Work out how to price co-managed IT by costing the responsibilities your MSP will actually carry. Assign the work between your team and the client's, then price your managed-service scope to the margin you need and check it against your floor. The presence of an internal IT person doesn't tell you what discount the service can afford.
Here's what I'd cut from the proposal process: the percentage reduction applied before anyone writes the split. Replace it with an ownership sheet and a cost beside the work you retain. A better description on the website cannot fund an unpriced escalation.
Show the Split Before Showing the Price
Picture a client keeping everyday support while asking your MSP to handle specialist problems. Before the split, a single fully managed fee may have covered the whole service. After the split, you need to know which tasks and response commitments remain yours before reducing the price.
I'd write the arrangement in the following shape. The assignments are an example to discuss, not a standard every co-managed client should receive. Each row needs the person who acts when the work arrives.
| Work | Possible Client Responsibility | What Your MSP Must Confirm |
|---|---|---|
| Routine support | Internal IT handles agreed first-line requests. | Which requests reach your desk and how overflow is approved. |
| Escalations | Internal IT investigates before handing over. | The information required, the skills needed, and the response you will staff. |
| Delivery tools and policy | The client uses the agreed tools. | Who pays for and maintains the tools and who can change their configuration. |
| Standards and administration | The client retains named administrative tasks. | Which remaining tasks you own and how changes are coordinated. |
| After-hours support | The client identifies the support it needs. | The service window, covered work, and actual people providing it. |
| Technology planning | The client supplies business priorities and authority. | Which alignment and business-planning responsibilities your fee includes. |
Keep the handoff in the same record as the responsibility. If the internal technician leaves, name who decides the interim service and its price. The MSP shouldn't discover that the scope expanded only after the new tickets have reached its desk.
Cost the Work That Stays With Your MSP
Use the labor and tools required for the scope you own. The model's US Tier 2 salary is $62,000; at its general 1.25 burden multiplier, that is $77,500. Tier 3 is $84,000 before burden, or $105,000 after the same multiplier.
Those annual figures don't price a particular client's escalations by themselves. Estimate the work and the productive capacity needed to deliver it, then use your actual staffing costs. Keep coordination and cover in that plan rather than assuming only hands-on ticket time needs funding.
The model budgets delivery tools at $22.50 per seat per month. Check which of your tools the co-managed service still requires. Removing first-line support from the agreement doesn't establish that the delivery stack has become cheaper.
Alignment work needs its own decision too. The model sizes a technical alignment manager, or TAM, at $70,000 of monthly recurring revenue. That is a staffing cross-check for the account role; it isn't evidence that every co-managed client needs the same amount of TAM work.
Use the Model to Test the Arithmetic
The model's fully managed US example has $103.10 of monthly cost per seat, including delivery labor and tools. The desk accounts for $38.25. Those are allocations from that example, so treat the subtraction below as an illustration rather than a ready-made co-managed rate card.
Say the client keeps the entire desk workload and your MSP retains the other modeled delivery responsibilities. Removing $38.25 from $103.10 leaves $64.85 of cost per seat. This assumes the desk work really leaves your scope and the remaining cost allocation still fits the service.
The model's managed-service target is a 50% gross margin, fully loaded with burdened delivery labor and tools. Price equals cost divided by one minus that margin. So $64.85 divided by 0.50 gives $129.70 per seat.
That result misses the model's $150 US seat-price floor. The margin calculation and the floor answer different questions. The calculation shows what would earn the target delivery margin on those assumptions; the floor is a pricing policy that still has to be met.
My view is to revise the offer or decline it where the agreed service cannot support the floor. Don't turn the gap into a recurring discount to win the client. If a concession is justified, the model puts it on a bonus item rather than reducing monthly recurring revenue.
Keep Product and Service Economics Visible
If the agreement includes subscriptions you resell to the client, keep those product economics distinct from the tools used to deliver your service. The model targets about 30% product gross margin on resold licenses. That isn't the managed-service margin.
A single client-facing fee can still have a clear internal split. Record what pays for the product and what remains for delivery. Otherwise a change in the license cost can consume the service fee while the total invoice still looks healthy.
Keep overhead and the owner's fair-market pay in the wider business plan as well. A delivery-margin target isn't EBITDA, and a contribution from a client isn't cash available to distribute. Check the complete operating budget before treating a narrower service as affordable.
Measure the Handoffs You Have Priced
Before launch, record the estimate for the MSP work and where actual effort will be logged. Keep requests outside the agreement identifiable, with the decision that approved them. That lets you compare what you sold with what the desk actually delivered.
Inspect both sides of a delay. Your MSP may be waiting for useful diagnostic information, or the client may be waiting for a technician your plan didn't make available. A single total for ticket hours cannot tell you which handoff needs changing.
I'd review the arrangement when the client's staffing or your scope changes. Check the extra work and the service performance alongside the revenue. A larger invoice isn't a successful expansion if the added responsibilities cost more than the price covers.
Price the Next Proposal From Its Ownership Sheet
Start with the work the prospect wants to retain. Put the responsibilities your MSP would carry beside your cost estimates, then calculate the managed-service price and check the floor. Keep any resold products visible as their own economic decision.
Write the fee and scope in plain language, including the work that costs extra. Make the change process explicit before work moves between teams. That gives you an offer built from a service you can deliver, rather than a discount waiting for a boundary dispute.
mspoutpost.com/articles/how-to-price-co-managed-it-from-your-delivery-costs
Written by Owen Gallagher
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