The software invoices keep coming, and nobody reads them line by line. Most business owners don’t think about how their IT provider handles purchasing until something goes wrong. A license they didn’t know they were paying for. A renewal they didn’t see coming. A “recommended” software tool that overlaps with three others they already have. By then, the money is spent.
Done well, the way a technology provider handles purchasing on a client’s behalf is one of the most valuable services they provide. Not as a margin play. As actual client value, it builds trust and keeps clients longer.
But most providers either treat it as an afterthought or use it to pad their own margins. Both approaches cost their clients real money.
The Scale of the Problem
Let’s start with what business owners are actually experiencing.
The Small Business Expo surveyed 781 small business owners and found that 41% said software costs have increased over the past 12 months. More concerning: nearly one-quarter weren’t sure whether their software costs had changed at all. They simply didn’t have visibility.1
That uncertainty has a cost. The same survey found that businesses unsure about their software spending were more likely to report declining profit margins than those who had clear visibility into where the money was going. The problem isn’t always that costs are going up. Sometimes it’s that nobody is watching.
Zoom out and the numbers get bigger. Gartner projects global software spending will hit $1.43 trillion in 2026, growing 14.7% year over year.2 Zylo’s 2026 SaaS Management Index found that the average organization now manages 305 separate SaaS applications and spent 8% more on SaaS this year even though the number of apps barely changed.3
Application growth isn’t driving cost increases anymore. Pricing complexity is. AI add-ons, consumption-based fees, auto-renewal clauses that kick in 90 days before anyone notices. That’s where the money leaks out.
What “MSP Procurement” Usually Looks Like
Most MSPs handle procurement reactively. A client needs new laptops. Someone on the team gets three quotes, picks one, marks it up 15-30%, and sends the invoice. The client approves it because they trust their MSP. Nobody compares the negotiated rate against volume pricing the MSP might already have through distributor relationships. Nobody tracks whether that client could save 20% by bundling the purchase with other clients buying the same equipment.
That’s not procurement. That’s order-taking with a margin attached.
At the other end, some MSPs treat procurement as a profit center outright. They negotiate discounts from vendors, pocket the difference, and tell the client they got them “a good deal.” The client has no way to verify because they never see the pricing structure.
Both models have the same fundamental problem: the MSP’s financial incentive is misaligned with the client’s interest.
What Good Procurement Actually Looks Like
Real procurement, the kind that creates measurable value, has three components.
Visibility. You can’t manage what you can’t see. A competent MSP should be able to tell you every piece of technology you’re paying for, what it costs, when it renews, and whether you’re actually using it. According to Zylo, the average organization manages 211 SaaS renewals per year. That’s roughly one per business day.4 Without a centralized renewal calendar and a process for reviewing each one, you’re auto-approving price increases by default.
Leverage. Procurement accounts for 50-80% of a company’s total cost base, according to McKinsey.5 An MSP serving 50 clients has exponentially more purchasing power than any single one of those clients alone. Group purchasing agreements, volume licensing, distributor relationships. An MSP that handles procurement properly should be passing those savings through to clients, not absorbing them as margin.
Varisource, which benchmarks procurement programs, found that using group purchasing organizations and supplier consolidation typically delivers 18-22% savings on technology categories.6 Even a basic contract audit, comparing what you’re actually paying against what you agreed to pay, recovers 3-7% of spend in most organizations.7
Discipline. Good procurement means challenging specifications. Do you really need the Enterprise edition, or would Business Standard cover 95% of your use cases? Is that new AI add-on tool solving a real problem, or is it a line item because a vendor made it sound essential during a renewal conversation? Zylo found that 61% of organizations reported cutting other projects because of unplanned SaaS cost increases.8 When technology spending is undisciplined, it crowds out everything else.
The Questions Worth Asking
If your MSP handles your technology purchasing, here are five questions that separate the good ones from the rest.
1. Can you show me everything I’m paying for? Not a summary. A line-by-line list of every subscription, license, lease, and recurring payment they manage on your behalf. If your MSP can’t produce this in under a minute, they don’t have it organized. That’s a problem.
2. How do you handle renewals? The right answer involves a renewal calendar, advanced notice (at least 90 days), benchmark pricing data, and a conversation before anything auto-renews. The wrong answer is “we handle it.”
3. Do I see your pricing, or just your invoice? An MSP that’s marking up hardware or software should be transparent about it. You don’t need to see their distributor invoices, but you should know the markup structure and agree to it. If they won’t discuss it, that tells you something.
4. Are you auditing what we already have? Redundant tools are everywhere. JumpCloud found that 42% of a company’s applications are shadow IT. These are tools employees signed up for without IT’s knowledge.9 An MSP that’s not actively auditing your stack for overlap, waste, and unused licenses is leaving your money on the table.
5. Are you compensated on procurement, or on service? This is the core question. If your MSP earns a margin on everything they buy for you, their incentive is to buy more, not to buy better. The best procurement relationships are fee-based. The MSP gets paid for the service of managing procurement, not for the stuff itself. Their incentive becomes saving you money, because that’s what keeps you as a client.
The Trust Conversation
This isn’t a comfortable topic for a lot of MSPs. Talking about procurement means talking about money, margins, and incentives. The things that are easier to leave in the background.
But here’s where it connects to everything else a good MSP should be doing. Trust isn’t built by avoiding hard conversations. It’s built by having them. An MSP that can sit down and say, “Here’s what you’re paying for, here’s what I’m marking up, here’s where I found savings, and here’s what I recommend we change.” That MSP is building the kind of relationship that lasts.
The cheapest bid should be thrown out. That goes for MSPs buying technology too. But the most valuable MSP isn’t the one with the lowest markup. It’s the one that can look you in the eye and show you exactly where every dollar went, and why.
Demand that. You’re paying for it either way.
Sources:
1 Small Business Expo Research Desk, “41% Of Small Business Owners Report Rising Software Costs,” thesmallbusinessexpo.com, 2026.
2 Nicole Wood, “175+ Unmissable SaaS Statistics for 2026,” Zylo, February 8, 2026.
3 Zylo, “2026 SaaS Management Index,” zylo.com/reports/2026-smi, 2026.
4 Zylo, “2026 SaaS Management Index,” zylo.com/reports/2026-smi, 2026.
5 Victor Hou, “Cost Reduction Procurement: 15 Strategies for 2026,” Varisource, 2026. Citing McKinsey & Company.
6 Varisource, “Cost Reduction Procurement: 15 Strategies for 2026,” varisource.com, 2026.
7 Varisource, “Cost Reduction Procurement: 15 Strategies for 2026,” varisource.com, 2026. Citing Opstream.
8 Zylo, “2026 SaaS Management Index,” zylo.com/reports/2026-smi, 2026.
9 Sean Blanton, “Shadow IT and the Hidden Costs of SaaS Sprawl for MSPs,” JumpCloud Blog, June 1, 2025.
This post draws on themes from Rewired MSP: Mastery, Scalability & Performance, specifically Chapter 10 on vendor-neutral guidance and client-centered service delivery.
