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The Hidden Costs of MSPs: What They Don't Tell You - MSP Guide Australia

Alex Morgan
Industry Analysis 2026-06-09 🕐 4 min 795 words

The Sticker Price vs The Real Price

MSPs advertise $150/user/month. But that's just the beginning. Here's what they don't tell you.

The Hidden Costs

1. After-Hours Rates

What they say: "24/7 support included" What they mean: "24/7 support at 2x the rate"

Real cost: $150/hr × 2 = $300/hr after hours

How to avoid: - Define "after hours" in the contract - Cap after-hours charges - Require approval before after-hours work

2. Travel Charges

What they say: "On-site support available" What they mean: "On-site support at $150/hr + travel"

Real cost: $150/hr + $0.85/km + parking + tolls

How to avoid: - Define travel radius - Cap travel charges - Require approval for on-site visits

3. Minimum Call-Outs

What they say: "Flexible support" What they mean: "2-hour minimum for every call"

Real cost: $300 minimum for a 15-minute fix

How to avoid: - Negotiate shorter minimums - Cap call-out charges - Require approval for minimum call-outs

4. Project Work

What they say: "Project services included" What they mean: "Project services at $200/hr"

Real cost: $200/hr × 100 hours = $20,000

How to avoid: - Define project vs BAU clearly - Get project rates in writing - Require approval for project work

5. Software Licensing

What they say: "We handle licensing" What they mean: "We mark up licensing 20-40%"

Real cost: $100/user × 1.3 markup = $130/user

How to avoid: - Buy licensing directly - Get transparent pricing - Compare with direct licensing costs

6. Hardware Markup

What they say: "We procure hardware" What they mean: "We mark up hardware 15-30%"

Real cost: $1,000 server × 1.25 markup = $1,250

How to avoid: - Buy hardware directly - Get transparent pricing - Compare with market rates

7. Training Charges

What they say: "Training available" What they mean: "Training at $1,500/day"

Real cost: $1,500/day × 5 days = $7,500

How to avoid: - Negotiate training into contract - Use free online resources - Train internally

8. Documentation Fees

What they say: "We document everything" What they mean: "Documentation at $150/hr"

Real cost: $150/hr × 20 hours = $3,000

How to avoid: - Require documentation as part of service - Define documentation requirements - No extra charges for documentation

9. Escalation Fees

What they say: "Escalation support" What they mean: "Escalation at 1.5x the rate"

Real cost: $150/hr × 1.5 = $225/hr for escalations

How to avoid: - Define escalation procedures - Cap escalation charges - Require approval for escalations

10. Termination Fees

What they say: "Flexible contracts" What they mean: "6-month termination notice + fees"

Real cost: 6 months × $20,000 = $120,000 to leave

How to avoid: - Negotiate shorter termination periods - Cap termination fees - Define exit terms upfront

The Real Cost Calculator

Example: 200-person company

Item Advertised Real Cost
Monthly retainer $20,000 $20,000
After-hours support Included $5,000
Travel charges Included $2,000
Project work $200/hr $8,000
Software licensing Included $3,000
Hardware markup Included $1,500
Training $1,500/day $3,000
Documentation Included $1,000
Total $20,000 $43,500

That's 117% more than advertised.

How to Protect Yourself

Before Signing

  1. Get all-inclusive pricing — No hidden fees
  2. Define everything in writing — Scope, rates, terms
  3. Cap additional charges — Set limits
  4. Require approval — For all extra work
  5. Get references — Talk to current clients

During the Contract

  1. Track all charges — Monitor every invoice
  2. Question everything — Don't accept vague charges
  3. Document approvals — Get written approval
  4. Review regularly — Monthly cost analysis
  5. Negotiate adjustments — Don't accept price increases

If You're Overpaying

  1. Audit the contract — Find the hidden costs
  2. Negotiate better terms — Use as leverage
  3. Consider alternatives — In-house, other MSPs
  4. Get legal advice — If they won't negotiate
  5. Plan your exit — Know your termination rights

The Bottom Line

MSPs make money from hidden costs. The sticker price is just the beginning.

Key hidden costs: 1. After-hours rates 2. Travel charges 3. Minimum call-outs 4. Project work 5. Software licensing 6. Hardware markup 7. Training fees 8. Documentation fees 9. Escalation fees 10. Termination fees

How to protect yourself: 1. Get all-inclusive pricing 2. Define everything in writing 3. Cap additional charges 4. Require approval for extra work 5. Monitor every invoice

Use our MSP Cost Calculator to see the real cost of your MSP, or check the Salary Arbitrage Calculator to see how much the MSP pockets from your labour.


This analysis is based on industry surveys and real-world examples. Your experience may vary.

Frequently Asked Questions

What are the hidden costs of using an MSP?
Hidden costs include scope creep charges, after-hours surcharges, minimum call-out fees, travel charges, project overruns, and the opportunity cost of poor service. See our MSP Cost Calculator.
How can I avoid MSP hidden fees?
Review your contract using our MSP Contract Checklist, negotiate fixed pricing for common scenarios, and demand transparent invoicing. Our MSP Contract Red Flags guide covers common fee traps.

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