Return on MSP Investment: 5 Ways to Maximize Your Profit Margins

Looking for innovative ways to drive sustainable growth and build a thriving MSP business?

In this blog, we’ll explore five strategies to maximize your profit margins, including a smart business model that allows you to expand your service offerings without adding extra staff and the long-term investment gains of cybersecurity. Let’s dive in.

5 Ways to Maximize Your MSP Profit Margins 

Here are 5 ways you can increase revenue, reduce liability costs, improve customer retention, and think long-term investment for a more lucrative future. 

Get cyber insurance: Every MSP should have cyber insurance at a bare minimum. Cyber insurance can help reduce litigation costs and cover other fees that might be incurred out of pocket in the event of a security incident or breach. 

In addition to financial coverage, cyber insurance companies typically provide a dedicated incident response team to quickly address and mitigate breaches, ensuring that business operations can continue with minimal disruption.

Cyber insurance also provides peace of mind by offering financial protection against unknown events such as third-party disputes and other regulatory fines. Cyber insurance lets you maintain business operations and prevent potential losses beyond the balance sheets. Not only is cyber insurance a sound investment, but it’s also a strategic asset that is essential when doing business with clients.

Expand service offerings: Do you offer cloud migration, pen testing services, or have a thorough understanding of how to fix vulnerabilities in code? All can provide you with a competitive edge in the market. 

Does that mean you need to have a deep technical understanding of Python to write code or know the rules of ethical hacking to conduct a pen test? Not at all. It means that you need to outsource those services to a reputable third party and collect your percentages or fees. 

Technical arbitrage can provide you with a great revenue stream. Other ways to expand your offerings include partnering with other trusted MSPs that can accommodate the extra work. This frees you up to take on other projects and focus on higher paying clients. Niching down by industry or specific service can also help you stand out in a crowded MSP market. Once you expand, you can always upsell and cross-sell existing clients or create tiered service packages that offer more features or higher levels of service. 

Upgrade your security stack: Are you using the same routers and switches from 2005? You might want to consider upgrading your security stack. Seriously. Besides those products being discontinued or nearly obsolete nowadays, it’s also costing you in terms of bandwidth, connectivity, and optimal performance. It’s also costing you in terms of security. 

Older routers weren’t built to support the latest security protocols or software updates. Outdated switches might not have enough ports to accommodate the growing number of devices, impacting your ability to segment network traffic and maintain a secure environment.

These open, unsecured ports can leave your endpoints vulnerable to unauthorized access, making your network an easy target for cyberattacks. Upgrade your equipment. Reddit forums are excellent places to get actual feedback on security tools and hardware devices from fellow IT professionals and network engineers. Invest in your security stack.  

Focus on recurring revenue: Recurring revenue is the lifeblood of any successful MSP business practice. Recurring revenue also means that you have mastered client retention. That’s a big thing too because the cost of acquiring a new customer can be as much as five times higher than retaining an existing one. Look at it from a P&L ratio, if it costs you 5x more to acquire a new client, then those POCs better justify the investments, or else your business won’t achieve sustainable growth or succeed in the long run. 

Build those customer relationships once you sign any contracts. Don’t wait until your agreement is almost up to offer that extra level of support. Show your clients that you truly value and appreciate them. Go the extra mile for them. As an MSP, you might wear multiple hats if you run a smaller business. That means you might be their technology advisor, solution architect, account manager, and customer support team—all at once. Your clients depend on you, so make them feel valued. 

Don’t be afraid to negotiate terms either. POCs for enterprises might run several months or longer, but once you get that client locked in, it’s your responsibility to keep them there. And that centers around the customer experience. Retention is a huge part of recurring revenue. Futureproof your business in this turbulent economy by offering your clients top-tier services. The returns will pay off in dividends. 

Invest in cybersecurity: One way to attract more clients and increase your profit margins is to invest in cybersecurity. Why? Because it allows you to offer specialized services that protect your clients’ critical assets. Convincing your clients isn’t so difficult when you break down the estimated cost savings attributed to potential data breaches and other cyber threats, such as ransomware attacks, phishing scams, and insider threats.

The cost of a data breach as of 2024 is $4.88M. Keep in mind that we’re not factoring in other damages and losses the company might absorb in the process. 

Investing in cybersecurity benefits your clients and your business. You want to be able to secure all assets while making a profit. Think of it as a strategic business investment. KPIs such as ROSI (Return on Security Investment) allow you to demonstrate to clients how your cybersecurity solutions not only protect their critical assets and operations but also show them a long-term return, as they can prioritize mitigation of vulnerabilities based on business objectives. And that’s priceless. 

Still unsure of how to convince your clients of the benefits of cybersecurity?

Check out our guide on How to Sell Cybersecurity to Your MSP Clients in 6 Easy Steps and make sure you incorporate those techniques into your selling approach.

Maximize Your Return on Cybersecurity Investment with Guardz

Speaking of maximized profit margins and ROSI, Guardz provides MSPs with a multi-layered approach that consolidates fragmented cybersecurity tools and solutions into a unified platform. Guardz offers endpoint security, email security, cloud data protection, and an external footprint of your digital assets to show how an attacker might exploit vulnerabilities. 

Give your clients the security and peace of mind they deserve. Boost your revenue and future returns by consolidating your cybersecurity tools and solutions with Guardz today. 
Schedule a demo to find out more.