7 Steps to Switch Revenue Models from VAR to MSP

You’ve decided to add managed services to your portfolio, or even transform your entire business model from a traditional value-added reseller (VAR) to a managed service provider (MSP). This isn’t a small shift—it touches almost every part of your organization and naturally requires thoughtful preparation.

You’ll need to reconsider elements of your IT infrastructure, redefine how services are delivered and supported, and align your sales and marketing strategies with a recurring revenue model. The goal behind all of this remains clear: improve the lives of your clients, increase your ability to proactively serve and protect them, and ultimately enhance your organization’s long-term profitability and stability.

One of the first and most natural concerns in this transition is pricing. New plans must be simple to understand, easy to position, and compelling enough that customers can quickly see the value of moving to a managed model. They should also be structured to support predictable, recurring revenue for your business while remaining sustainable as you scale.

So how do we move from the classic, project-based and break/fix IT service provider revenue model to that of a proactive, contract-driven managed service provider? What changes are necessary to create pricing that reflects ongoing monitoring, backups, security, and support—while still staying competitive and profitable?

Critical Steps to Transition from VAR to MSP

Today, we look at preparatory steps to making the change to MSP pricing models as smooth as possible:

1. Examine Relationships

   It’s time to put that “V” in “Value Added Reseller” to good use. Your top clients trust and respect your work, or you wouldn’t be here today. Build upon this success and work with them early on, being open about the forthcoming pricing transition. Build up your relationships with key vendors that will enable these new managed services, and utilize their expertise and reputation while building your offerings. Existing clients and new clients alike will be looking for stability and confidence as your business evolves.
   
   

2. Decide on your MSP Pricing model

   Your service offering must match the needs of your current and future client base. An analysis of your costs to deliver services should help guide you in the best direction for choosing a specific pricing model. Also, carefully consider whether customers will be able to easily select a plan that will match their IT requirements.
   
   Per User: Billing clients based on the number of users/per month.
   Per Device: Billing based on the number of devices supported (servers, etc) per/month.
   Per Level: Billing clients based on the tier/bundle of services provided per month.
   
   

3. Prepare the Bundle

   You should have already identified what managed services are best to offer. If you haven’t, consider what common pain points you come across in your market. Common MSP offerings include Network Monitoring, Help Desk, Data Security, Data Storage, and more.
   
   Avoid the trap of trying to offer too much and appearing unfocused. Similarly, allowing customers to pick and choose what services they want from a long list may do more harm than good by opening up gaps in their coverage or your ability to manage them. Consider building packages that deliver maximum value to clients while adhering to best practice recommendations.
   
   

4. Reduce Redundancy and Costs

   Prior to a major change, it’s important to take the time to look closely at all of your services and how they are being delivered. Examine the cost of delivering each managed service and determine how you can minimize it. Are there manual procedures that could be automated? Do employees require new training, or are new employees required? What tools can help you administer services more seamlessly?
   
   Many businesses operate as something of a hybrid VAR-MSP as they add managed services. Do you have a transition timeline planned out that includes the elimination of redundant services?
   
   

5. Change from Within

   Making the transition to an MSP takes time because several departments must refocus on new goals and strategies. Your service desk, technical team, operations, and finance all need to align around a service-first, recurring revenue mindset. With the delivery of services and sale of service contracts being the priority, adjustments to both sales and marketing will be required—not just in messaging, but in how you position value, communicate risk reduction, and demonstrate ongoing outcomes to your clients.

   Here is where those carefully cultivated personal relationships with clients will work to your benefit. The trust you’ve built over years of projects and break/fix work becomes the foundation for conversations about proactive monitoring, managed backup, security, and cloud-based services. Lean into that trust by clearly explaining how a managed model will protect their business, simplify their IT, and provide more predictable costs.

   And if service hasn’t been your priority before, it is now. Service quality, response times, and measurable SLAs become central to your brand. Migrating customer services to the cloud is now the new normal, and clients will expect secure, compliant, and always-available access to their critical systems and data. Is your support staff ready to handle remote management, continuous monitoring, and escalations? Do your sales and marketing materials reflect this shift toward managed, cloud-enabled services—highlighting outcomes like reduced downtime, improved data protection, and faster recovery?

   Sales team members may be facing changes to their pitch and style of closing a sale, moving from one-time projects to ongoing service relationships. They’ll need to be comfortable discussing monthly recurring fees, contractual commitments, and bundled offerings such as managed backup, security, and remote support. This also means changes to how they are compensated, with a stronger emphasis on recurring revenue, retention, and upsell opportunities rather than one-off project wins. Aligning these internal changes early will make your transition to an MSP model more sustainable and far less disruptive in the long run.

6. Prepare Clients

   As services are added and consolidated, conversations with clients will naturally center on how your new managed model can best work for them—financially, operationally, and from a risk-reduction standpoint. Be prepared to clearly explain what changes, what stays the same, and how services such as remote monitoring, managed backup, and security will now be delivered and supported under your SLAs.

   There are certain steps that clients should take in advance when making the move from local IT services to remotely managed IT services. This may include cleaning up legacy systems, standardizing on supported hardware and software, confirming data retention and compliance requirements, and identifying which workloads are most critical to protect first. Helping clients inventory their environment and prioritize systems not only smooths the migration but also sets realistic expectations for timelines and outcomes.

   Building up your relationships with migration assistance is in the MSP’s best interest. Position yourself as a partner who will guide them through the transition with a clear plan: discovery, design, pilot, phased rollout, and review. Offer structured onboarding that includes documented procedures, user communication, and training where appropriate. You may even want to offer existing customers a free introductory period or a discounted migration package to get them on board, reduce perceived risk, and demonstrate early wins such as improved backup reliability or faster recovery.

   Despite all efforts, there may be a few client hold-outs who are stubborn to change anything at all, preferring ad-hoc support and project-based work. In such cases, you will need to determine if keeping the client is in your interests or a drawback—especially if their reluctance to adopt standardized, managed services increases your operational risk, consumes disproportionate resources, or undermines your ability to deliver on your MSP commitments. Sometimes, the best long-term decision is to gracefully transition these clients out or limit the scope of engagement so you can focus your energy on customers who align with your managed services model.

7. Commit to the Change

   When clients see a partner going through change, they are looking for continuity in their services, proactive communication, and a steady hand. They will be looking for SLAs (Service-Level Agreements) that reflect your new proactive commitments. But moving from a reactive model to a proactive model is also going to require education for both your team and your clients.
   
   While some new services may be rolled out individually, bold, confident decisions will be required when it comes to initiating a new pricing model. Once you’ve prepared, entering the pool slowly may cause a lot more discomfort than diving in.

Change can be painful if unplanned. Precautionary steps can make a huge impact on a smooth transition to offering your existing clients new services and opening yourself up to a new market. Pricing is always a sensitive subject, which means your relationship and clear communication with clients are all the more important as models change. Follow the seven preparative steps we’ve laid out to give your organization the best prospects for a smooth pricing model transition.

For those considering Backup as a Service, NovaBACKUP Managed Backup gives you a platform for predictable, recurring revenue. Not sure what to offer? Look at our blog post, “5 Reasons to Offer Backup as a Managed Service".