Converting Break-Fix to Managed: Scripts and Strategies That Work

You know that sinking feeling. A break-fix client calls with yet another emergency, you drop everything to help, and then you send an invoice they pick apart line by line. Their unpredictable IT spending makes your cash flow a mess. You are basically subsidizing their lack of planning with your team's stress.

Here is what nobody wants to say out loud: if you still have break-fix clients in 2025, they are not really clients. They are transactions. And those transactions cost you more than you realize. Unpredictable revenue, constant firefighting, and the opportunity cost of not serving clients who actually value your work.

The good news? Learning to convert break-fix to managed services is not some pipe dream. It is a repeatable process that successful MSPs have figured out. With 62 percent of MSPs having fully transitioned from break-fix to recurring revenue models, the path forward is well established. This guide gives you the actual managed services sales scripts, strategies, and frameworks to turn those break-fix relationships into predictable MRR. Or, if nothing else, it will help you see which clients should find support elsewhere.

Why Does Converting Break-Fix to MRR Matter for MSP Profitability?

Converting break-fix clients to managed services directly impacts your MSP's survival and growth potential, with research showing MSPs that report strong MRR growth are 27 percent more likely to achieve profitability within three years. The managed services market reached 390 billion dollars in 2025 and is growing at a 10.49 percent CAGR, creating real opportunity for MSPs who embrace recurring revenue models.

Before we get into scripts and tactics, let's talk about why going from break-fix to MRR matters for your MSP's survival and growth.

What Makes Monthly Recurring Revenue More Valuable Than Break-Fix Income?

Monthly recurring revenue provides three big advantages that break-fix billing simply cannot match: predictability, higher valuation multiples, and better profitability through operational efficiency.

Industry data shows that 91 percent of MSPs say building monthly recurring revenue is their top sales priority. The reason is simple: MSPs that boost retention rates by just 5 percent can increase profits by 25 to 95 percent.

Predictability: When you know what revenue is coming next month, you can plan staffing, invest in tools, and think about growth. Break-fix revenue is all over the place. Making strategic decisions with any real confidence becomes almost impossible.

Valuation: If you ever want to raise money or sell your company, MRR is the number that matters most. The average valuation multiple for an MSP is currently between 6x and 8x EBITDA, and investors focus heavily on MRR growth rate and predictability. An MSP leaning heavily on break-fix is simply worth less than one with strong recurring revenue.

Profitability: Most MSPs rely on monthly recurring services (37 percent of revenue), followed by consulting (22 percent), projects (21 percent), and the old-school break-fix model (20 percent). With recurring revenue, you can set pricing that delivers clear value to clients while covering your costs and leaving you with real margin. High-performing MSPs target 50 to 60 percent gross margins on managed services, with top performers achieving 70 to 75 percent.

What Are the Hidden Costs of Keeping Break-Fix Clients?

Break-fix clients cost far more than their unpredictable revenue suggests, with hidden operational costs that can reduce profitability by 20 to 30 percent compared to managed services agreements.

Most MSPs underestimate what break-fix clients actually cost them. Beyond unpredictable revenue, there are costs that do not show up on a balance sheet:

• Context switching: Your techs bounce between clients with different environments, setups, and expectations. That mental overhead adds up and reduces staff utilization rates, which should be above 76 percent for high-performing MSPs.
• Emergency response: Break-fix clients call when something is broken. That means urgent, stressful work that blows up whatever you had planned and prevents efficient service delivery.
• Tribal knowledge drain: Without ongoing relationships, you lose the institutional knowledge about each client's environment. Every visit feels like starting over, increasing labor costs per engagement.
• Undercharging: Research suggests the average MSP is undercharging by at least 20 percent. Break-fix billing makes this worse because clients treat each invoice as a separate buying decision, creating downward price pressure.

How Do You Identify Which Break-Fix Clients to Convert First?

Focus your MSP client conversion efforts on break-fix clients who already spend a lot with you, contact you frequently, are growing, or recently dealt with major IT problems. These clients offer the best conversion chances and revenue potential.

