From Commodity MSP to Solutions Practice

The race to the bottom is real. See what staying commoditized costs you — and what a Kinetic-built solutions practice is worth.

Outsourced IT is a race to the bottom. AI is accelerating it.

Commodity managed services compete on price, compress margins, and churn on the next cheaper bid. The MSPs pulling ahead are building customer-specific solutions — designed with AI, executed on a standard framework — that carry higher margins, convert into recurring managed services, and make customers too embedded to leave. This calculator quantifies the gap between standing still and making that shift.

Real-world example

$50M MSP, 200 customers, 8% annual churn

A mid-market MSP averaging $250k of annual revenue per customer at a ~15% blended project margin (Service Leadership Index measured MSP project margin at 12.9% in Q4 2024, down from 23% a year earlier). It sells commodity IT and loses ~1 in 12 customers a year on price. By building ~1–2 solutions per customer on Kinetic and converting half into recurring managed services — where measured margins run ~46% — it lifts margin, slows churn, and turns project work into a compounding recurring book.

Run your numbers