Top Trends
MSPs earning the highest annual revenue, regardless of size, are often high performers in other areas of their business. They tend to have higher client retention rates (76%+) and recurring revenue rates (51%+), which helps them consistently maintain their bottom line. They also tend to have the highest Average Revenue Per User (ARPU) (above $250) and staff utilization rates (76%+), showing that commanding high prices—while keeping operations efficient—is key to profitability.
A few other characteristics high earners have in common:
Top-earning MSPs are more likely to have higher client retention and recurring revenue rates, showing how long-term client relationships contribute to consistent growth. However, nearly a third (36%) of respondents have customer retention rates below 50%—meaning they have to replace half of their clients annually, which is expensive. Also, only a third of MSPs (34%) track Customer Lifetime Value (CLTV) or churn rates, even though these metrics directly relate to retention and recurring revenue.
What do top MSPs do to drive client retention and recurring revenue? Those with high client satisfaction scores and staff utilization rates enjoy higher retention and recurring revenue—suggesting that a strong client service strategy and highly productive team can secure long-term contracts. Those with low customer churn also tend to track more service-focused metrics (including ticket volume, average first response time, average resolution time, and service uptime), indicating that a holistic view of the client experience can help foster stronger client relationships.
The majority of MSPs project they’ll grow in 2025. And nearly half (49%) plan to do it by acquiring new clients, while another third feel offering new services or exploring partnerships will help. The focus on new business would explain why just over a third of MSPs plan to increase their marketing investments and prioritize hiring sales and marketing roles in the year ahead.
While larger marketing budgets are tied to more revenue, MSPs may miss out on other ways to increase profitability—like driving efficiency. Many MSPs say that increasing costs (55%), shrinking client budgets (39%), and being underpriced by competition (38%) are obstacles. So increasing operational efficiency and scaling service delivery should be a priority. (High-revenue MSPs are more likely to see service delivery efficiency as a growth driver over the next year.)
Reporting may be another overlooked area since only 18% of MSPs feel improving their data will give them an advantage in 2025. However, MSPs who track more metrics—whether they’re financial, operational, or client-related—outperform their peers. MSPs should improve their data tracking by either leaning on vendors for stronger reporting or building internal solutions.
Account managers and customer success managers tend to see their client success initiatives in a harsher light than executives and technical team members. They're more likely to say their consulting services are inefficient and that their CSAT scores are average. They’re also less likely to say they have formal client roadmaps, renewal strategies, or an ‘excellent’ way to show clients value. It could be that their standards are high since client success is their focus—or that the rest of the organization isn’t aware of these gaps in the client experience.
The disconnect may be partially caused by a lack of technical proficiency or access to data. Account managers and success managers are less likely to say they have project management software (even though 41% of MSPs have it) or business intelligence (BI) tools. They’re also less likely to say they track CSAT (58% do) and other customer service metrics compared to other team members. Ideally, these customer-facing roles are well-trained on their tech stack and partnering closely with technical service teams to get a clear picture of customer health.
Nearly half of MSPs (47%) say the hardest thing about tech stack management is keeping up with new tools, while a third (33%) feel they have too many different applications to manage. The number of apps MSPs have in their tech stack increases as the company grows, with small MSPs more likely to have 10 or less, medium MSPs more likely to have 6-15, and large MSPs slightly more likely to have 10-20. However, about a third of large MSPs only have 6-10 apps—suggesting that a lean tech stack can still fuel growth.
Interestingly, MSPs with the highest CSAT, client retention, and staff utilization rates are more likely to have 15+ apps in their tech stack—suggesting that more apps don’t mean less efficiency. They’re also more likely to use vCIO/vCISO, BI, documentation, invoicing, and resource management solutions, which suggests that professionalizing operations with software can drive MSP performance.
Most MSPs also use AI to streamline communications, monitor threats, engage clients, and improve reporting. MSPs that leverage AI across their business—from automation and ticket analysis to writing code or supporting marketing—have higher CSAT, ARPU, projected growth rates, and revenue, meaning that adopting AI is vital for increasing efficiency.
The most common services offered by MSPs stayed relatively similar to last year, with network management, network operations, cybersecurity management, and cloud services at the top of the list. Backups and project management, which made last year’s top services, are lower on this year’s list.
When asked which services they intend to grow in 2025, MSPs are focusing on the top services they are already likely to offer, like IT helpdesk, cloud services, cybersecurity management, network operations, and network management. This suggests MSPs aren’t necessarily looking to offer brand new services to grow their business, but want to either sell their existing offerings to new customers or expand these core services among existing clients.
But MSPs shouldn’t ignore the potential of new services. MSPs who offer more services overall—and less common services, like disaster recovery, software license management, productivity management, and Internet of Things (IoT)—have higher overall revenue, CSAT scores, and client retention rates. This suggests that selling complementary services outside of one’s core services can help unlock new growth and improve customer loyalty.
Most MSPs, regardless of size, can generate a few million in revenue annually. (67% make over $1 million in annual revenue.) Smaller MSPs (those with 1-10 employees) can punch above their weight and earn as much as their larger counterparts (those with 51+ employees)—if they can overcome some common challenges.
Smaller MSPs tend to have lower recurring revenue and staff utilization rates, allocate less budget towards marketing, are less likely to offer vCIO/vCISO services, and are more likely to feel they have too many apps—all areas that high performers don’t struggle with. However, small MSPs with the highest revenue have solid recurring revenue and staff utilization rates, invest more in marketing, and are more likely to offer vCIO/vCISO services—meaning that with the right investments, small MSPs can pull ahead.
Larger MSPs are more likely to be challenged by too much competition, being underpriced, and shrinking client budgets. This suggests that small firms could win accounts from their bigger counterparts based on price. However, large MSPs don’t always need a large number of accounts to stay afloat. While bigger MSPs are more likely to serve 100+ clients at a time, many serve a similar amount of clients to their small and medium counterparts—suggesting that some large businesses can thrive with a small number of high-value accounts.
ScalePad creates software that helps IT managed service providers work more effectively, both internally and with their clients. From wrangling hardware and software assets to monitoring vital backups and compliance frameworks, our platforms give MSPs the tools they need to succeed.
