MSP pricing explained: What you'll pay and what you'll get

What pricing models are available for an MSP program? That’s one of the first questions we hear from clients.The truth is that pricing depends on your goals, your workforce needs, and how your organisation prefers to fund its recruitment solutions.

Choosing the right pricing structure is critical to ensuring your MSP solution is tailored to meet your strategic goals.

In this guide, we break down the most common MSP pricing models, offer practical examples, and help you understand the pros, cons, and best-fit scenarios for each.

What are the main MSP pricing models?

When selecting the right pricing model for your MSP program, there are two primary approaches: supplier-funded and client-funded. Each has advantages, challenges, and ideal use cases.

Supplier-funded

The supplier-funded model is the most prevalent choice for MSP programs, particularly in staff augmentation. With this approach, the suppliers cover the MSP fees as a percentage of the invoice, ensuring no additional upfront cost to the client. 

Works best for: 

Companies looking to optimise supply chain management, achieve greater efficiencies, and expand operations without increasing their budget should consider this option. It’s best suited for organisations pursuing staff augmentation strategies, where supplier cooperation is critical. 

• Advantages: This model doesn’t have any added direct cost to the buyer, making it an attractive option for businesses that want to manage their contingent labour without additional expenses. 

• Challenges: Some suppliers may resist adoption due to the impact on their margins, leading to a potential loss of diversity in the talent pool. 

Client-funded

Here, the client pays a fee to the MSP to manage the program. The fee structure can be fixed, variable, or hybrid. Although this option involves an upfront cost, it encourages suppliers to deliver top talent quickly, offering greater benefits over time.

Works best for:  

Companies operating with lower-margin supplier agreements or in cases where program enhancements are insufficient to offset supplier costs. It is particularly effective for organisations prioritising services procurement solutions, where the client gains more value from the program than suppliers do. 

• Advantages: It ensures smooth supplier adoption since the client does not bear any costs, and it allows the client to maintain greater influence over the MSPs' priorities. 
• Challenges: An increase in line-item costs can make it harder to secure leadership buy-in. Higher upfront costs to clients can also deter organisations with tight budgets. 

Common MSP pricing models to know about

When it comes to structuring fees for an MSP program, flexibility is key.  

Below are four common approaches, highlighting their benefits, challenges, and the types of businesses they best serve. 

Percentage of spend/transaction fee 

Works best for:  

This model bases fees on a percentage of the total third-party supplier spend managed by the MSP or on a per-transaction basis. It’s a scalable, pay-as-you-go structure where costs align with your actual contingent workforce usage. 

• Advantages: Offers scalability, flexibility, and simplicity in administration. 
• Challenges: Requires a minimum spend threshold for viability. 

License fee

With this model, clients pay a fixed lump sum for MSP services over a pre-determined period (e.g., monthly, quarterly, or annually). 

Works best for: 

Businesses with a centralised budget that value predictable and stable spending. 

• Advantages: Predictable costs and consistent resource support, with lower costs at higher usage levels. 
• Challenges: Payment is required regardless of actual usage, and it often necessitates upfront investment and a centralised budget. Allocating costs to usage can be complex.
  

Fixed price

In this model, MSP services are charged at a set price per unit, regardless of underlying costs. This ensures clarity and stability in pricing. 

Works best for:  

Businesses in competitive markets where pricing transparency is essential. 

• Advantages: Pricing remains stable, with the profit/loss risk absorbed by the MSP. 
• Challenges: Requires competitive benchmarking or market analysis to ensure fair pricing. 

Cost-plus

The Cost-plus model adds a fixed percentage profit to the MSP’s operational costs. This approach ensures straightforward administration but can sometimes result in higher overall costs for the client. 

Works best for: 

Organisations lacking access to detailed market intelligence or benchmarking data. 

• Advantages: Easy to calculate and implement, with minimal market data required. 
• Challenges: This may drive up costs as there’s limited incentive for the MSP to optimise efficiency. 
  

Comparison table for MSP pricing models

Which MSP pricing model is right for you?

• Choose supplier-funded if you want to scale without extra costs.
• Choose client-funded if control and supplier engagement are priorities.
• Choose fixed price for transparency and stable budgeting.
• Choose cost-plus if simplicity is key and benchmarking is unavailable.

Still unsure? Let’s talk through your workforce needs and design a model that fits.

Ready to optimise your contingent workforce management?

We understand that no two organisations are the same, which is why our MSP solutions are designed to adapt to your specific goals—whether you’re optimising contingent workforce management, navigating SOW complexities, or improving operational efficiency. 

With over 40 years of experience, we bring deep expertise in talent sourcing, workforce planning, data analytics and end-to-end workforce management. 

Learn more about our MSP solutions