Are you really an MSP, or are you just playing tech support roulette? If less than 50% of your revenue isn’t recurring, you’re not fooling anyone. Real MSPs thrive on predictable, recurring revenue, not just patching up problems and hoping for the next break-fix call.
Why Recurring Revenue is Non-Negotiable
Here’s the bottom line: Buyers—especially private equity—want to see steady, recurring revenue. No one’s interested in a business with inconsistent income from random projects and hardware sales. As Gary Stein says, “To be considered an MSP, at least 50% of your revenue should be recurring.” But don’t settle for just meeting the minimum. Shoot for 65% or higher. That’s when your business stops being a gamble and starts being a solid investment.
The math is simple. A company bringing in $1 million in T&M revenue might be valued at just $500,000. In contrast, $1 million in managed services revenue could be valued at $1.5 million. If your business isn’t focused on building that recurring revenue stream, you’re leaving serious money on the table.
Know Your Numbers or Get Left Behind
You might think, "Hey, I’m making a decent income." But if all you’re doing is covering your own salary, you’re not running a business—you’re just owning a job. And let’s be real: No one wants to buy a job. The goal is to generate profit, not just revenue. The top-performing MSPs hit 25% product margins. If you’re not there, it’s time to figure out why.
If you’re not comparing yourself to the industry’s top performers, you’re flying blind. The market doesn’t care about excuses; it cares about results. And if 25% of MSPs can achieve those margins, there’s no reason you can’t either.