How Engineers’ Salaries and Productivity Affect MSP Profitability

Managing Personnel and Performance with Data

Maximizing and sustaining long-term profitability for your managed services company requires you to strike a delicate balance among your labor expenses, what you charge clients, and the service levels your tech team provides. We will now explore one of these levers: engineer salaries and how they relate to your MSP’s profitability.

Money, Engineers, and Metrics

Whether your MSP focuses on IT infrastructure, application development, project management, outsourcing, hosted services, or something else, one truth remains universal: for your MSP to flourish, your engineers must cover their salaries, their share of the overhead, and the profit threshold you have deemed reasonable given the risks you run as a business owner.

That means each engineer should create monthly billings equal a multiple of their salary.

Two Paths to Profit: Cut Costs and/or Boost Revenue

Even if you have to tweak this rule of thumb to account for special situations, it can be helpful to identify which technicians are contributing to profits and which create liabilities. Market demand limits your flexibility when it comes to engineers’ pay. Each will fall into a fairly tight range based on their experience, longevity with your company, your community’s standard of living, and other factors. As a result, your focus to drive revenue growth while keeping expenses at bay, must be informed by accurate engineer productivity information.

Time is Money for MSP Engineers and Executive Leaders

Your livelihood – and theirs – depends on each engineer’s ability to translate his or her time at work into hours billed to clients. To optimize billable hours, MSPCFO can show you whether they – and you – are accomplishing that mission efficiently across these three dimensions:

Accounting for and billing for all time spent on a client

Optimizing Scheduling to maximize billable hours

Review all “flat rate” agreements to ensure the work is covered

To truly optimize your billable rates, you need to understand what you are paying your engineers and what you are billing. You can’t optimize performance until you measure it. And you can’t measure it without the right data. MSPCFO digs deep into your data with powerful, granular reports that give you critical insights into engineer profitability and how that relates to agreement pricing.

MSPCFO Reports Used To Evaluate Engineer Productivity

Here are three of the primary reports we use to help you understand where your engineers are spending their time and how that time is translating into revenue for your MSP.

Member P&L by Period

See members gross dollars associated with each individual member for a specified date range

Members Profit & Loss

See each member’s P&L statement for a specified date range

Member Billing by Month

See each member’s billing for a given month both in hours expended and dollar value for those hours

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We are eager to show you how your MSP can become as profitable as possible. Reach out below and we’ll be happy to schedule a personalized demonstration – just choose the time and date that works best for you below.

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