If you’re serious about building a best-in-class MSP, you need more than grit and gear. You need a scoreboard. And not just any scoreboard. You need the RIGHT numbers that drive real profit, protect your downside and push the business forward every single month.
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Let’s break down the 6 metrics every MSP must track, and what to do if you’re falling short.
1. Blended Gross Margin: 45%–50% Minimum
Let’s get one thing straight: if your blended gross margin isn’t at least 45%, your business is running too lean, too risky and too close to the edge.
Gross margin = revenue – direct costs. That means labor (techs, subcontractors), software you resell, tools, licenses, third-party services and hardware.
If you’re under 45%:
- You’re underpricing your services.
- You’re over-delivering for too little.
- You’re tolerating inefficiency from your techs and tool stack.
What to do now:
- Audit your client contracts: Are you including too much for too little?
- Analyze your tech stack: Are you paying for tools you don’t use or that overlap?
- Improve labor utilization: If techs are spending hours fixing low-impact issues, that’s margin leakage.
You don’t have to be an accountant. Just use this:
Revenue – Direct Costs = Gross Margin
Then divide by revenue to get your %.
Target: 45%–50%. Non-negotiable.
2. Net Profit (After Paying Yourself): Minimum 10%, Target 18%+
This is where most MSPs lie to themselves. They say, “We’re doing okay,” while they’re making just enough to pay the bills and scrape by.
Net profit is what’s left after EVERYTHING, including your own salary.
Here’s the benchmark:
- <10%? Your hair’s on fire. This is a dangerous game.
- 10%? You’re surviving, not thriving.
- 18%+? You’re in the top 25% of MSPs — best-in-class.
What to do now:
- Pay yourself a fair market salary as the owner.
- Track true profit monthly. If it’s under 10%, you have a problem, not a business.
- Cut unproductive clients. Reprice. Renegotiate.
You cannot scale what’s barely making money. Profit is what funds growth, hires, security and sanity.
3. 12%+ Year-Over-Year Growth
If you’re not growing, you’re dying. Slowly, quietly, and comfortably… until a competitor eats your lunch.
12% YOY growth is your bare minimum. But if you want to be elite? 20%+ for 3+ years makes you a “gazelle” — a fast-growth company that investors, buyers and talent all want to chase.
“Yeah, but last year was rough.” Sure, maybe. But market conditions don’t stop the best, they adapt faster.
What to do now:
- Run your revenue numbers from the last 3 years. What’s your growth rate?
- If you’re under 12%, stop chasing shiny objects. Double down on what’s proven to work: outbound prospecting, marketing automation, referrals.
- Create a 12-month sales plan, not a hope-and-pray plan.
Growth doesn’t happen accidentally. Set the number. Build the engine. Drive it weekly.
4. No Single Client Over 10% Of Revenue
If one client represents more than 10% of your revenue, you are standing on a financial cliff.
What happens if:
- They get acquired and drop you.
- A new CIO brings in “their guy.”
- They nickel-and-dime you into oblivion.
You go from profitable to panic mode overnight.
What to do now:
- Audit your top 5 clients. What % of total revenue do they represent?
- If one crosses 10%, create a 90-day action plan to reduce that dependency:
- Add new clients.
- Upsell other clients.
- Offer more services across your base.
Diversification = risk management. Get serious about protecting your MRR.
5. 1 New MRR Client Per Month Per Location
There’s no mystery here. If you’re not adding 1 new monthly recurring revenue client per month, your pipeline is clogged, your marketing is weak or your sales process is broken.
Adding MRR clients consistently compounds over time. One new client per month can add $5K–$15K/month in MRR annually. Do that for 3 years, and you’ve doubled your revenue.
What to do now:
- Set the goal. One per month. No excuses.
- Track activity: How many leads are you generating weekly? From where?
- Review your follow-up. Most MSPs lose deals from lack of persistence.
If you don’t have a pipeline you’re working daily, you’re not building a business, you’re just babysitting the one you have.
6. Client Churn <10% (And The Right Clients Leaving)
Churn gets a bad rap. Truth is, strategic churn is healthy. You SHOULD be letting go of the bottom-feeders, the price shoppers, the scope creepers and the high-maintenance low-value disasters.
The problem is when great clients leave. That’s the churn that hurts…and usually points to broken service, bad communication or an aging relationship that was never nurtured.
What to do now:
- Review which clients have left in the last 12 months. Why?
- Rank your client base: Keep the best. Fire the worst.
- Build a “retention system” — proactive check-ins, QBRs, upsell reviews.
Aim for <10% churn — but make it the right 10%.
Know These Numbers Like Your Life Depends On It…Because It Does
Look, none of these goals mean anything if you’re not tracking them. You can’t grow what you don’t measure. You can’t fix what you won’t face.
You should know:
- Your monthly gross margin
- Net profit
- YOY growth
- Client revenue distribution
- New client acquisition rate
- Churn rate
What to do now:
- Build a simple scorecard. Update it monthly.
- Review it with your leadership team.
- Use it to drive decisions — not your gut.
You don’t have to be a spreadsheet ninja. But if you’re flying blind, expect turbulence. And maybe a crash.
Final Word: Build A Business That Serves YOU
These 6 goals are not theory. They are battle-tested, field-proven metrics used by top-performing MSPs to build wealth, freedom and peace of mind.
Miss these? You’ll stay stuck in the grind.
Hit them? You build a machine.
So audit your numbers. Set the targets. Hold yourself accountable.
Because success is earned, not given. Let’s go earn it.
Need help implementing a marketing strategy? Schedule a FREE MSP marketing strategy session. In 60 minutes or less, we’ll show you how to get in front of more high-quality prospects who WANT your services and are ready to buy.