Not all break-fix clients make good conversion candidates. Before you start your conversion push, take a hard look at your client base.

Which Break-Fix Clients Are the Best Conversion Candidates?

The best conversion targets are clients with consistent high spending, frequent service requests, growth plans, and recent experience with major incidents or security scares.

Go through your break-fix clients and look for these patterns:

High spending: Clients who consistently spend a lot on break-fix work are basically already paying for managed services. They just have not realized it yet. With the average new MSP contract deal size now at 2,500 dollars per month MRR, clients spending near this amount on ad-hoc work are prime candidates.

Frequent service requests: Clients who call you often have messy or complex environments that would benefit from proactive management. They are already engaged with your services, which makes the conversation easier.

Growth trajectory: Small businesses that are growing will need more IT support. Nearly two-thirds of SMBs are set to spend between 25,000 and 1 million dollars on tech in 2025, with four in ten increasing their spending year over year. Converting these clients now locks in the relationship as their needs expand.

Recent major incidents: A client who just had a big outage, a security breach, or data loss is primed to hear about proactive management. The conversation practically starts itself.

Which Break-Fix Clients Should You Deprioritize or Release?

Deprioritize chronic price shoppers, businesses with minimal IT needs, and high-maintenance clients who bring in almost nothing. These clients rarely convert, and even if they do, they often become problem accounts.

Be honest about which clients probably will not convert and may not be worth the effort:

Chronic price shoppers: Clients who question every invoice and keep mentioning cheaper alternatives will fight managed services. And if they do convert, they will likely become problem clients on that side too.

Minimal IT dependency: Some very small businesses genuinely do not need ongoing IT support. A solo practitioner with a laptop and cloud email is not a managed services candidate.

High maintenance, low revenue: The clients most likely to resist managed services tend to be your problem clients. You know the ones. They eat up time and resources but bring in almost nothing. Given that 37 percent of MSPs cite hiring and retaining technical talent as their biggest challenge, wasting technician time on unprofitable clients creates real opportunity cost. If you are dealing with these types of clients, our problem client scorecard can help you identify which relationships are worth saving.

What Managed Services Sales Scripts Actually Work for Conversion?

Effective managed services sales scripts focus on three approaches that work: cost comparison using historical data, risk and liability assessment for clients with security gaps, and stepping stone offers for hesitant clients. The average closing rate for MSP sales is 35 percent, so preparation and script execution matter.

When you convert break-fix to managed services, it is a different kind of sale than landing a new managed client. You are not introducing yourself. You are reframing a relationship that already exists.

How Do You Use Cost Comparison to Convert Break-Fix Clients?

The cost comparison approach uses the client's actual break-fix spending history over 12 to 24 months to demonstrate that managed services delivers more value for similar or slightly higher monthly investment.

Use this one with clients who have a solid break-fix history with your company.

Setup: Before the conversation, pull their spending over the past 12 to 24 months. Include all invoices, the incidents behind them, and any downtime they experienced.

The script:

"I wanted to schedule some time to review your IT situation over the past year. Looking at your account, you spent [total amount] on IT support over the last twelve months, dealing with things like [specific incidents]. That breaks down to roughly [monthly average] per month, but it came in unpredictable chunks. And you had [X hours/days] of downtime while we fixed things.

Here is what I want to show you. Under our managed services agreement, all of that work would have been covered for [proposed monthly rate]. And here is the important part: most of those issues would have been prevented entirely. Our monitoring would have caught [specific issue] before it caused downtime. Our proactive maintenance would have addressed [specific issue] before it became an emergency.

Instead of paying unpredictable amounts when things break, you would have consistent monthly payments of [amount], and you would actually have fewer problems. What questions do you have about how this would work for your business?"

When Should You Use the Risk and Liability Approach?

Use the risk and liability approach with clients running outdated systems, those with security vulnerabilities, or businesses facing compliance requirements like HIPAA, PCI, or cyber insurance mandates.

This works well with clients running outdated systems, clients with security gaps, or anyone facing compliance requirements. With SMBs forecast to spend 29.8 billion dollars on managed security services in 2025 alone, security-focused conversations hit home.

