How to make MSP cybersecurity profitable

In recent years, cybersecurity spending—particularly by small- and medium-sized businesses (SMBs)—has witnessed a significant surge. By 2025, global cybersecurity spending will reach $458.9 billion, the highest on record.

Prompted by the increasing popularity of ransomware and malware attacks across businesses of all sizes, organizations are investing in cybersecurity to bolster their company and mitigate any potential risks.

To take advantage of this trend, building a profitable business model is essential for long-term sustainability and success. With the expanding market for cybersecurity options, keep reading for our recommendations on how to make your MSP cybersecurity program profitable.

The market demand for cybersecurity services

Recent research shows an increasing market demand for cybersecurity services, with 78 percent of organizations planning to increase their level of investment in cybersecurity over the next year. 

The increase in demand for cybersecurity is correlated to an increase in cyberattacks on small- and medium-sized businesses. As cybercriminals turn their attention to focus on SMBs—and avoid government attention—businesses of all shapes and sizes are at risk.

One study found that 82 percent of ransomware attacks hit SMBs. This consequence has a particularly dangerous impact for that group as well: About 60 percent of small businesses close permanently within six months of a cyberattack.

For MSPs, the increase in market demand opens up an opportunity for expansion in cybersecurity services. Because many organizations don’t have the expertise or resources to manage these needs themselves, MSPs are a critical partner for many companies. As you build out cybersecurity service offerings and start selling cybersecurity, consider the following:

• Endpoint detection and response (EDR): EDR solutions actively monitor endpoint devices—such as computers and mobile devices—to detect and respond to threats. By combining this with SOC (security operations center) you have MDR (managed detection and response). This allows for 24/7 monitoring and response, without working about expertise gaps.
• Identity and access management (IAM): IAM solutions manage user identities, roles, and permissions to ensure that only authorized individuals can access specific resources.
• Security awareness training (SAT): SAT allows organizations to train employees on key best practices to protect organizational networks and data.
• Firewall management and intrusion prevention: Implementing and managing firewalls helps to prevent unauthorized access and monitor traffic.
• Security information and event management (SIEM): SIEM solutions collect and analyze log and event data to provide real-time analysis of security alerts.

While selling cybersecurity is essential across virtually every industry and market due to the increasing reliance on digital technologies, potential target markets include finance and banking, healthcare, retail, government, and other industries with a large amount of sensitive financial or consumer data.

Knowing the true cost of your cybersecurity offerings

To effectively sell your cybersecurity program, start by understanding your investment in cybersecurity infrastructure and talent.

Investing in a cybersecurity infrastructure

Developing and marketing a cybersecurity program involves specialized hardware, software, servers, and other equipment. Licensing or subscription fees for cybersecurity tools and platforms can vary widely, and MSPs often need to invest in a suite of tools to streamline service offerings.

In addition, acquiring and retaining cybersecurity talent can be challenging and expensive. The U.S. Bureau of Labor Statistics (BLS) reports that the median annual salary for information security analysts is $112,000—which is approximately double the national median earnings of workers across all industries. Because the rates of cybercrime continue to rise, careers in cybersecurity are becoming increasingly in demand.

Skilled cybersecurity professionals are in high demand and attracting and retaining talent means competitive salaries, continuous training and development, and benefits.

Overhead costs

Beyond the direct costs of infrastructure and personnel, consider any overhead costs such as rent, utilities, insurance, and marketing. Factoring these elements into your total operating costs is critical.

In addition, consider what fixed vs. variable overhead costs your business has. Some costs, such as rent, remain constant regardless of business activity; variable costs, however, change depending on business activity. Understand what costs will scale with your company’s growth and what will remain relatively static.

Remember: cloud migration can be a helpful tool for reducing overhead. Leveraging the cloud can reduce your need for physical infrastructure, utility costs, and IT personnel costs. 

Pricing models

Pricing models for cybersecurity services can take on a number of forms, including subscription-based, tiered services, à la carte pricing, value-based pricing, or per user pricing. As you sell your cybersecurity services, consider the most effective solution for your clients.

Profitability analysis

To ensure profitability and long-term sustainability when selling cybersecurity, consider a profitability analysis that includes:

• Break even analysis: How many clients or how much service volume is required to cover your overall operating costs?
• Margin analysis: What is the profit margin on each cybersecurity offering? Ensure that your profit margins account for any unexpected costs or client acquisition costs.
• Client lifetime value vs. Client acquisition cost: How much revenue will a client bring over the duration of your relationship vs. the cost to acquire them?

While these metrics can help aid your sales and marketing strategy, periodically review and adjust your pricing based on changing costs, competitive landscapes, and market demand. Understanding the true cost of your offerings ensures that you’re not only providing top-tier services—but you’re also operating profitably.

