Raising Rates With Purpose: Why MSPs Can’t Afford To Stay The Same

At Pax8 Beyond, Jonathan Mack of Pax8 Academy shares the pricing playbook for sustainable, strategic revenue that supports reinvestment, retention, and real profitability.

If you’re still charging the same rates that you were two years ago, you’re not just leaving money on the table, you’re risking your business according to Pax8 Academy’s Mack. In a booming tech economy, MSPs and IT service providers need to evolve their pricing models to reflect premium service, real costs, and future growth.

Most MSPs know they need to raise their rates, but far fewer do it. At Pax8 Beyond, executive coach Jonathan Mack didn’t mince words during his session, “Did You Raise Your Prices Yet?” He broke down exactly why raising rates is a necessity for long-term partner sustainability.

“Not all revenue is equal,” Mack explained. “Some clients look good on paper but are draining your resources. You need to know which clients are building your business and which ones are quietly breaking it.”

Here are the key takeaways from his session that every MSP and IT channel leader should know:

Revenue ≠ Profit

A hard truth Mack emphasized: Just because your top-line revenue looks strong doesn’t mean your business is healthy.

Many MSPs run lean, undercharge, or delay rate increases to avoid client friction. But as Mack illustrated through real client data, some businesses need a 30 percent to 40 percent increase with specific clients just to break even.

A suggested action step: Use profitability analysis tools like MSP CFO from the Pax8 Academy to pinpoint where your margins are falling short.

Three Pricing Models You Can Actually Use

Mack broke down three practical approaches to pricing:

Top-down: Based on market rates. Useful for knowing where you stand, but not always tailored to your service level.

Bottom-up: Based on costs and desired margins. Reliable, but sometimes too focused on internal numbers.

Value-based: The gold standard. Combines market and internal data, plus perceived value by the client.

His pro tip: If you’re delivering premium service, your rates should reflect that. Otherwise, you’re subsidizing client success at the expense of your own growth.

Client Loss Is Not The Worst-Case Scenario

Many providers fear that increasing rates will cost them business. But Mack flipped that fear on its head.

“If a client walks away because you raised your rates by 10 percent, they were probably going to leave anyway,” he said. “You’re not losing a client. You’re freeing up capacity for one that sees your value.”

Strategic account management is the key here. The data shows most clients accept rate hikes but only if the service justifies it.

Build It Into The Contract

Rate increases don’t have to be awkward surprises. In fact, Mack urged providers to bake increases into contracts from the beginning. That helps manage expectations, avoid delays in implementation, and create space for honest conversations about value and partnership.

Another point of action: Review your current contract templates and add clauses for annual or bi-annual increases tied to service level benchmarks or inflation.

Start With The Bottom Five

Mack’s parting challenge? Don’t try to overhaul your pricing across the board overnight. Start small, but smart.

Focus first on the bottom five clients: those who require a lot of the business’ time yet return the least in terms of margin. Raising rates here provide two options: step up or step out.

“Sometimes your least profitable client is also the one consuming your best people and your biggest headaches,” Mack said. “That’s a leadership problem, not a loyalty win.”

Price Like You Mean It

The channel is maturing. Survival no longer depends on being the cheapest; it depends on being the most sustainable. Mack’s approach isn’t about gouging clients; it’s about knowing your worth and owning your value. That means building pricing into your strategy, not reacting to the market but defining your place in it.

Are you looking to raise your rates with confidence?

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