The script:

"I need to have an important conversation with you about something that has been bothering me. Looking at your current setup, I see some risks that honestly keep me up at night. And they should concern you too.

Right now, you have [specific vulnerabilities: outdated systems, lack of backup verification, no security monitoring, etc.]. Under our current break-fix arrangement, we only see these issues when something goes wrong. By then, the damage is done.

What I am proposing is a shift to proactive management. We monitor your systems 24/7, catch problems before they cause downtime, and make sure you have proper security protections in place. For [monthly rate], you get [specific protections], and we take on responsibility for keeping your systems healthy rather than just fixing them after they break.

Given what is at stake for your business operations and potential liability, I think this is a conversation worth having. Can we schedule time to walk through what this would look like for your environment specifically?"

How Does the Stepping Stone Approach Work for Hesitant Clients?

The stepping stone approach offers a smaller initial commitment, typically security monitoring or antivirus management, allowing hesitant clients to experience proactive management benefits before committing to comprehensive managed services.

This is for hesitant clients who are not ready to jump into a full managed services agreement.

The script:

"I get it. Switching entirely to managed services feels like a big change. Let me suggest something that might make more sense as a starting point.

Most businesses already understand they need antivirus protection and security monitoring. What if we started there? For [smaller monthly amount], we would install our security tools on all your systems, monitor them 24/7, and handle any security-related issues as part of that monthly fee.

This gives you a taste of what proactive management looks like. You will see your systems stay healthier, you will have predictable costs for that security piece, and if you like how it works, we can talk about expanding coverage.

The only thing I would need from you is a commitment to [minimum term, typically 6 to 12 months] so we can actually show you the value. Does that seem like a reasonable way to test the waters?"

How Do You Handle Common Objections When Converting Break-Fix Clients?

Handling objections well means acknowledging the client's perspective, reframing the conversation around value rather than cost, and giving specific evidence of how managed services addresses their concerns. The key is avoiding an adversarial position while clearly explaining the limitations of reactive IT support.

Every MSP hears the same objections when trying to convert break-fix clients. Here is how to handle each one.

How Do You Respond When Clients Say They Already Get What They Need?

When clients claim they already get what they need from break-fix, avoid arguing and instead focus on capabilities that simply do not exist in reactive support models, including proactive monitoring, preventive security, and regular maintenance.

Karl Palachuk, a well-known MSP industry expert, calls this the "Killer Objection." The worst thing you can do is argue that they are not getting what they need. That puts you in an adversarial position and basically tells them they have been making bad decisions.

The response:

"You are right that we have been able to help you when problems come up, and I am glad that has worked for you. But what I want to talk about is not whether you are getting support when you need it. It is what you are missing by only getting reactive support.

Right now, you are not getting 24/7 monitoring that catches problems before they cause downtime. You are not getting proactive security that prevents breaches rather than responding to them. You are not getting regular maintenance that extends the life of your equipment and prevents failures.

These are not criticisms of how things have been going. They are capabilities that do not exist in a break-fix model. And they are becoming essential for any business that depends on technology."

What Do You Say When Clients Claim Managed Services Costs Too Much?

Address cost objections by showing total cost of ownership including downtime and lost productivity, emphasizing the value of predictability, and demonstrating how proactive management prevents the issues that drove their break-fix spending in the first place.

This usually comes from clients focused on monthly cost without considering total cost of ownership or what prevented problems are actually worth.

The response:

"Let me walk through the actual numbers with you. Over the past year, you spent [amount] on IT support. That does not include the cost of downtime, lost productivity, or the time your team spent dealing with IT issues instead of doing their actual jobs.

Under our managed agreement at [monthly rate], that is [annual amount], which is [higher/lower/similar]. But here is what that comparison misses: under managed services, you get proactive monitoring, security protection, and regular maintenance that prevent most of the issues that caused those costs in the first place.

More importantly, you get predictability. No more surprise invoices for emergency work. No more scrambling to find budget when something breaks. Just one consistent monthly payment that covers everything.

