For an in-house IT vs MSP cost comparison, build the full cost with the prospect before changing your price. An employee and an MSP can both be sensible choices. The decision needs the full cost and the work each option actually covers.
Picture a proposal for the model's 20-seat client at $225 per seat, or $4,500 a month. The prospect says they could hire someone instead. I'd answer: 'Let's cost that option properly. What would you want the person to handle, and what would still need outside help?'
Agree on the Job Before Choosing a Salary
Start with the duties they want inside the business. A person on site for the working day is different from access to a shared support team. Don't present those as interchangeable simply because you can put annual prices beside them.
Use this opener: 'Is having someone here part of the requirement, or is the requirement getting the work covered?' Then ask which work needs that presence. Their answer gives you a comparison to build rather than a salary figure to argue against.
For a worked US comparison, use the MSP model's $62,000 Tier 2 salary. That is an illustration, not a finding that every 20-seat prospect needs a Tier 2 hire or can recruit one at that pay. Replace it with the prospect's realistic salary for the duties and market.
Keep your own side equally specific. In the example, $4,500 is the monthly managed service fee. Spell out separately billed products and projects rather than calling that figure the price of everything the client could need.
Add the Employment Costs Without Padding Them
The model's ordinary US employee burden is 1.25 times salary. For the illustrative Tier 2 hire, $62,000 multiplied by 1.25 gives $77,500 of annual employment cost. The multiplier covers the model's payroll taxes, benefits, and insurance assumption; it is not a complete technology budget.
Say: 'Can your payroll person check what employing this role would cost, beyond the salary?' Use their answer when they have it. If they already included an employer cost in their estimate, don't add the same item again to make your column look better.
The model budgets internal software and equipment at $3,600 per person per year, with training at $2,500. Treat those as prompts to price their setup, not extra charges the prospect must accept unchanged. Their employee may use a workstation they already own, or need something your allowance doesn't cover.
Recruiting also belongs somewhere in the comparison. The model uses $5,000 per hire and a 20% annual technician-turnover assumption for workforce planning. That assumption is neither a prediction that this person will leave nor a reason to charge a full new-hire cost every year.
Ask Who Owns the Tools and the Cover
The delivery tools have a cost whichever staffing route the prospect chooses. The MSP model's internal tool allowance is $22.50 per seat per month at the example price. That is the MSP's modeled cost, not a retail quotation for a business buying its own stack.
Ask the prospect to identify their actual tool costs and who will operate the tools. On your side, show what the managed fee includes. If a product is sold separately, keep it separate in the table so both columns describe the same coverage.
Time needs the same treatment. The model starts with 2,080 paid hours and 1,660 available hours after its leave and admin allowances. Those are availability assumptions, not a promise that all remaining hours go to the client tasks being compared.
A single hire may have backup through a contractor or another employee. Ask for that arrangement and its cost instead of declaring the prospect will have no cover. Use: 'When this person is unavailable, who takes the work, and what have you allowed for that?'
After-hours service needs an explicit scope too. The model's default is an on-call engineer, with a $300 weekly stipend before call-out pay and associated burden. It doesn't establish the prospect's employment terms, or make every after-hours task free inside your proposal.
Put Comparable Costs Beside Comparable Work
Build a sheet the prospect can correct. Keep employment cost separate from the fee, and put any unresolved coverage beneath the figures. An empty cost cell should mean you still need a price, rather than quietly meaning free.
| Comparison Line | Illustrative In-House Option | Managed Proposal |
|---|---|---|
| Core Cost | $62,000 salary; $77,500 with the model’s US burden | $4,500 monthly for 20 managed seats at the example price |
| Annual Comparison | Start with $77,500, then add costs outside burden | Twelve payments of $4,500, plus separately priced scope |
| Internal Workstation and Training | Price the employee’s requirements; model allowances are $3,600 and $2,500 annually | Confirm how your team delivers the contracted work |
| Delivery Tools | Obtain the actual stack cost and identify its operator | List included tools and separately billed products |
| Leave Cover | Name the backup arrangement and any additional cost | Confirm the team and service hours you are offering |
| After-Hours Work | Confirm who responds and how they are paid | Show the included response scope and additional charges |
| Specialist Work | Identify work the hire will need help to deliver | Identify available escalation and any separate project scope |
| Hiring and Replacement | Show recruiting costs when incurred and the handover plan | Explain how you maintain the contracted service when staff change |
Don't total this into a claim that hiring always costs more. A narrower in-house role can be a different purchase, and the prospect may already have resources you have not considered. My view is that the sheet should expose those differences rather than disguise them as savings.
Respond to the Difference They Actually Care About
If they challenge the salary, use: 'Let's use the salary you can recruit at. Which responsibilities does that person cover at that pay?' Keep working from their number instead of defending a model input as the only possible wage.
If they want someone physically present, use: 'Then let's price the on-site requirement as part of the job. Which parts would you still want our team to own?' That can lead to a shared arrangement, but it needs its own scope and price.
If they say your team sounds broader than they need, use: 'Let's mark the services you do need and check whether our package fits.' Don't promise a tailored package your service team cannot support. Bring the service lead into that decision before offering it.
If they ask for a lower monthly fee simply to match the salary comparison, I'd hold the recurring price. The model puts concessions on a bonus item, with quoted onboarding included free for a signed agreement as the model's usual concession. Any concession still needs its delivery cost covered.
Leave Them With a Decision They Can Check
Before the follow-up, ask the prospect to confirm the employment-cost column with their payroll owner. Have your service lead confirm the managed scope. Bring the corrected comparison back to the person choosing how the work will be covered.
Close with: 'We have a price for our defined service and a cost for the role you're considering. These are the responsibilities still needing a decision. Which arrangement do you want to build around?' If the answer is an in-house hire, decide whether you have a useful supporting role to propose.
You don't need to prove that an employee is a bad idea. You need a comparison accurate enough that the prospect can choose, and a proposal your MSP can deliver at the price you keep.
mspoutpost.com/articles/in-house-it-vs-msp-cost-compare-roles-and-coverage
Written by Natalie Brandt
MSP Outpost publishes information, not legal, financial, insurance, tax or compliance advice, and reading it creates no professional relationship. For decisions about your business, talk to a qualified professional.