us, here are a few pages you’ll likely benefit from:
- Chapter One – The Go-Getter for an introduction on how to use these Discussion Questions
- Book Clubs, Conversations, and Curiosity for why we started a book club for a technical team here
Chapter Summary
In Chapter 5, the Law of Compensation, Joe meets successful CEO, Nicole, amidst a chaotic and playful work environment, again dismantling our concept of success and professionalism. Nicole teaches Joe the Second Law of Stratospheric Success: Your income is determined by how many people you serve and how well you serve them.
Discussion Questions
Use these open-ended prompts to guide reflection and conversation. Remember, there are no right answers!
- Do you see a difference in the two different ways they present the 2nd Law? (“Your income is determined by how many people you serve and how well you serve them.” vs. “Your compensation is directly proportional to how many lives you touch”)?_
- Are there times that you shared an idea with someone and it worked out poorly? What about one where it worked out splendidly?
- How do you feel about the idea of there being two types of people in this world: those who get rich, and those who do good? Where do you feel that belief comes from?
- Can you relate to Nicole getting nervous and sabotaging her own success?
- You just make it up. How did this statement make you feel?
Rising Tide Input for your Consideration
- On the "rich vs. good" binary.
- Many of us definitely internalize some form of the “to get rich, you have to step on a lot of people to get money” or “to get super rich, you don’t have time to do good”
- Examples that extend and complicate that binary
- 20 People Confront a Billionaire (ft. John Morgan) this billionaire considers that he's doing good for others. Subjectively, people may think they’re doing good. His wife gave away $500,000 USD and he didn't even know about it.
- Dolly Parton, arguably one of the most successful musical artists, has invested millions of her own money in improving education outcomes, healthcare, animal welfare, LGBTQ+ youth, and even Appalachian cultural preservation.
- Billie Eilish was recently honored for her music at the Wall Street Journal Innovator's award, where she spoke to billionaires in the audience after she herself gave away 1/4 of her net worth: "No hate, but give your money away, shorties". Billie Eilish tells billionaires to give away more of their money | AP News
- Not every rich person is successful, not every successful person is rich.
- Have you ever experienced some of your most challenging customers are often the wealthiest? It's almost like they've lost the experience and the value of the work being done?
- Comes back to our perspective and the definition of success. If money is your only metric for meaning, you may be missing the plot.
- On having our generosity taken for granted
- It's happened to all of us. The question is: do you live and learn, do you trust people again the next time?
- The failings of others can make us jaded or they can make us wise. There is a huge difference.
- We encourage you to identify markers of trustworthy and honest partners and people, and to instead of promising to never share again, promise to only share with those who truly will be honorable with your energy, time, and skill.
- On "You just make it up"
- There's research about how Jazz musicians aren't thinking through their performances, but rather going through the flow and feeling it out in the moment! This can be encouraging: we don't have to know all of the answers in the moment, but the work we do to create the type of person we want to be can help guide us through true game-time decisions. https://www.nature.com/articles/s41598-021-98332-x.pdf
- On Songs and Stories with Kelly Clarkson, we learn that Gloria Estafan and the Miami Sound Machine's iconic song, Conga, came from a pure encore. It was riffing that came from sheer shared energy between the band and the crowd. https://www.youtube.com/watch?v=mJeg1wFBNFA&msockid=0a5959e7b66211f096d8057420e615b7
About Rising Tide and our Book Club
Rising Tide helps MSPs and service-focused teams build better systems: the kind that align people with purpose.
Every Friday at 9:30 AM ET, we host Rising Tide Fridays as an open conversation for MSP owners, consultants, and service professionals who want to grow both professionally, technically, and emotionally. In Fall/Winter 2025, we’re walking through The Go-Giver, chapter by chapter.
If that sounds like your kind of crowd, reach out to partners@risingtidegroup.net for the Teams link.
Bring your coffee and curiosity…no prep required.
Chapter-by-Chapter Discussion Questions for The Go-Giver by Bob Burg: Chapter Four - The Condition
What happens when you serve the client even if it means sending them elsewhere? Chapter 4 of The Go-Giver shows how giving more than you take builds trust, loyalty, and outcomes that outlast clout. We explore long-tail generosity, practical ways to add value, and a real MSP example of earning devotion by automating without upsells.
