MSP KPI Definition
MSP MRR Gross Margin: Definition, Formula & Operating Standard
MRR gross margin measures how much managed-services recurring revenue remains after the direct labor and tools required to deliver that managed service. For example, ($100,000 monthly MRR − $30,000 matching monthly labor-and-tools COGS) ÷ $100,000 = 70%. In the MSP Fuel 30-40-30 model, managed-services labor and tools COGS should consume about 30% of MRR, leaving a 70% gross margin.
By MSP Fuel · Examples are illustrative.
MSP Fuel Operating Standard
≥ 70%
MSP Fuel taught operating standard for managed-services MRR gross margin.
Taught operating target, not an observed industry benchmark.
Formula
MRR Gross Margin = (MRR − MRR Labor & Tools COGS) ÷ MRR
Why it matters
It shows whether the managed-services delivery model is economically healthy before SG&A is considered.
Low MRR gross margin can make growth create more workload without creating enough profit.
It connects pricing, capacity, labor cost, tools cost, and service-delivery efficiency in one number.
It is one of the core numbers an integrator or operations leader should be able to explain.
Common mistakes
Leaving service-delivery labor out of COGS and overstating gross margin.
Classifying supported recurring products as low-margin ORR when the service team actually supports, audits, or reports on them.
Using markup language where gross margin is intended.
Looking only at companywide blended margin and missing weak managed-services economics.
What moves the number
Calculate labor-loaded service-delivery cost consistently.
Review tool cost and vendor sprawl inside the managed-services stack.
Use capacity planning before adding headcount.
Review pricing and scope when client-level gross margin is structurally weak.
Reduce avoidable reactive work through better proactive service delivery.
Related MSP Fuel resources
Your company plan sets the target, priority and timing for improving this number from your current position.