Guide
4 min read
By MSP Margin Editorial
Many MSPs now include a security bundle in every agreement, or sell it as a required tier. A typical bundle combines endpoint detection and response or a managed detection service, email security, backup for cloud data or devices, and security awareness training. Bundling makes the offer easier to sell and easier to deliver consistently. It also hides the economics, because the client sees one price while you pay several vendors on different units and terms.
Know the unit for every component
Each component is priced by its vendor on its own unit. Endpoint protection and managed detection are usually per endpoint. Email security and awareness training are usually per mailbox or per user. Backup may be per user, per device, per workload, or by storage consumed.
Your bundle is probably priced per user. That means you are converting endpoint-based and storage-based costs into a per-user price, which only works if you know your typical ratio of endpoints to users and your typical storage consumption, and if you check those assumptions over time. A client with two devices per user costs more to protect than one with a single laptop each, even at the same headcount.
Do not forget labor. Someone onboards new devices, tunes policies, responds to alerts, handles backup failures, and runs the training campaigns. Even with a managed detection service doing the first layer of triage, your team spends time on security. Log it to its own work type in the PSA so you can measure it.
Minimums change your real unit cost
Some security vendors require a minimum commitment, such as a minimum number of endpoints or a minimum monthly spend. If you deploy fewer units than the minimum, you still pay the minimum, and your effective cost per unit rises.
When you calculate bundle margin, use your effective cost, not the contract rate. If a commitment of 100 endpoints at $9 each costs $900 per month and you have only 60 endpoints deployed, your effective cost is $900 / 60 = $15 per endpoint. That gap closes as you grow into the commitment, but you should price with the current number in mind and know when the crossover happens.
A worked example
All figures in this example are illustrative and do not represent any vendor's pricing.
A client has 25 users and 30 endpoints. Your unit costs, already adjusted for any minimums, are:
| Component | Unit | Cost per unit | Units | Monthly cost |
|---|---|---|---|---|
| EDR with managed detection | Endpoint | $9 | 30 | $270 |
| Email security | User | $3 | 25 | $75 |
| Cloud backup | User | $3 | 25 | $75 |
| Awareness training | User | $2 | 25 | $50 |
| Stack subtotal | $470 |
Add three hours a month of security-related technician time at a fully loaded $55 per hour: 3 x $55 = $165. Total monthly cost of the bundle: $470 + $165 = $635.
If you price the bundle at $40 per user, revenue is 25 x $40 = $1,000. Bundle margin is $1,000 - $635 = $365, or 36.5%.
Now suppose this client had 45 endpoints instead of 30. EDR cost rises by 15 x $9 = $135, and margin drops to $230, or 23%. Same user count, same price. This is why a per-user price needs an endpoint assumption written into the agreement, or a per-endpoint component for devices beyond a set ratio.
Tracking the bundle's margin
To see whether the bundle earns what you planned, keep it visible in your books and your PSA.
Give the bundle its own revenue line or product code, separate from the base managed services fee, even if the client sees one combined price. Map each security vendor's charges to cost of service accounts under the same service line. Then, each month, compare bundle revenue to bundle cost and calculate the margin at the total level and for your largest clients.
When a vendor bills one pooled invoice across all clients, allocate it by the units each client has deployed. Allocate any minimum commitment shortfall the same way, or carry it as a separate line so it does not distort individual client margins. Either approach works if you apply it consistently.
Review the unit counts each month. Endpoints that have been retired but still carry an agent, users who left but still have a training seat, and backups for mailboxes that no longer exist all add cost without adding revenue.
Revisit pricing at least once a year and whenever a vendor changes terms. A bundle priced against last year's costs can lose several points of margin without anyone changing a single agreement.
This guide is general information, not accounting or tax advice. How you present bundled services on invoices and classify their costs and revenue can have reporting and sales tax implications, so confirm the details with your CPA.