There is a quiet trap inside most MSP businesses, and it starts with a question that feels already answered: who is your ideal client? Most owners have something written down — a vertical, a seat count, maybe a geography. But when you measure what those clients actually produce beyond the managed services agreement, the answer exposes a harder truth. The clients who got you to your current revenue may be the same clients preventing you from reaching the next level. Understanding the mechanics of recurring revenue traps, the real economics behind agreement gross profit, and the structural reasons that MSPs stall at $2 million all begin with one discipline: defining an ideal client profile that functions as a revenue strategy, not a description of what already exists.
Pull-through rate — the percentage of project, hourly, and product revenue generated relative to your recurring managed services base — is the metric that separates MSPs with growth potential from MSPs running in place. A company operating at a 15% pull-through rate with no intention behind it has a fundamentally different ceiling than one targeting 35% and staffing accordingly. This distinction isn't about ambition or hustle. It's about whether your client base is economically capable of growing alongside you, whether your agreements are structured to capture the work that naturally arises from that growth, and whether you have the internal discipline to identify, bill for, and staff against the revenue you're currently walking over. The ideal client profile is where all of that starts — and for most MSPs, it's where the real strategic planning has never actually happened.
Most MSP owners, when pressed, will produce a description of their typical client and call it an ICP. They'll reference a seat count, an industry vertical, maybe a geography. That's a customer description, and it has almost nothing to do with whether that client can generate the revenue trajectory the business actually needs. The real function of an ideal client profile is to define the economic relationship your business requires with each client — what they'll spend on recurring services, what they'll produce in project and hourly revenue above that base, and whether their own growth trajectory will compound your revenue over time without requiring constant new client acquisition. When you confuse a description of who currently pays you with a strategy for who should pay you, every downstream decision — hiring, staffing, agreement structure, account management investment — gets built on a foundation that can't support the weight of your growth goals.
Pull-through rate — sometimes called drag-along rate — measures how much project, hourly, and product revenue your client base generates relative to your recurring managed services base. It is the single most revealing metric for determining whether your clients are growth-capable or maintenance-locked. An MSP operating with an unintentional 15% pull-through rate has a fundamentally different business than one targeting 35% and structuring agreements, staffing, and account management to reach it. The clients generating a $36,000 annual contract that also produce $20,000 in project work are telling you something with their dollars — they want to grow, and they want you to help. The clients generating $18,000 a year with zero project activity are telling you something equally clear. Both of those stories need to be heard, measured, and planned around. The most mature MSPs in the industry — the ones operating at $50 million and above — are targeting 100% or more on pull-through rate. That means for every dollar of recurring revenue, they're generating at least another dollar in project, hourly, and product revenue from the same client base.
The conventional wisdom is that MSPs get stuck at $2 million because of sales or operations. That's partially true, but there's a deeper structural issue: most $2 million MSPs have 35 to 40 clients, and those clients are predominantly small — $1,500 to $4,000 per month agreements with companies that aren't trying to grow aggressively. They don't produce meaningful project work. They don't add users at a rate that moves the needle. They are, by every economic measure, maintenance clients. Having 35 of them feels like a business, but it's actually a constraint disguised as a client base. Compare that to the $2 million MSP with 17 clients, which sounds like it should be stronger but actually reveals the same problem from a different angle: if those 17 clients have been stable for five or ten years, they aren't growing, and they aren't going to suddenly start. The number of clients is less important than the growth trajectory and spending behavior of each one. That's what an ICP is supposed to clarify — and it's why so many $2 million MSPs remain $2 million MSPs for years.
There's a version of the ICP conversation that's about what the MSP wants. But the more important version is about what the client is already signaling. When a client submits project work — new user onboarding, infrastructure upgrades, cloud migrations, application deployments — they're making an investment decision. They're telling you they want to grow and they want you to be part of that growth. Failing to staff for that work, letting projects drag out because your support techs are overloaded, or never asking the client about their business plans isn't just a missed revenue opportunity — it's a breach of the advisory relationship most MSPs claim to have. The clients who want to grow are the ones most likely to leave when someone else shows up and asks the right questions. That competitor won't be better at helpdesk. They'll just be better at listening to what the client has been saying all along.
The AI and automation wave isn't a future event to prepare for — it's a current force reshaping how MSP clients think about technology. Business owners who never had anything interesting to imagine in IT are now being exposed to automation, AI agents, and process optimization through their own peer networks and public platforms. They have something to talk about. They have something to want. And if their MSP can't be part of that conversation, someone else will be. The MSSP parallel from 2014-2015 is instructive: security wasn't optional, a new category of company emerged to serve it, and some of those companies are now $75 million operations that didn't exist a decade ago. The same structural opportunity exists now for MSPs willing to expand their offering into AI-enabled business technology — not as a buzzword, but as a product and service category that their clients are beginning to demand. The MSPs who define their ideal client to include companies that want both operational IT support and growth-oriented technology development will position themselves for the next decade. Everyone else will watch their share of the client's wallet shrink.
A typical client profile describes who you're currently serving — seat count, vertical, geography, monthly contract size. An ideal client profile defines the economic and behavioral characteristics a client must have to support your growth plan — including growth trajectory, spending behavior on projects and hourly work, and alignment with your service model. The TCP is descriptive. The ICP is strategic.
Pull-through rate measures how much additional revenue (project, hourly, and product) your clients generate above and beyond their recurring managed services agreement. A client paying $3,000/month in recurring who also generates $1,000/month in project, hourly, and product work has roughly a 33% pull-through rate. Mature MSPs target 100% or more — meaning the total client value is at least double the recurring contract.
Bering McKinley recommends targeting at least 30% from project work, 20% from hourly work, and the remainder from resold cloud licenses and product. At full maturity, a 100% total pull-through rate is the benchmark used by MSPs operating at $50 million and above. If you're currently at 15% with no intention behind it, that's your baseline — not your ceiling.
Multiple factors contribute, but a primary structural cause is client quality. Most $2 million MSPs have 35-40 clients generating $1,500-$4,000/month with minimal project or hourly revenue. Those clients aren't growing aggressively, which means the MSP's growth has to come entirely from new client acquisition rather than organic expansion within the existing base. Redefining the ICP is the first step to breaking that ceiling.
Not necessarily. The goal isn't to fire every non-ideal client — it's to understand what each client type contributes so you can plan accordingly. A client with a 15% pull-through rate who's stable and pays on time still has value. Just know the story: that client isn't going to drive your growth. Your growth will come from new clients who match the ICP. Plan your hiring, account management investment, and sales targets around that reality.
AI is reshaping client expectations and creating new service categories. Clients who historically only needed helpdesk and infrastructure support are now asking about automation, AI agents, and process optimization. An ICP designed for 2020 may not serve you in 2028. Additionally, per-user billing models face risk if AI reduces client headcounts. MSPs that define their ICP to include companies wanting both operational support and technology development will capture a larger share of the client's wallet and be more resilient to billing model disruption.
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 perspective combines hands-on technical knowledge with executive-level business strategy — exactly the combination MSP owners need when defining their ideal client and structuring their growth model.
Connect with Gary on LinkedIn →
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.
Connect with Josh Peterson on LinkedIn →
Your ideal client profile isn't a document to check off — it's the foundation of every growth decision you'll make. The BMK Vision Operating System helps MSP owners connect their ICP to their strategic plan, revenue targets, and operational structure so growth happens with intention, not accident.