I would rather have you pay a slightly higher amount monthly and have a healthy, secure IT environment than pay less overall while dealing with constant problems and uncertainty."

How Do You Move Forward When Clients Want to Think About It?

When clients need time to think, identify their specific concerns, provide a written proposal addressing those concerns, and schedule a concrete follow-up date within one to two weeks to maintain momentum.

Sometimes this is a soft no. Sometimes it is genuine. The key is figuring out what they actually need to think about and setting a clear next step.

The response:

"I completely understand. This is an important decision. Can you help me understand what specifically you need to consider? Is it the cost, the scope of services, the contract terms, or something else?

[After they respond]

That makes sense. What I would like to do is send you a written proposal that addresses [their specific concern], and then schedule a follow-up conversation for [specific date, typically 1 to 2 weeks out]. That gives you time to review everything and come back with any questions.

Does that work for you?"

How Do You Handle Clients With Bad Previous MSP Experiences?

Turn previous bad MSP experiences into opportunities by understanding what went wrong, explaining specifically how your approach differs, and offering shorter initial terms to reduce perceived risk.

This objection can actually work in your favor if you handle it right.

The response:

"I appreciate you sharing that, and I am sorry you had that experience. Not all MSPs are created equal, and a bad experience can make anyone hesitant.

Can you tell me more about what went wrong? Understanding that will help me explain how we do things differently and show you the safeguards we have in place.

[After they share]

That is exactly the kind of issue our approach prevents. [Explain specifically how your service addresses their past problems]. What I would suggest is starting with a shorter initial term so you can evaluate our service without a long commitment. If we do not deliver what we promise, you are not locked in. Fair enough?"

How Should You Price the Transition From Break-Fix to Managed Services?

Price managed services transitions by anchoring to the client's historical break-fix spending, offering tiered service levels to fit different budgets, and targeting minimum 50 percent gross margins with the expectation that negotiations will reduce this to 30 to 40 percent.

Pricing the transition from break-fix to MRR means balancing a few things: delivering value to the client, keeping your MSP profitable, and building an offer that actually closes.

What Are the Current MSP Pricing Benchmarks for 2025?

In 2025, managed services pricing ranges from 125 to 250 dollars per user per month for standard packages, with comprehensive packages reaching 250 to 300 dollars. Per-device pricing ranges from 30 to 200 dollars monthly, and small businesses with up to 20 employees typically spend 2,000 to 3,000 dollars monthly on fully managed IT.

As of 2025, managed services pricing generally falls into these ranges:

Per-user pricing: Average costs run between 125 and 250 dollars per user per month, depending on what services are included and your geographic market. Standard managed IT services tend to land between 150 and 250 dollars per user monthly. With advanced security and consulting, pricing can reach around 300 dollars per user monthly.

Per-device pricing: Costs range from 30 to 200 dollars per device per month, depending on device type and service level. Workstations typically cost 50 to 150 dollars monthly, while servers range from 150 to 500 dollars monthly.

By company size: Small businesses with up to 20 employees typically spend 2,000 to 3,000 dollars per month on fully managed IT. Medium businesses with around 50 employees are usually in the 5,000 to 7,000 dollars per month range.

What Transition Pricing Strategies Drive Conversion Success?

Transition pricing strategies that work include the break-even anchor that matches historical spending, tiered approaches offering multiple service levels, and bridge periods with reduced rates during initial assessment and implementation.

The break-even anchor: Show the client their average monthly break-fix spending over the past 12 to 24 months. Price your managed services at or slightly above that amount. This makes the cost feel familiar while you are actually delivering much more value.

The tiered approach: Offer multiple service levels (Basic, Standard, Premium) to give clients options. The basic tier should be priced to capture hesitant clients. Premium tiers capture more value from clients who want comprehensive coverage. Our guide to designing tiered service packages can help you structure these offers effectively.

The bridge period: For long-standing break-fix relationships, consider a 90-day transition period at a reduced rate. This gives you time to assess their environment, implement proper monitoring, and demonstrate value before full pricing kicks in.