How to effectively price and package your cybersecurity offerings

Pricing, packaging, and selling your cybersecurity offerings can make or break your MSP business. Setting the right price and bundling services effectively will determine your overall profitability and market positioning. Let’s explore strategies to build a sound pricing plan and package your offerings for success.

Step #1: Building a pricing plan for your offerings

You’ve already conducted a profitability analysis and taken a deep dive into what services you offer. Now, consider your competitive analysis by researching what competitors are charging for similar services and discover your unique value. With this foundational knowledge, you can decide on a target cybersecurity profit margin for each service or package and start to assign prices accordingly.

Step #2: Packaging your offerings

For many MSPs, creating bundled packages in addition to à la carte options offers flexibility and customization for clients. Offer packages that group complementary services together and offer discounts for clients who select more than one option.

Step #3: Balancing pricing with market expectations

Because of the complexity of selling cybersecurity offerings, some clients may not fully understand the importance of a particular cybersecurity service. Provide education about the benefits and potential risks to support clients as they determine what services they need.

For additional information and insights, read our recent eBook, Cybersecurity Pricing and Packaging Guide, on how to price and package your MSP cybersecurity offerings. We also have our webinar, Cybersecurity Pricing and Packaging Techniques.

Practices and tactics to increase MSP cybersecurity profitability

To boost cybersecurity profitability, MSPs should consider adopting holistic service solutions, implement tiered pricing strategies, and prioritize continuous team training and certifications. These actions will contribute to improved revenue and client retention rates.

Building long-term client relationships for upsells and retention

Building new business relationships is key for selling cybersecurity—but having strong and consistent repeat business is just as crucial. Nurturing these existing relationships is the bedrock of sustainability and profitability.

Retaining old clients is often more cost-effective than acquiring new ones, and your most loyal clients can become advocates for your business and drive additional referrals. With this in mind, consider developing a referral program for your satisfied clients, offering a cost-effective channel for future customer acquisition.

Upselling cybersecurity consulting to your existing clients is also a strategic opportunity for organizational growth. Regularly review your client needs and their unique IT environments. As their business grows or shifts—and as new cybersecurity threats emerge—keep your clients up-to-date with best practices and recommendations for success. You can also use this information to cross-sell services that your clients don’t currently use.

Never underestimate the power of building strong, lasting relationships with your existing clients. Support the relationship through regular communication, exemplary customer service, and transparent reporting to build trust.

Conduct cost audits

In the realm of selling cybersecurity, enhancing profitability isn’t solely about boosting income—it’s also about optimizing expenses.

For MSPs, controlling costs is paramount to sustaining a competitive edge and ensuring the delivery of quality services without compromising cybersecurity profit margins.

One of the most effective ways to manage and reduce costs is by conducting regular cost audits. Cost audits are typically made up of several steps:

• Create a comprehensive list of all costs associated with your cybersecurity program, including infrastructure, software and hard, personnel salaries, training, licensing, and any third-party vendors.
• Once all costs are itemized, analyze them to understand any trends over time.
• Compare these costs against industry benchmarks and best practices to determine if you are overspending in certain areas.
• Review contracts and agreements to ensure cost-effectiveness.
• Evaluate if there are any processes that can be automated to reduce manual effort and costs.

While the primary focus of some MSPs might be on revenue generation, a balanced approach that gives equal importance to cost management is also a successful path to improved profitability.

Maximizing operational efficiency

Operational efficiency is particularly important for MSPs that offer cybersecurity consulting because it has a direct impact on your profitability and your service quality. Operational efficiency in the MSP world means accomplishing objectives with a minimum waste of time, effort, and resources.

Methods to optimize resource allocations

• Automated task management: Use tools that automatically allocate tasks based on expertise, availability, and workload to reduce manual intervention.
• Capacity planning: Forecast future workloads and align resources accordingly to avoid overstaffing.
• Skill development: Invest in regular training to ensure your team’s skills are up-to-date and relevant.
• Consolidation of tools: Use a consolidated platform with multiple functionalities to simplify operations and reduce costs.
• Outsource a Security Operations Center (SOC): A SOC is a 24-hour team of experts who proactively hunt for, triage, and respond to cyber threats in real-time. Outsourcing SOC services can help MSPs free up valuable resources and allow internal team members to focus on responsibilities with the most ROI.

Some of the most common KPIs for MSPs to track for continuous improvement include:

• First-call resolution rate: How often are client issues resolved on the first interaction?
• Average resolution time: What is the average time it takes to address and resolve client issues?
• Resource utilization rate: How effectively are ‌human resources used?
• Client satisfaction score (CSAT): How satisfied are clients after working with your team?
• Operational uptime: What percentage of services are operational without disruptions?
• Cost per ticket: What is the average cost incurred by the MSP to resolve a client issue?

