Financial Metrics for IT Services
IT services companies, managed service providers (MSPs), and technology support businesses
Common Challenges
- Underpricing managed services contracts
- High tool stack costs (RMM, PSA, security)
- Break-fix vs. managed services revenue mix
- Technician training and certification costs
- Client concentration risk on large contracts
- Scaling support without proportionally scaling headcount
Typical Cost Structure
Typical Revenue
$300K-$2M
Team Size
3-15 technicians
Key Metrics for IT Services
Essential financial metrics with benchmarks specific to it services
Gross Profit Margin for IT Services
How much money you keep from each sale after paying direct costs
Current Ratio for IT Services
How much money you have available to pay bills due in the next 30-90 days
Days Sales Outstanding (DSO) for IT Services
How long it takes customers to pay you after you invoice them
Net Profit Margin for IT Services
How much money you actually keep after paying all expenses
Burn Rate for IT Services
How much cash you're spending each month to run your business
Cash Flow for IT Services
The movement of money in and out of your business over a specific period
Overhead Costs for IT Services
The ongoing expenses of running your business that aren't tied to delivering a specific product or service
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