What Profit Margins Should You Target on Managed Services?

Target 50 to 60 percent gross margin on managed services agreements as a design goal, with the understanding that negotiations typically result in 30 to 40 percent realized margins. Net profit margin goals should range from 20 to 30 percent, with top-performing MSPs achieving 25 to 35 percent.

Aim for at least 50 percent gross margin on managed services agreements, with 70 to 75 percent as the design target for recurring revenue. Industry benchmarks show most MSPs design for 50 percent margin and end up at 30 to 40 percent margin after contract negotiations.

According to TruMethods' Gary Pica, "You should have 70 to 75 percent gross margins on your recurring revenue. If your gross margins are 50 to 65 percent, you probably do not have command over your micro math."

Keep in mind that break-fix work typically requires more labor per dollar of revenue than managed services. A well-designed managed services agreement should be more profitable than break-fix work, even if the top-line revenue looks similar.

When Is the Best Time to Push for Break-Fix Conversion?

The best time to convert break-fix clients is when they are experiencing pain from IT problems, facing new compliance requirements, or going through business changes. Trigger events create urgency and make clients open to conversations about proactive IT management and predictable costs.

The best time to convert break-fix to managed services is when the client is feeling pain. Watch for these trigger events:

What Incident-Based Triggers Create Conversion Opportunities?

Major outages, security incidents, hardware failures, and new compliance mandates create immediate conversion opportunities because clients are actively experiencing the consequences of reactive IT support.

• Major outage: After resolving a big outage, the conversation about prevention is natural and timely.
• Security incident: A malware infection, successful phishing attack, or data breach creates immediate urgency around proactive security. With SMBs expected to spend 90 billion dollars on cybersecurity in 2025, security-focused conversations hit home.
• Hardware failure: When a server or critical system fails, the discussion about monitoring and maintenance practically writes itself.
• Compliance requirement: A new compliance mandate (HIPAA, PCI, cyber insurance) often requires capabilities that only managed services can provide.

What Business Triggers Should You Watch For?

Business triggers including new leadership, growth milestones, and annual budget planning create natural opportunities to discuss transitioning from unpredictable break-fix to predictable managed services.

• New leadership: A new owner, CEO, or IT decision-maker often wants to review and improve IT operations.
• Growth milestone: When a company adds employees, opens locations, or expands operations, their IT needs grow too. With four in ten SMBs increasing tech spending year over year, growth creates conversion momentum.
• Budget planning: Annual budget cycles are natural times to talk about moving from unpredictable break-fix to predictable managed services.

When Do Your Own Business Changes Create Conversion Opportunities?

Service offering updates, tool migrations, and strategic decisions to move away from break-fix create natural opportunities to transition existing clients to new managed services agreements.

• Service changes: When you update your service offerings, it is a natural time to transition clients to new agreements.
• Tool migrations: Implementing new RMM or PSA tools can require new agreements with all clients.
• Strategic decisions: If you are moving away from break-fix entirely, communicate this to clients with advance notice and conversion options.

Should You Require All Clients to Sign Managed Services Agreements?

Requiring managed services agreements from all clients is a strategy that works for high-performing MSPs, eliminating unprofitable break-fix work, improving operational efficiency, and increasing overall profitability even when some clients choose to leave.

The highest-performing MSPs got there by standardizing their offerings, standing by their value, and saying no to opportunities that were not a good fit. At some point, you may need to require managed services agreements from all clients. Some MSPs have even increased profitability significantly by selectively releasing unprofitable relationships.

How Do You Communicate the Transition to Managed Services Only?

Communicate the transition to managed services only by providing 90 days advance notice, offering preferential pricing for existing clients, expressing willingness to recommend alternative providers, and scheduling individual discussions about options.

The easiest way to transition resistant clients is to tell them you are requiring every client to sign a service level agreement. They do not have to sign. But if they do not, you will no longer be able to support them.

The communication:

"After careful evaluation of how we can best serve our clients, we have decided to transition to a managed services only model effective [date, typically 90 days out]. This means we will no longer offer break-fix support on an ad-hoc basis.

