You walk the floor. Your team looks busy. Tickets are flying in and out. The phones are ringing. Your engineers are booked solid for the week, your service managers are buried in escalations, and your sales team is chasing down new business. From the outside, everything looks like it’s firing on all cylinders.
So why don’t your margins reflect all that activity?
Welcome to one of the biggest traps MSPs fall into: confusing busy with profitable.
At Next Level Now, we work with MSPs every day who struggle with this very issue. In our recent session, we dug into the heart of the problem—and more importantly, how to fix it.
The Real Problem: You Don’t Know Where Time Is Going
You can’t grow a healthy MSP without understanding where your team’s time is really being spent—and what that time is worth. In our recent webinar with Alternative Payments, we take a deep dive into this.
A Tale of Two Utilizations:
- Real utilization: The actual percentage of time your billable resources spend doing billable work.
- Perceived utilization: The sense that everyone is working hard (which they are), but on a mix of billable, non-billable, administrative, or even wasted time.
If you don’t have accurate utilization tracking, you’re likely leaving money on the table—and setting your margins up to fail.
Why Utilization Tracking Is So Critical for Profitability
For an MSP, labor is your product. Every hour your techs work is inventory. But unlike a warehouse, you can’t physically count unsold hours. Instead, you need systems that give you visibility into:
- How much time is truly billable
- How much is being spent on internal work, meetings, or rework
- Where scope creep is stealing profit
- Which roles or tiers are underperforming or overloaded
Without this clarity, you can’t:
- Price your services correctly
- Staff appropriately
- Forecast growth
- Protect your profit margins
How To Spot The Gaps (And Plug The Leaks)
In our session, we discussed several practical ways to get utilization under control:
1. Leverage Your PSA System
Your PSA (ConnectWise, Halo, etc.) should be your single source of truth for time entry. But accurate data starts with:
- Clear ticket categories
- Required time entry fields
- Manager review processes
2. Financial Assessments
Perform regular financial assessments that correlate time entry data with revenue, margins, and client profitability. If a client’s effective hourly rate is below target, it’s a red flag.
3. Service Delivery Reviews
Break down weekly and monthly reports by role, client, and service type. Use this data to adjust pricing, staffing, and process bottlenecks.
4. Payment Solutions
Stop being afraid to have difficult pricing conversations. Consider:
- Minimum monthly spend agreements
- Tiered pricing models
- Project-specific scoping disciplines
5. Mind the “Soft Costs”
Excessive internal meetings, admin tasks, rework, and scope creep can quietly kill your margins. Build processes that protect your team’s billable time.
The Bottom Line: Activity ≠ Profit
Busy teams aren’t always profitable teams. MSP leadership requires visibility, discipline, and a willingness to challenge assumptions about where your team’s time is going—and whether it’s creating value.
When you track utilization the right way, you unlock the ability to:
- Increase margins
- Make better hiring decisions
- Price services properly
- Deliver better client outcomes
- Grow sustainably
Next Level Now will continue to have webinars and workshops to help MSPs tighten financial controls, improve service margins, and explore new ways to scale profitably. Stay tuned for announcements on upcoming sessions—and reach out if you’d like to schedule a financial assessment for your organization.
Register for our next webinar here to learn about “The ConnectWise Feature You’re Paying For (But Not Using To Grow Revenue).” We’ll show you how to turn the ConnectWise Finance Dashboard into a revenue-driving asset. No fluff, no theory—just real-world tactics from MSP finance experts who know exactly how to make your numbers work for you.
Contact Next Level Now to start the conversation!