Let’s talk tech costs.

You’re a typical IT Service Provider—your business revolves around managed service contracts: MRR, project revenue, break-fix work, and product resale. When it comes to the products you resell—new laptops, backup services, M365, and so on—you have a pretty good handle on costs.

But your tech labor? That’s a different story.

For many MSPs, all tech wages sit on one big, undifferentiated line in the financials. You can’t break it down by line of business, so it becomes one of those unfathomable mysteries that keep you up at night, like why Anora won Best Picture over  Dune: Part Two.

The Good News

If you’re like most MSPs, you’re already hounding your techs to track their time accurately in your PSA (let’s say ConnectWise). And while they may not love it, they’re mostly doing it.

That means you already have the data you need to start allocating your tech labor costs across your different lines of business. And voilà—welcome to the ranks of the more sophisticated MSPs, the ones sitting around coffee shops discussing “gross margin on projects” like they’re in some kind of Accounting Fight Club.

But all jokes aside, once you start tracking gross profit by line of business, you shift from “managing by feel” to “managing by data.” And that’s a game-changer.

The Next Stage: Hunger

Once you see your numbers clearly, you won’t want to stop there. You’ll start craving deeper insights—financial reporting by tech, by agreement, by project, by hourly billing.

Good news: you’ve already laid the groundwork. Allocating tech labor costs through your ticketing system is the first step toward mind-blowingly useful financial data.

I know, I know—some of you are saying, But I already get agreement and customer profitability reports from my PSA!

Great! But ask yourself:

• Are those reports based on actual time, or just estimates?
• Can you reconcile them with your QuickBooks financials so that all labor in the reports adds up exactly to what’s on your income statement?

If the answer is no, then you’re like most MSPs—you never quite got to the point where you fully trust your monthly financials. And without that trust, making critical decisions—who gets a raise, which customers need a price increase—feels like a shot in the dark.

What’s Next?

Next month, we’ll tackle another head-scratcher: Why do my monthly financial statements swing as wildly as my Tesla stock?

Stay tuned.