The managed services model is under pressure from two directions at once. Client expectations are shifting as AI tools become mainstream, and the per-user pricing structure that has anchored MSP revenue for decades may be approaching its expiration date. For MSP owners navigating this transition, the path forward requires rethinking not just what you sell but how you create value — moving from reactive technology support to strategic advisory partnerships and proprietary product ownership. The most durable MSP businesses have always been the ones that understood the difference between billing for labor and building something worth buying, and the economics of revenue growth through financial clarity have never been more relevant than they are right now.
In this roundtable, Josh Peterson and Gary Boyle confront the commoditization curve head-on — not with defensive tactics but with an offensive playbook built around two strategic moves: earning the advisory seat at your client's executive table and leveraging AI-compressed development costs to build software products that generate real enterprise value. The conversation traces the full arc from the first client conversation (business questions, not technology questions) through project-based revenue models to the productization path that transforms bespoke work into scalable, ownable SaaS. This is not about adding another line item to your agreement. It is about fundamentally repositioning where the MSP sits in the value chain — and building the kind of business that commands premium multiples when it matters most.
Managed services providers have been talking about commoditization for years. What has changed is the rate. AI tools are compressing the gap between what clients expect and what they can access independently, and the per-user pricing model that has anchored MSP revenue is increasingly misaligned with how businesses actually grow. When headcount stops being the primary driver of technology complexity — when automations and agents replace human tasks — the MSP that bills per seat is betting against the very forces shaping the market. The question is not whether this shift is coming. It is whether you are positioned on the right side of it when it arrives.
Every MSP claims to be a trusted advisor. Almost none of them actually sit in their client's executive planning meetings. The gap between aspiration and execution is not about capability — it is about the conversation. MSPs default to technology questions because that is what they know. But the business owner does not think in terms of servers, security scores, or ticket volumes. They think about hiring, market expansion, product launches, and competitive positioning. If the only value you bring to the table is a technology review, you have made yourself replaceable by any other MSP offering the same review at a lower price. The advisory position is earned by asking business questions first and letting the technology implications surface naturally — often in areas the client never connected to IT in the first place.
There is a pattern that recurs across the highest-multiple MSP exits of the past two decades, and it has nothing to do with the size of the managed services contract. IT Glue, ConnectWise, Enable — every one of them started as an MSP or MSP-adjacent operation that turned an internal tool or vertical solution into a standalone software product. The managed services book was the distribution channel. The software was the asset. AI has fundamentally altered the economics of this play. Development costs that would have required six figures and a dedicated team eighteen months ago can now be achieved at a fraction of the cost, with the MSP maintaining creative and strategic control over the product. The barrier to entry has collapsed. The strategic opportunity has not.
The managed services industry has conditioned MSP owners to view project work as secondary to recurring revenue. That framing made sense in a stable environment where headcount grew predictably and technology stacks were standardized. It does not make sense in an environment where the most valuable client engagements involve custom development, workflow automation, and strategic advisory — none of which fit neatly into a monthly subscription. The MSPs that will thrive in this next phase are the ones willing to rebalance their revenue mix: maintain the managed services base for stability, but drive growth and margin through project work that leads to product ownership. Base the business on managed services. Make money on the projects.
MSP commoditization refers to the process by which managed services become interchangeable in the eyes of the buyer — where the primary differentiator is price rather than value. As AI tools give clients more direct access to technology capabilities and standardized MSP offerings become increasingly similar, the commoditization curve is accelerating. MSPs that compete on packaging and pricing alone are most vulnerable.
Earning the trusted advisor position requires changing the conversation from technology to business outcomes. Instead of asking what servers or software clients need, ask about their growth plans, hiring strategy, competitive positioning, and operational challenges. Facilitate executive-level planning conversations, and position technology as a component of business strategy rather than a standalone discussion. The goal is a regular seat at the leadership table, not just an IT review meeting.
AI has dramatically reduced the cost of software development, making it accessible for MSPs to build custom solutions and eventually proprietary products. The highest-value MSP exits in history — IT Glue, ConnectWise, Enable — were all software plays. MSPs can leverage their client relationships to identify repeatable problems, build solutions, and scale them into products that create enterprise value beyond monthly recurring revenue.
No — the managed services base remains essential for business stability. The strategic shift is in how growth and margin are generated. Rather than trying to force every service into a monthly subscription, MSPs should embrace project-based work for new service offerings like AI implementation and custom development, while maintaining their MRR base. The formula is: base the business on managed services, make money on the projects.
The path moves through three stages: first, bespoke work (custom automations and projects for individual clients), then repeatable solutions (templated versions of successful projects that can be deployed across similar clients), and finally packaged software (a SaaS product that can scale independently). Each stage adds enterprise value, but the real multiplier comes from product ownership rather than service delivery alone.
Start with internal use cases that directly improve your operations — analyzing time entry data, scoring service delivery quality, automating reporting workflows, and building internal dashboards. This builds competency, demonstrates ROI, and gives you credible experience to reference when advising clients. If you are not using AI to run your own business better, you are not positioned to guide anyone else through the same transition.
Gary Boyle is a Partner for Strategy & Business Development at Bering McKinley. With a background spanning network engineering, entrepreneurship, and strategic consulting, Gary brings real-world operator experience to helping MSP owners build stronger, more profitable businesses. His hands-on work with AI tools, software development workflows, and the BMK Vision platform gives him a practitioner's perspective on the opportunities and pitfalls facing MSPs in the current market.
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Josh Peterson is the CEO of Bering McKinley and host of The BMK Vision Podcast. Since 2004, Josh has worked with hundreds of MSP owners to build operationally sound, profitable businesses through consulting, peer teams, and direct coaching.
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If this episode reframed how you think about your MSP's future, the BMK Vision Operating System is the framework that turns strategic clarity into operational discipline — from advisory positioning to enterprise value creation.