For existing clients like yourself, we are offering a transition period and preferential pricing to move to a managed services agreement. I would like to schedule time to discuss what this would look like for your business specifically.

If managed services is not the right fit for your needs, we understand. We are happy to provide recommendations for other providers who may be able to help. We want to make sure you have support either way.

Please let me know when you are available to discuss your options."

Why Does Requiring Managed Services Improve MSP Profitability?

Requiring managed services eliminates operational unpredictability, forces decisions from clients who have been delaying, removes problem accounts, and lets you focus on clients who value proactive IT management. High-performing MSPs achieve 76 percent or higher client retention rates through this focused approach.

This approach works because it:

• Removes the option to maintain the status quo
• Communicates confidence in your value proposition
• Gives clients a clear deadline for making a decision
• Provides a graceful exit for clients who will never convert
• Positions you as a professional service provider, not an on-call technician

What Actually Happens When MSPs Require Managed Services?

Many MSPs report that clients expected to leave actually converted when given a deadline, while clients who did leave were often the most problematic accounts. The result is typically improved profitability, easier operations, and more appreciative clients.

A lot of MSP owners who have taken this approach report that the clients they expected to leave actually converted. The deadline and clear communication forced a decision that clients had been putting off. And the clients who did leave? They were often the most problematic accounts anyway.

One MSP owner reported firing customers that accounted for 25 percent of his company's revenue. His only regret was not doing it sooner. The remaining clients were more profitable, easier to serve, and more appreciative of the value provided.

How Do You Build a Systematic Break-Fix Conversion Process?

Build a systematic conversion process with quarterly client reviews, spending analysis, structured outreach using proven scripts, 48-hour proposal delivery, defined follow-up intervals, and standardized onboarding. Track conversion rates, time to conversion, MRR added, retention, and profitability.

MSP client conversion should not be a one-time campaign. Build a systematic approach that becomes part of your regular operations.

What Does an Effective Conversion Pipeline Look Like?

An effective conversion pipeline includes six stages: quarterly identification of candidates, spending and environment analysis, outreach using proven scripts, 48-hour proposal delivery, systematic follow-up until conversion or release, and structured onboarding for converted clients.

Create a pipeline specifically for break-fix conversion:

1. Identification: Quarterly review of all break-fix clients to identify conversion candidates.
2. Analysis: Pull spending history, incident data, and current environment assessment for each candidate.
3. Outreach: Schedule conversion conversations using the managed services sales scripts outlined above.
4. Proposal: Deliver written proposals within 48 hours of the conversation.
5. Follow-up: Systematic follow-up at defined intervals until the client converts or you release them.
6. Onboarding: Structured onboarding process for converted clients.

How Should You Train Your Team to Support Conversion Efforts?

Train technicians to identify conversion opportunities during break-fix work, equip sales teams with data-driven objection responses and ROI calculators, and ensure everyone communicates consistent value propositions to break-fix clients.

Your technicians and account managers need to support the conversion effort:

• Technician awareness: When working with break-fix clients, technicians should note opportunities for proactive management and document recurring issues that managed services would prevent.
• Sales enablement: Give your sales team data-driven responses to objections, case studies, and ROI calculators.
• Consistent messaging: Everyone who interacts with break-fix clients should communicate the same value proposition and urgency.

What Metrics Should You Track for Conversion Success?

Track five key metrics: conversion rate of targeted clients, average days from conversation to signed agreement, MRR added from conversions, 12-month retention of converted clients, and gross margin on converted accounts compared to historical break-fix profitability.

Track these metrics for your conversion efforts:

• Conversion rate: Percentage of targeted break-fix clients who convert to managed services.
• Time to conversion: Average days from initial conversation to signed agreement.
• Revenue impact: MRR added from converted clients.
• Retention: 12-month retention rate of converted clients. High-performing MSPs maintain 76 percent or higher retention rates.
• Profitability: Gross margin on converted accounts compared to their historical break-fix profitability.

