#1 – Don’t Be That Guy: Managed Services Sucks (Ryan Alter)

In Episode #1 of Don’t Be That Guy on the BMK Vision Podcast, Josh Peterson and former MSP owner Ryan Alter take aim at a phrase that makes many MSP owners uncomfortable: “Managed services sucks.” Not because the work lacks value—but because the business mechanics behind managed services frequently fail owners who don’t inspect profitability with discipline.

This episode is not an attack on managed services as a concept. It is a challenge to the assumption that predictable recurring revenue equals a healthy business. Josh argues that many MSPs are profitable in spite of their model, not because of it, and that without consistent inspection of Agreement Gross Profit (AGP) and Effective Hourly Rate (EHR), owners are often operating on feelings instead of facts.

Ryan brings a counter-intuitive but proven perspective. He built, ran, and sold a highly profitable MSP that leaned heavily on hourly execution—creating immediate feedback loops around delivery, pricing, utilization, and accountability. The lesson is not “go back to break-fix,” but rather: honor every service revenue stream—recurring, project, and hourly—and stop letting managed services hide margin erosion.

The real issue: managed services hides feedback

The central argument of the episode is that managed services requires near-perfect operational execution to remain profitable. Unlike hourly or project work, managed services delays feedback. Revenue arrives before profitability is validated, which removes pressure to inspect margins in real time.

• Predictable invoices reduce urgency to improve profitability.
• Overdelivery becomes normalized and invisible.
• Owners mistake stability for success.

AGP and EHR: the two numbers that tell the truth

Josh anchors the conversation on two metrics that expose whether managed services is actually working:

• Agreement Gross Profit (AGP): Agreement revenue minus labor and hard costs, divided by agreement revenue.
• Effective Hourly Rate (EHR): What your agreements truly pay per hour after costs.

If these numbers aren’t inspected monthly—and consistently—opinions about managed services are ungrounded.

Hourly work isn’t the enemy—it’s a pressure release valve

Ryan explains why hourly revenue creates healthy friction. It exposes inefficiencies quickly, forces clarity around scope, and protects margins when work falls outside agreements. Josh reinforces that hourly and project revenue should not be treated as noise, but as leverage.

• Hourly billing creates immediate accountability.
• Out-of-scope work becomes visible and recoverable.
• Project work fuels account management and refresh cycles.

Episode highlights

• 00:00:15 – Why the series exists: challenge MSP sacred cows.
• 00:08:11 – AGP as the first truth test.
• 00:13:18 – Why EHR exposes hidden discounting.
• 00:20:44 – The three service revenue buckets.
• 00:31:29 – Hybrid pricing models explained.
• 00:53:14 – Exit readiness and buyer scrutiny.

FAQ

Is BMK saying managed services is a bad model?

No. The point is that managed services demands disciplined execution. Without consistent inspection of AGP and EHR, it can quietly destroy margins while appearing successful.

Should MSPs go back to break-fix?

No. This episode advocates honoring all service revenue streams—recurring, project, and hourly—rather than treating hourly work as a failure.

Why does hourly billing matter if most revenue is recurring?

Hourly billing reveals scope creep, forces documentation discipline, and protects margins when agreements are over-consumed.

How does this affect exit value?

Buyers don’t buy stories—they buy data. Clean reporting, consistent margins, and disciplined operations reduce risk and improve valuation outcomes.

About the guest: Ryan Alter

Ryan Alter is a former MSP owner who grew a one-man operation into a 25-person firm before selling the business. His experience highlights the power of immediate feedback, operational clarity, and disciplined execution.

🌐 Connect with Ryan Alter on LinkedIn →

About the host: Josh Peterson

Josh Peterson is the CEO of Bering McKinley and host of the BMK Vision Podcast. Through Don’t Be That Guy, Josh helps MSP owners replace opinions with truth by building disciplined operating systems.

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