Recurring Revenue MSPs vs. Project-based MSPs

Not all managed service providers (MSPs) are created equal. Some are built for consistency, while others are built for innovation.

MSPs have two distinct ways of categorizing tasks they complete for their clients:

1. Recurring revenue: Regular support as outlined in the service level agreement. This generally involves day-to-day support, data backup and recovery, network/cloud management and more.

1. Project based: These are temporary jobs with a clear beginning and end, separate from ongoing maintenance and support tasks. Example projects include workstation setups for new employees, cloud migration and hardware upgrades.

Every MSP is a mix of both, but it’s quite common for an MSP to heavily favor one over the other. For example, Hungerford Technology favors recurring revenue but also handles client projects to fill in the gaps that day-to-day support doesn’t cover.

Each method has its pros and cons, and we’ll discuss those so you know what to expect when you begin looking for an MSP that fits with your organization.

Ultimately, the recurring revenue vs. project-based discussion comes down to two questions: Why speed up vs. why slow down?

Recurring Revenue MSPs vs. Project Based MSPs at a Glance

Here’s a quick summary of the two methods and how they differ.

Now, let’s detail each method and which kind of organization would prefer one over the other.

Recurring Revenue

Recurring revenue is all about avoiding pain and change. It asks the question, “Why speed up our technology investment?”

Some organizations just want to rely on their IT to work daily, and they aren’t worried about their own IT beating out their competition’s IT or having the latest and greatest hardware or software. Those organizations would probably prefer an MSP more focused on recurring revenue.

These MSPs aren’t incentivized to push new products because the goal is all about keeping the status quo. That’s not to say these MSPs will encourage you to use outdated hardware or software, but upgrading is more about satisfying a need rather than a want.

Of course, the downsides to recurring revenue are the possibility of stagnation and being left behind from a technological standpoint.

Project Based

Project based, on the other hand, is built on change. It asks the question, “Why slow down our technology investment?”

Some organizations want to have the latest and greatest technology to put themselves ahead of their competition. In that case, they would tend to do business with a project-based MSP.

These MSPs are motivated to push new products because the goal is to optimize their clients’ IT infrastructure to be the best that it can be. For example, maybe a new line of firewalls just came out. A client’s firewall is just 2 years old, so they have a few years before it needs to be replaced, but a project-based MSP might encourage that client to upgrade because it’s better than what they currently have.

The cons with project-based MSPs are that it can get very costly very quickly, and new hardware/software could introduce compatibility issues with existing systems.

Managed IT Services in Grand Rapids

Whether you just want your IT to work when you need it, or you need IT that adapts quickly, we have a solution for you. We can help keep your business running smoothly while increasing security, productivity and profitability.

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