MSPs have evolved from the reactive break/fix model — where clients pay only when something breaks — to a proactive, recurring revenue-driven managed services model. Yet, some MSPs still operate a hybrid approach, offering both break/fix and managed services depending on the client or circumstance.
This guide compares the two models in depth — what they mean for your business operations, client relationships, profitability, and long-term growth. Whether you’re a legacy break/fix shop looking to transition or an MSP evaluating if you should retain some reactive clients, this guide will help you decide which model aligns with your goals.
Approach 1: Break/Fix or Hybrid Model
In a break/fix model, you charge clients per incident, often hourly, when issues arise. Hybrid MSPs may have some fully managed clients on recurring contracts, while still accepting break/fix work from legacy or small clients.
Advantages
- Low Commitment for Clients: It’s an easy “yes” for smaller clients hesitant to commit to monthly contracts.
- Familiar Revenue Model for Many SMBs: Clients only pay when something goes wrong, which can feel more budget friendly.
- Easy to Start: This model requires minimal client onboarding, contracts, or SLA development.
- Cash Flow from Ad-hoc Work: May help fill revenue gaps with short-term or urgent projects.
Challenges
- Unpredictable Revenue: Income depends on emergencies or issues, making forecasting nearly impossible.
- Reactive vs. Proactive Service: You’re always putting out fires instead of preventing them. This increases client frustration and technician burnout.
- Harder to Scale: Every incident is time-consuming, and adding clients increases workload linearly.
- Lower Client Loyalty: No recurring relationship or proactive strategy means your value is harder to demonstrate, making you replaceable.
Example
- A small-town MSP works with 25 local businesses. Half are break/fix clients who only call when printers stop working or a server goes down. While the MSP brings in $80,000 per year from this work, it’s unpredictable and response demands interfere with managed service client SLAs.
Approach 2: Fully Managed Services Model
Clients sign a monthly contract for comprehensive IT management — including help desk, patching, monitoring, and backups. It’s often based on per-user or per-device pricing.
Advantages
- Predictable MRR: It’s easier to forecast, budget, and plan for growth.
- Proactive Support Model: You fix issues before they happen, improving uptime, reducing stress, and creating a better client experience.
- Higher Client Retention: Long-term contracts and recurring touchpoints build stronger relationships.
- Efficiency Gains: You can standardize tools, automate processes, and support more clients with fewer resources.
- Easier to Sell Strategic Services: When you’re already embedded in the client’s business, it’s easier to upsell security, compliance, cloud, or vCIO services.
Challenges
- More Complex Onboarding: You need detailed assessments, contracts, SLAs, and expectations defined upfront.
- Requires Strong Tools and Processes: PSA, RMM, documentation, and standardization are essential.
- Higher Initial Sales Resistance: Some clients balk at the perceived cost of monthly fees — even if they save in the long run.
Example
- An MSP with 40 managed clients generates $125,000 per month in MRR. All clients receive a core bundle of security, help desk, and backup services. The MSP’s techs use standardized onboarding, documentation, and automation tools. This allows them to support 40 clients with only five full-time staff members.
Key Decision Factors
- Revenue Predictability
- Break/fix/Hybrid: Revenue fluctuates based on client emergencies and reactive needs.
- Fully Managed: Predictable monthly recurring revenue (MRR) from service contracts.
- Scalability
- Break/fix/Hybrid: Difficult to scale; more clients mean more reactive work.
- Fully Managed: Easier to scale with automation, standardized services, and remote tools.
- Client Retention
- Break/fix/Hybrid: Lower loyalty; clients often shop around or delay calling until emergencies.
- Fully Managed: Stronger relationships built through ongoing support and proactive care.
- Operational Efficiency
- Break/fix/Hybrid: Time-intensive and unpredictable; inefficient use of technician time.
- Fully Managed: Streamlined workflows, proactive resolution, and automation reduce workload.
- Sales Complexity
- Break/fix/Hybrid: Easier to sell at first; low-commitment model appeals to cost-sensitive clients.
- Fully Managed: Requires more sales education but delivers long-term value and trust.
- Tools and Systems
- Break/fix/Hybrid: Can operate with minimal tools or manual systems.
- Fully Managed: Requires investment in PSA, RMM, documentation platforms, and SOPs.
- Brand Positioning
- Break/fix/Hybrid: Viewed as a generic IT repair shop or support vendor.
- Fully Managed: Positioned as a strategic advisor, business partner, and security expert.
Staffing Considerations
- Technician Workload
- Break/fix/Hybrid: Work is chaotic and unpredictable; harder to plan technician schedules.
- Fully Managed: Workflows are ticket-based and organized, reducing stress and improving throughput.
- Skills and Expertise
- Break/fix/Hybrid: Requires techs to handle varied, ad-hoc issues with little context.
- Fully Managed: Encourages specialization in tools, platforms, and proactive processes.
- Onboarding and Training
- Break/fix/Hybrid: Minimal need for standardized training or documentation.
- Fully Managed: Requires structured onboarding, SOPs, and consistent internal processes.
- Burnout Risk
- Break/fix/Hybrid: High. Constant emergencies, frustrated clients, and lack of structure take a toll.
- Fully Managed: Lower. Techs work proactively with fewer crises, leading to better job satisfaction.
Making the Transition to Managed Services
If you’re currently operating as break/fix or hybrid, here’s how to evolve:
- Start with Standardization. Document and standardize your core services: antivirus, patching, backups, and monitoring. Choose a PSA/RMM stack.
- Identify Ideal Clients for MRR. Review your break/fix clients—who would benefit most from consistent IT support and might accept a monthly contract?
- Create Tiered Offerings. Build pricing bundles (Basic, Standard, Premium) to give clients flexibility and align expectations.
- Shift the Conversation. Don’t talk about “paying more”—talk about “protecting uptime, productivity, and peace of mind.”
- Sunset Low-value Clients. If clients consistently reject managed service contracts or pull too many resources without commitment, it may be time to part ways.
Conclusion
Operating as a break/fix provider may seem more flexible, but it limits your ability to scale, retain clients, and build true business value. A fully managed services model may take more effort to build, but it provides long-term stability, client satisfaction, and higher profitability.
The future of the MSP model is clearly rooted in recurring revenue and proactive service. Your pace of transition depends on your client base, staffing, and service readiness.
Next Steps
- Want more helpful guidance on selling security services? Check out our Running a Profitable MSP Answer Center
- Have a question for our experts? Send it to editors@channelpronetwork.com
ChannelPro has created this resource to help busy MSPs streamline their decision-making process. This resource offers a starting point for evaluating key business choices, saving time and providing clarity. While this resource is designed to guide you through important considerations, we encourage you to seek more references and professional advice to ensure fully informed decisions.
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