When seeking profitability while selling cybersecurity, operational efficiency is a critical strategy for cost optimization and service excellence. Continually monitoring the right KPIs and focusing on streamlining operations helps ensure your organization remains competitive, profitable, and in high demand.

Security automation

Security automation has emerged as a cornerstone strategy for enhancing operational efficiency for MSPs and their cybersecurity vendors. By reducing any reliance on manual intervention for repetitive tasks, organizations not only boost revenue—but can often improve consistency and accuracy.

Automating different processes can lead to reduced human error, improved scalability, faster response times, more efficient resource allocation, and continuous monitoring to provide 24/7 insights for clients.

Some of the most commonly leveraged components of a security stack include automation at several key points: 

• SIEM: Automated features often include ‌log collection, event correlation, alert generation, and dashboard reporting.
• EDR: Automated features include behavioral analysis, threat hunting, and response actions, such as quarantining or restricting affected endpoints.
• Automated patch management: Automated features can include patch discovery, patch deployment, verification and reporting to confirm successful patch installations.
• IAM: Automated features can include provisioning and de-provisioning, authentication, and role-based access control.
• Cloud security posture management (CSPM): Automated features can include configuration monitoring, compliance assessment, and visualization.

While these are just a few examples, the cybersecurity market is filled with numerous automation solutions, all tailored to different requirements and environments.

Know how to address client fears in the sales process

Knowing how to address client fears when selling cybersecurity is crucial. Many prospects and clients may be hesitant to make a purchase or upsell—and your team can address these concerns and alleviate potential reluctance.

Clients often harbor various concerns, from high costs and complex implementation to data loss and vendor trustworthiness. When selling cybersecurity, MSPs can put clients at ease by presenting complex topics in a jargon-free, accessible manner—and answering client questions in straightforward, approachable language.

Be ready to monitor and adapt to market trends

In the ever-evolving landscape of cybersecurity, complacency is the enemy. In order to remain relevant and competitive amid other MSPs, your company needs to respond to the current demands of the market—while also anticipating future needs and trends.

We already understand that cyberthreats are never static. As new vulnerabilities emerge and threat actors devise new methods to exploit them, MSPs must track and update service offerings in real time to offer protection against emerging threats.

In addition, MSPs must keep a close eye on compliance regulations and standards. Staying ahead of regulatory challenges will ensure that your team is fully equipped to support clients as they work to remain compliant.

Lastly, collaboration with your sales and marketing teams is critical. Adapting your service offerings and pricing strategies is a helpful tactic to maintain market share and upsell current clients.

Common myths about cybersecurity profitability

Now that you have a deeper understanding of how to market your cybersecurity services and how to get started in cybersecurity, let’s unpack some of the common myths about profitability.

• Bigger isn’t always better. When driving financial performance, running a larger cybersecurity practice doesn’t mean improved service or better profit margins. In fact, many small organizations operate at a high operational maturity level and deliver great results.
• Cybersecurity is just an add-on service. In today’s digital world, cybersecurity is required for any organization with a digital presence. Cybersecurity is mission-critical, and this is key to share with your clients, both potential and present.
• More tools mean better protection. While having various cybersecurity tools might seem like a comprehensive approach, it often leads to added complexity, inefficiencies, and even gaps in protection if they don’t integrate well.
• Automating everything will boost profitability. Automation certainly can streamline many processes and reduce labor costs—but it’s not the only way to drive revenue. Over-reliance on automation leads to missed nuances or unique threats that require human intelligence.

Driving efficiency and profitability through cyber solutions

Cybersecurity solutions drive efficiency and profitability for your MSP. From automating daily processes to centralizing your tech stack, there are numerous opportunities to improve revenue and scalability.

In a world where cyberthreats are evolving and multiplying daily, MSPs cannot afford to be reactive. Instead, consider an up-front investment in building your comprehensive cybersecurity solutions to safeguard your clients and pave a path toward growth, scalability, and profitability.

At ConnectWise, we see the importance of navigating different cybersecurity tools in order to drive efficiency and profitability for your business. With our comprehensive cybersecurity suite, MSPs can benefit from a number of mission-critical tools to streamline daily tasks, compliance reporting, and 24/7 monitoring. 

Stay a step ahead, optimize your operations, and ensure your clients have the protection they deserve. Register for an on-demand demo of our Cybersecurity Suite today or check out our cybersecurity center for up-to-date threat intelligence and cybersecurity resources for MSPs.