Read post
About this Series
This discussion guide is part of Rising Tide’s Fall 2025 book club, where we’re reading The Go-Giver by Bob Burg and John David Mann. If you’re just joining us, here are a few pages you’ll likely benefit from:
- Chapter One – The Go-Getter for an introduction on how to use these Discussion Questions
- Book Clubs, Conversations, and Curiosity for why we started a book club for a technical team here
Chapter Four Discussion
Chapter Summary
In Chapter 4, The Condition, Joe if back in the office and we find him losing yet another customer. This, time, however, in an effort to test the First Law of Stratospheric Success (Your true worth is determined by how much more you give in value than you take in payment), he guides the customer to a competitor who may be able to better fit his needs.
Discussion Questions
Use these open-ended prompts to guide reflection and conversation. Remember, there are no right answers!
- How did Joe giving the customer to Joe’s competition make you feel?
- How was Joe’s action representative of giving more in value than he takes in payment?
- Can you describe a time a person gave you more in value than you paid? How did that make you feel?
- What are ways in your life that you can practice giving more in value than you take in payment?
Rising Tide Input for your Consideration
- Success is about perspective. You can be successful by your own goals, and not standard expectations of power, money, and attention.
- Our friend and MSP Owner at Network Integration Specialists in Virginia, Doug White, mentioned that he's enjoying making automations for his customers and not charging extra, and how those actions spark unsolicited client replies like, “This is awesome”. Truly the kind of experience the next MSP will have a hard time matching!
- Give without scoreboard math. Community help, answering questions, volunteering, parenting: these are “long-tail” investments that compound in character and network, not just invoices.
- We're curious! Maybe Gus has layers. There’s likely more going on with him than the mentor archetype...let's file that for later.
About Rising Tide and our Book Club
Rising Tide helps MSPs and service-focused teams build better systems: the kind that align people with purpose. Every Friday at 9:30 AM ET, we host Rising Tide Fridays as an open conversation for MSP owners, consultants, and service professionals who want to grow both professionally, technically, and emotionally. In Fall/Winter 2025, we’re walking through The Go-Giver, chapter by chapter. If that sounds like your kind of crowd, reach out to partners@risingtidegroup.net for the Teams link. Bring your coffee and curiosity…no prep required.
Chapter-by-Chapter Discussion Questions for The Go-Giver by Bob Burg: Chapter Three - The Law of Value
What makes a business truly valuable? Chapter 3 of The Go-Giver reframes worth: deliver more value than you take. Explore Ernesto’s playbook—care as a differentiator, authentic generosity, and spotting hidden value in plain sight—to build customer experiences that create trust, loyalty, and momentum.
Read post
About this Series
This discussion guide is part of Rising Tide’s Fall 2025 book club, where we’re reading The Go-Giver by Bob Burg and John David Mann. If you’re just joining us, here are a few pages you’ll likely benefit from:
- Chapter One – The Go-Getter for an introduction on how to use these Discussion Questions
- Book Clubs, Conversations, and Curiosity for why we started a book club for a technical team here
Chapter Three Discussion
Chapter Summary
In Chapter 3, The Law of Value, Joe and Pindar visit a busy Italian-American cafe and its owner/head chef/real estate magnate: Ernesto. Here, we learn The First Law of Stratospheric Success: “Your true worth is determined by how much more you give in value than you take in payment”
Discussion Questions
Use these open-ended prompts to guide reflection and conversation. Remember, there are no right answers!
- Here, we find Pindar redefining phrases again. Ernesto says his hot dog cart was voted the City’s best hot dog stand. Pindar corrects: “Best outdoor dining experience in the city.” What does this difference say to you?
- Who do you think the Connector is going to be?
- Why did the words “clout and leverage” mean so much to Joe, specifically? What do you think the author is trying to say by having Joe repeat them over and over?
Rising Tide Input for your Consideration
- Part of giving is making people feel important. Ernesto’s real differentiator isn’t cuisine: it’s care. People remember how the place treated them more than what they ate.
- Give for the love of the game. Value isn’t a gimmick. When generosity is authentic (and bounded), quality compounds.
- The narrative keeps checking Joe’s assumptions (e.g., not realizing the chef is the owner). How do you feel about the point: perhaps value often hides in plain sight?
- Clout vs. leverage. Clout seeks recognition; leverage seeks outcomes. Joe wants both, but this chapter hints that trust is the real currency.
About Rising Tide and our Book Club
Rising Tide helps MSPs and service-focused teams build better systems: the kind that align people with purpose. Every Friday at 9:30 AM ET, we host Rising Tide Fridays as an open conversation for MSP owners, consultants, and service professionals who want to grow both professionally, technically, and emotionally. In Fall/Winter 2025, we’re walking through The Go-Giver, chapter by chapter. If that sounds like your kind of crowd, reach out to partners@risingtidegroup.net for the Teams link. Bring your coffee and curiosity…no prep required.