How to get 60% MSP gross margin - Real Time Utilization 

Do you want 60% MSP gross margin? Best-in-class MSPs understand that healthy profitability and keeping clients happy is a fine balance of scheduling enough proactive work to keep systems healthy and provide facetime, as well as avoiding black hole tickets that suck up hours of manpower. However as a month is progressing, how do you know how you are doing across all your clients? Which clients need more scheduled work, who is already overcommitted? Our real-time utilization chart is the answer.

This new chart is a game changer for your Managed Services team. For the first time, you have visibility on MS agreement utilization real-time as the month progresses. Which clients are running too hot? Which clients haven’t gotten enough love this month to see the value of your offering? All on one dashboard.

As the days of the month tick by, the target line for where your agreement utilization should keep moving to the right. For example, if at the 15th of the month a client has already posted time equal to 100% of his monthly MS agreement fee, you might have a problem. In the converse, if you only have 1 week to go in the month and a client has barely used you at all, there might be a risk of them feeling neglected and not seeing the value.

The goal is to keep all your clients in a healthy range of agreement utilization. For most MSPs and clients that range is normally about 50% - 110% of the agreement value in any given month. That means that for a $3k per month client, in any given month you should target to keep your posted billable hour value between $1500 and $3300. If you police this religiously, your overall target agreement utilization across all clients should be in the 70% range which translates to an MS gross margin of around 60% depending on your bill rates and engineer costs. 

To try out this tool and everything else that we offer, please contact sales@bizratings.com.