Key Takeaway: The clients who push back hardest on a price increase are usually the ones who are most underpriced. Frame the increase as a reflection of the value delivered and the cost of delivering it. Be matter-of-fact, not apologetic. The clients who leave over a reasonable, well-justified increase were not clients who valued the relationship.
The clients you priced too low in year one are still at those rates. This is the most common financial problem in managed services businesses that have been operating for two or more years. The rates that felt reasonable when you were desperate for clients now feel like a ceiling you cannot break through. Every new client you add at market rates makes the gap between your best and worst clients more visible.
Raising prices on existing clients is one of the hardest conversations in the business. It is also one of the most necessary. This guide covers how to do it without losing the relationship.
Why You Have to Raise Prices
The case for raising prices is not complicated. Your costs have increased. Tool costs for MSPs have risen significantly in 2025 and 2026, driven by vendor price increases and the RAM shortage affecting hardware across the industry. Labor costs have increased. The cost of delivering the security controls that cyber insurance carriers now require has increased. If your rates have not kept pace with those cost increases, your margin has compressed, and compressed margin eventually becomes unsustainable service delivery.
There is also a value argument. The service you are delivering in year three is better than the service you delivered in year one. You know the client’s environment. You have documented it. You have built the processes that make your service consistent. The rate you charged when you were learning the client’s environment is not the right rate for the mature service relationship you have built.
The clients who understand this will accept a reasonable price increase. The clients who do not are telling you something about how they see the relationship.
The Right Way to Frame a Price Increase
The framing matters more than the number. A price increase framed as “our costs went up” is a vendor conversation. A price increase framed as “here is what we have delivered and here is what it costs to continue delivering it” is a partnership conversation.
The conversation that works goes something like this: over the past year, we have done X, Y, and Z for your business. We have resolved N incidents, maintained your security posture through a period when threats have increased significantly, and kept your environment current. The cost of delivering that service has increased because of tool cost increases and the expanded security requirements your cyber insurance carrier now mandates. We are adjusting our rates to reflect those costs, effective [date]. The new rate is [amount].
Notice what is not in that conversation: an apology, a request for permission, or an offer to negotiate. You are informing the client of a change, not asking for approval. The tone is matter-of-fact, not defensive.
How Much to Raise and How Often
Annual price adjustments of 3% to 8% are standard in the managed services industry and are generally accepted by clients who understand the relationship. A 3% annual increase is below inflation in most years and is easy to justify. An 8% increase requires more explanation but is still within the range of what clients expect from a professional services relationship.
If you have not raised prices in two or more years, a single large increase is harder to absorb than a series of smaller ones. A 20% increase in one step will generate more pushback than two 10% increases over two years. If you are significantly below market rate, consider a phased approach: bring clients to within 10% of market rate in year one, and to market rate in year two.
The notice period matters. Thirty days is the minimum. Sixty days is better. Ninety days is appropriate for clients who have been with you for several years and who will need time to adjust their budgets. The notice period signals respect for the relationship.
The Clients Who Will Push Back
Some clients will push back on a price increase. Most of the time, the pushback is not about the money. It is about the relationship. The client who pushes back is often asking: do you value our business? Are you treating us fairly? Is this increase justified?
The answer to all three questions should be yes, and you should be able to explain why. If you cannot explain why the increase is justified, you are not ready to have the conversation.
The clients who push back hardest are usually the ones who are most underpriced. They have been getting below-market service for years and have come to expect it. The conversation with these clients is harder, but it is also the most important. Either they accept the new rate and the relationship continues on a sustainable basis, or they leave and you replace them with a client who pays market rates.
Both outcomes are acceptable. The outcome that is not acceptable is keeping a client at a rate that makes the relationship unsustainable.
When to Let a Client Go Instead of Raising Prices
Some clients are not worth keeping at any price. The client who calls at 11 p.m. for non-emergencies, who refuses to follow your security recommendations, who treats your technicians poorly, or who generates disproportionate support load relative to their revenue is a client whose departure improves your business.
A price increase is sometimes the right mechanism for ending a relationship you should have ended earlier. If you raise a difficult client’s rate to market level and they leave, you have achieved the outcome you needed without having to fire them directly. If they stay at the new rate, you are at least being compensated for the difficulty.
The clients worth keeping at market rates are the ones who respect your team, follow your recommendations, pay on time, and treat the relationship as a partnership. Those clients are worth the conversation. The others are worth letting go.
Building Price Increases Into Your Agreements
The best time to establish the expectation of annual price increases is before the client signs the agreement. An MSP agreement that includes language allowing for annual adjustments tied to cost increases or a defined index sets the expectation from the beginning. The client who signed an agreement with an annual adjustment clause is not surprised when the adjustment happens.
The language does not need to be complicated. Something like: “Fees may be adjusted annually with 60 days written notice to reflect changes in the cost of delivering the services described in this agreement.” That is sufficient to establish the expectation and the process.
Frequently Asked Questions
How do I raise prices without losing clients?
By framing the increase as a reflection of the value delivered and the cost of delivering it, giving adequate notice, and being matter-of-fact rather than apologetic. Clients who understand the relationship will accept a reasonable increase. Clients who do not are telling you something about the relationship that is worth knowing.
What if a client threatens to leave over a price increase?
Let them. A client who leaves over a reasonable, well-justified price increase was not a client who valued the relationship. The revenue they represented will be replaced by a client who pays market rates. The alternative, keeping the client at a below-market rate to avoid the conflict, is a decision that compounds over time.
How do I handle a client who has been with me for five years at the same rate?
With honesty and respect. Acknowledge the length of the relationship. Explain that the cost of delivering the service has increased over that period and that the rate needs to reflect current costs. A phased increase over two years is appropriate for a long-term client. A single large increase after five years of no adjustment is harder to absorb and harder to justify.
Should I raise all clients at the same time?
Staggering increases across the year is operationally simpler and reduces the risk of multiple difficult conversations happening simultaneously. Raising all clients at once is also legitimate if your agreements all renew on the same schedule. The approach matters less than the consistency of applying increases across your client base.
About Brent Lacy: Brent Lacy is a technology advisor and the voice behind Rewired MSP. He helps MSPs operate with greater maturity and helps business owners make IT choices that make them more secure and more efficient. He is the author of Rewired MSP: Mastery, Scalability & Performance, vCIO Rewired: Virtually Conquering IT Obstacles, and Near Miss: Preventable IT Failures Threatening Your Business Security.