What Is the Path Forward for Converting Your Break-Fix Clients?

The path forward requires action: identify your top five conversion candidates this week based on spending history and relationship strength, schedule conversations within two weeks, use the cost comparison script to start, and track results to improve your approach.

Going from break-fix to MRR is not just about revenue. It is about building a sustainable MSP that can invest in its people, tools, and growth. Every break-fix client you convert is a step toward predictable operations, less firefighting, and better profitability.

Start with your best conversion candidates. Use the scripts and strategies in this guide. Handle objections with confidence. And do not be afraid to release clients who will never convert and are dragging down your business.

The MSPs that thrive in 2025 and beyond are the ones that made the decision to focus on recurring revenue relationships with clients who value proactive IT management. The question is not whether you should convert break-fix to managed services. The question is how quickly you can get it done.

Your next step: Pull up your break-fix client list this week. Identify your top five conversion candidates based on spending history and relationship strength. Schedule conversations with each of them within the next two weeks. Use the cost comparison script to start. Track your results and improve your approach.

The predictable, profitable MSP you want to build is waiting on the other side of these conversations.

Frequently Asked Questions

How long does it take to convert a break-fix client to managed services?

Converting a break-fix client to managed services typically takes 30 to 90 days, depending on client readiness and your approach. Clients who recently experienced a major incident or security scare tend to move faster. Long-standing break-fix clients may need a stepped approach, starting with security monitoring or antivirus management before full managed services adoption.

What percentage of break-fix clients can realistically be converted to managed services?

With a systematic conversion process in place, most MSPs convert between 40 and 60 percent of their break-fix clients to managed services. Industry data shows 62 percent of MSPs have fully transitioned from break-fix to recurring revenue models. The remaining clients typically fall into two categories: businesses genuinely too small to need managed services, or problem clients better served by another provider.

Should I keep break-fix clients who refuse to convert to managed services?

In most cases, retaining break-fix clients who refuse to convert is not advisable. These clients often question every invoice, make operations unpredictable, and reduce overall profitability. Many successful MSPs require managed services agreements across the board and report improved profitability even when some clients leave. One MSP owner released clients representing 25 percent of revenue and had no regrets, as remaining clients proved more profitable and easier to serve.

What is the typical price increase when converting from break-fix to managed services?

Looking at total annual spend, clients typically see a 10 to 30 percent increase in IT costs when converting to managed services. However, this comparison is incomplete. Managed services clients receive proactive monitoring, faster response times, preventive maintenance, and security protections that were either unavailable or charged separately under break-fix arrangements.

What is the average cost of managed services per user in 2025?

In 2025, managed IT services typically cost between 125 and 250 dollars per user per month for standard packages. Comprehensive packages with advanced security and 24/7 support range from 200 to 300 dollars per user monthly. Per-device pricing varies from 30 to 200 dollars monthly depending on device type, with workstations at 50 to 150 dollars and servers at 150 to 500 dollars per month.

What profit margin should MSPs target on managed services contracts?

MSPs should target a minimum 50 percent gross margin on managed services agreements, with top performers achieving 70 to 75 percent gross margins on recurring revenue. Net profit margins should aim for 20 to 30 percent, though the top 10 percent of MSPs achieve 25 to 35 percent net margins. Design pricing for 50 percent margin, as contract negotiations typically reduce this to 30 to 40 percent.

How much does break-fix work cost MSPs compared to managed services?

Break-fix work typically requires more labor per dollar of revenue than managed services, reducing profitability by 20 to 30 percent. Hidden costs include context switching between client environments, emergency response disruption, loss of institutional knowledge, and chronic undercharging. Research indicates the average MSP undercharges by at least 20 percent, a problem amplified by break-fix billing where each invoice becomes a separate purchase decision.

What triggers the best opportunities to convert break-fix clients?

The most effective conversion triggers include major outages, security incidents, hardware failures, and new compliance requirements. Business triggers such as leadership changes, growth milestones, and annual budget planning also create conversion opportunities. Clients experiencing pain are most receptive to discussions about proactive IT management and predictable monthly costs.