How MSPs Can Grow Revenue & Increase Profit Margin in 2026

While the managed services industry continues to show double-digit growth, most MSPs aren’t feeling it. Over half are growing under 10%, and one in five are flat or declining.

For many MSPs, sentiment is slipping. Canalys analyst Robin Ody’s latest poll shows MSP growth expectations falling from 11.9% earlier this year to 10.7%.

With growth slowing and competition tightening, the question now is: how can MSPs strengthen revenue, protect margins, and position for sustainable growth?

Improve Margin/Streamline Operations

When growth slows, profitability matters more than ever. For many MSPs, improving margins starts not with selling more, but with operating smarter.

Audit Customers and Contracts

Not every client is profitable. Some drain time and resources that could be spent on higher-value accounts.

• Rank clients by revenue, service hours, and complexity
• Reprice or phase out contracts that consistently overconsume support
• Revisit flat-rate agreements that no longer make financial sense
• Reinforce SLAs and boundaries to prevent scope creep, and charge for add-ons and premium support

Review and Consolidate Your Tech Stack

Software sprawl silently eats margin. Each additional tool adds licensing costs, training time, and integration overhead. Conduct quarterly reviews and ask:

• Are we paying for overlapping functionality?
• Which tools are rarely or inconsistently used?
• Could a single integrated solution meet multiple needs?

Look for:

• Unified PSA + RMM platforms to centralize management
• Cloud-based solutions that scale without infrastructure costs
• Vendor consolidation to improve pricing leverage and simplify billing

A lean, integrated tech stack minimizes overhead, streamlines service delivery, and frees teams to focus on higher-value work.

Leverage Automation and AI

Tools that can handle ticket triage, reporting, or system monitoring help reduce workload and allow teams to focus on strategy and client success.

Reduce Churn Before It Erodes Growth

Peter Kujawa of Service Leadership Inc. analyzed the most recent four quarters of managed services revenue growth and noted that churn rates range from 5%-10%.

Every lost client not only reduces recurring revenue, it also costs significantly more to replace through sales and marketing efforts, cutting further into margins.

Common culprits of churn include:

• Reactive support models – Waiting for issues instead of preventing them.
• Outdated contracts – Clients expecting more value for the same rate.
• Weak client communication – A lack of proactive updates or reporting erodes trust.
• Falling behind on innovation – Clients expect modern, forward-thinking solutions.

Leverage Partner Programs

Partner programs can be a powerful accelerator for MSPs. Whether it’s accessing co-marketing funds, improving margins through discounts, or adding new capabilities without extra overhead, the right partnership extends your reach and resources.

Improve Sales Process

When deals fall through, it’s rarely about price, it’s about clarity. MSPs win more often when they focus the sales conversation on outcomes, not features.

Improve your closing rate by focusing on:

Lead with risk, not price. Frame discussions around the cost of downtime, data loss, and reputation damage—not monthly fees.

Sell continuity, not backups. Anyone can store data. The real value lies in fast, verified recovery that keeps operations running.

Tie services to compliance and insurance. Show how your solutions meet regulatory standards and protect against denied cyber-insurance claims.

Differentiate

Many MSPs use the same software and offer similar services, making it difficult to stand out on features alone. To grow, you need to clearly define what sets you apart and communicate it consistently.

• Highlight your strengths
• Narrow your focus/vertical expertise
• Show thought leadership
• Build partnerships
• Leverage your local presence
• Deliver an exceptional client experience

Make Sure You Are Spending Enough on Marketing

Data from Service Leadership Inc. shows that top-performing MSPs dedicate over 14% of gross margin dollars to marketing. In contrast, ConnectWise’s survey of 1,000+ MSPs found that 42% spend less than $10,000 per year on marketing.

To grow, you need to invest strategically.

• Allocate budget strategically across multiple channels — SEO, email, paid media, and events
• Track ROI from each and reinvest where performance is strongest.
• Eliminate underperforming efforts to maximize efficiency and return.

Thought Leadership & Public Relations

While marketing focuses on lead generation, public relations builds trust and credibility.

PR elevates your credibility, getting your wins, partnerships, and innovations in front of the right audiences. Thought leadership takes it further by sharing insights that position your MSP as an expert and trusted voice in the industry.

Together, they:

• Strengthen brand reputation and credibility
• Differentiate you from competitors
• Build confidence that converts awareness into opportunity

Upsell and Cross-sell High Margin Services

Upselling and cross-selling strengthen relationships when done well. The goal isn’t to sell more, it’s to help clients operate smarter.

• Lead with value. Recommend solutions that improve performance, security, or compliance.
• Be consultative, not transactional. Build on trust established through proven results.
• Focus on outcomes. Frame every recommendation around measurable business impact—reduced risk, faster recovery, or lower compliance costs.

When positioned thoughtfully, upselling becomes an extension of service, not a sales pitch, and drives higher margins while deepening client loyalty.

Partner with Cloud IBR to Unlock Revenue Growth

For many MSPs, disaster recovery has always been a tough sell, too complex, too expensive, and too resource-intensive to deliver profitably. Cloud IBR changes that.

Built for MSPs, Cloud IBR automates the recovery of Veeam backups into on-demand bare metal cloud infrastructure, no replication, no standby hardware, and no weekend testing marathons. It gives your clients the business continuity they expect while giving you a high-margin, low-touch service you can manage at scale.

With Cloud IBR, MSPs can:

• Deliver full disaster recovery from existing Veeam backups
• Run automated DR testing and generate compliance reports
• Pay only when recovery or testing runs, no idle infrastructure.
• Earn up to 25% margins with flexible reseller and affiliate models