The MSP Profitability Crisis Isn't About Pricing: It's About Time

The MSP profitability crisis isn’t about pricing.

It’s about where your technicians spend their time.

New data reveals a shocking reality: 62% of an MSP technician’s workday is consumed by routine, repetitive tasks, while only 20% goes toward crucial, high-value work that actually drives client satisfaction and retention.

Let me show you why this matters, what it’s costing you, and how the math adds up for fixing it.

The Time Allocation Crisis: By the Numbers

According to Asana’s 2023 Anatomy of Work report, knowledge workers (including MSP technicians) spend their time like this:

The Breakdown:

• 62%: Routine, repetitive tasks
• 20%: Crucial, important work
• 18%: Unnecessary or duplicative work

Let’s be clear about what this means:

Your most expensive resource (skilled technicians at $50-75/hour) is spending two-thirds of their day on work that:

• Doesn’t require their expertise
• Could be automated
• Doesn’t generate revenue
• Burns them out
• Limits your scalability

No wonder MSP margins are stuck at 11% when best-in-class companies are hitting 30%+.

What Counts as “Routine Work” in an MSP?

Before you think “not my team,” let’s define what routine work actually means:

The Usual Suspects:

• Password resets
• Account provisioning/deprovisioning
• Software installations
• License assignments
• Basic troubleshooting (same issue, same fix)
• Documentation updates
• Ticket categorization and prioritization
• Status updates to clients
• Collecting information from multiple systems

The Reality Check:

Pull your PSA reports right now. Look at your top 20 ticket types. How many:

• Have the same solution every time?
• Take 10-30 minutes but don’t require expertise?
• Could be handled by a junior tech or intern?
• Make your senior techs say “another password reset”?

That’s routine work. And it’s eating your profitability alive.

Why This Matters: The Margin Problem

The data tells a brutal story:

Industry Benchmarks:

• Average MSP margin: 11% (Service Leadership Index)
• Best-in-class MSP margin: 30%+ (NetSuite)
• MSPs using automation: 71% (Channelholic)
• MSPs not using automation: 29% (and losing ground fast)

The Connection:

When your technicians spend 62% of their time on routine work:

1. You’re paying premium rates for commodity work
2. You can’t scale without adding headcount
3. Billable work gets delayed by routine requests
4. Senior techs get burned out and leave
5. Client satisfaction suffers from slow response times

The companies hitting 30% margins? They’ve figured out how to capture that 62% and redirect it toward high-value work.

The Math: What Time Savings Actually Mean

Let’s make this concrete with real numbers.

Scenario: Mid-Size MSP

• 17 technicians working 40-hour weeks
• 62% of time (25 hours/week per person) spent on routine work
• Total routine hours: 425 hours weekly across the team

The Opportunity:

Even capturing just 10% of that routine work through automation means:

• 42.5 billable hours freed up weekly
• At $150/hour: $6,375 additional weekly revenue
• $331,500 annually without adding headcount

But Wait, It Gets Better:

That’s just direct revenue. The cascade effects include:

• Reduced escalations (30% fewer in our data)
• Better first-touch resolution (higher kill rates)
• Lower turnover costs (happier technicians)
• Higher client satisfaction (faster response times)
• Easier scaling (same team, more capacity)

The Conservative Case:

Let’s be even more conservative:

• Capture only 5% of routine time = 21.25 hours weekly
• At $150/hour = $3,187.50 weekly
• $165,750 annually

Even in the most conservative scenario, you’re looking at the cost of 1-2 additional full-time techs without the overhead, benefits, training time, or turnover risk.

The Automation Imperative: Why 71% of MSPs Are Moving Now

According to Channelholic’s MSP Success research, 71% of MSPs now use automation tools.

This isn’t about being cutting-edge anymore. It’s about survival.

Why MSPs Automate:

1. Labor shortage: Can’t find enough qualified techs
2. Margin pressure: Clients won’t accept price increases
3. Scaling limits: Hit a wall without automation
4. Competitive pressure: Others are doing more with less
5. Technician burnout: Can’t keep good people doing routine work

What Automation Actually Solves:

The goal isn’t to replace humans. It’s to multiply their impact.

When AI automation for MSPs handles:

• Password resets in 30 seconds (vs 15 minutes)
• Account provisioning in 2 minutes (vs 45 minutes)
• Basic troubleshooting with suggested solutions instantly
• Documentation updates automatically
• Automated ticket triage and routing immediately

Your technicians can focus on:

• Complex problem-solving
• Strategic client projects
• Relationship building
• High-value consulting
• Innovation and improvement

That’s where the margin expansion comes from.

The Quick Math for Your MSP

Want to know what this looks like for your specific team? Use this framework:

Step 1: Calculate Your Routine Time

• Number of technicians: ___
• Average hours/week: ___
• Multiply by 0.62 (62% routine work): ___
• Total routine hours weekly: ___

Step 2: Set a Conservative Capture Target

• Total routine hours × 0.10 (10%): ___
• Recoverable hours weekly: ___

Step 3: Calculate Revenue Impact

• Recoverable hours × your billable rate: ___
• Weekly revenue gain: ___
• Multiply by 52: ___
• Annual revenue gain: ___

Step 4: Factor in Additional Benefits

• 30% fewer escalations = ___% time saved
• Better kill rates = ___% efficiency gain
• Reduced turnover = $_____ savings

Real-World Results: The Commandare Case Study

When we implemented automation at Commandare (before building Mizo), here’s what happened:

Before Automation:

• 17 technicians
• 425 routine hours weekly (62% of total time)
• Constant firefighting
• Tech burnout and turnover
• 11% margins

After Stage 2 Automation:

• Same 17 technicians
• 20 additional billable hours weekly captured
• 30% fewer escalations
• 26% capacity increase per technician
• Better kill rates and client satisfaction
• Margins improving toward 20%

The Key Insight:

We didn’t need “full automation” or “AI agents making all decisions.” We needed Human-in-Loop automation that:

• Handled routine tasks with tech oversight
• Kept humans involved in meaningful ways
• Built trust with clients
• Scaled with the business

That’s what we built into Mizo.

The 29% Who Aren’t Automating: What’s Holding Them Back?

If 71% of MSPs are automating, what about the 29% who aren’t?

Common objections we hear:

“We’re too busy to implement automation”

Translation: You’re too busy doing routine work to stop doing routine work. That’s exactly the problem automation solves.

”Our clients want the personal touch”

Reality: Clients want fast, accurate solutions. They don’t want to wait 2 hours for a password reset because your techs are slammed.

”We tried automation and it broke things”

Valid concern. That’s why Human-in-Loop (Stage 2) beats full automation. Techs review and approve, automation executes.

”The ROI isn’t clear”

Math above: 10% of routine time = $165K-$330K annually for a mid-size MSP. How much clearer does it need to be?

”We don’t have time to learn new tools”

Modern automation integrates with your PSA, documentation, and RMM. The learning curve is measured in hours, not months.

The Bottom Line: Time Is Money, But Only If You Use It Right

Let’s bring this full circle:

The Problem:

• 62% of technician time = routine work
• Only 20% of time = crucial work
• MSP margins stuck at 11%
• Best-in-class at 30%+

The Solution:

• Automate routine work with human oversight
• Redirect technician time to high-value work
• Capture 10-20% of routine hours = massive revenue gains
• Scale without proportional headcount increases

The Math:

• Mid-size MSP (17 techs)
• 10% routine time capture = 42.5 hours weekly
• At $150/hour = $331,500 annually
• Without adding headcount, training, or overhead

The Reality: 71% of MSPs are already doing this. The other 29% are falling behind.

What Percentage of Your Team’s Time Goes to Crucial Work?

Here’s your homework:

1. Pull last month’s ticket data
2. Categorize by type: Routine vs. Complex vs. Unnecessary
3. Calculate time allocation: How much time on routine work?
4. Run the math: What’s 10% of routine time worth to you?
5. Ask your team: Which routine tasks burn them out most?

If your numbers look anything like the industry averages, you’re leaving six figures on the table annually.

Ready to Capture That Lost Time?

At Mizo, we’ve built AI for MSPs specifically for MSPs who:

• Want to reduce routine work without losing control
• Need to scale without proportional headcount increases
• Value Human-in-Loop over full automation
• Integrate with existing PSA and documentation tools

The results speak for themselves:

• 30% fewer escalations
• 26% capacity increase per technician
• Better kill rates and client satisfaction
• $165K-$330K+ annual impact for mid-size MSPs

Start Your Free Trial or Book a Demo

The MSP profitability crisis isn’t about pricing. It’s about using your most valuable resource, technician time, on work that actually matters. How much of your team’s time is spent on crucial work vs. routine firefighting? Let’s change that equation together.

Sources:

• Asana’s 2023 Anatomy of Work Report
• Service Leadership Index (MSP benchmarking)
• NetSuite MSP Industry Research
• Channelholic MSP Success Report
• MSP360 Blog Industry Analysis