The MSP contract is designed to outlast the people who signed it.
Managed service providers run your helpdesk, your endpoints, your backups and often your licensing. The contract is usually three years, auto-renews, and is priced per user or per device. Nobody reads it after year one, which is exactly the point.
Whether you are signing a new MSP or renewing one, here is what to check.
1. Per-user pricing: count the users, then count the definition
Per-user pricing looks simple until you read how "user" is defined. Shared mailboxes, contractors, service accounts and former employees with a lingering licence can all count.
What to look for:
- The definition of a billable user in the contract, not in the proposal
- Whether the count is fixed at signature or trued up monthly, and in which direction
- Minimum user commitments that stay flat when your headcount drops
What to ask: "Billable users are defined as active named employees. The count is trued up monthly in both directions, with no minimum above 80 percent of the initial count."
2. What is in the base fee and what is billed on top
The base fee covers "support". Projects, after-hours work, onboarding new sites, hardware installs and anything the MSP calls "professional services" are usually billed separately, at rates set in a schedule you did not negotiate.
What to ask: "List every service that is billed outside the base fee, with its rate, in the contract. Include a monthly bank of 10 project hours in the base fee."
3. SLAs with credits, not SLAs with apologies
Most MSP contracts include response and resolution targets. Fewer include what happens when they are missed. An SLA without a credit is a description, not a commitment.
What to look for:
- Response versus resolution targets, by priority level
- Whether targets apply 24/7 or business hours only
- Service credits: how much, how they are claimed, and whether they are automatic
4. Hardware and licensing markup
Many MSPs resell hardware and Microsoft or Google licensing. The convenience is real. So is the margin, often 10 to 25 percent above what you would pay direct or through a distributor.
What to ask: "We may procure hardware and licences directly or through a distributor of our choice. The MSP supports them under the same terms. Any resold item is priced with a disclosed markup, capped at 8 percent."
5. Auto-renewal and the notice window
The classic structure: 36-month term, auto-renews for 12 months, 90 days' notice required. If you miss the window by a day, you have bought another year.
What to ask: "Auto-renewal is removed. If renewal is retained, notice is 30 days and the MSP must send a written reminder 60 days before the deadline."
6. The exit: documentation, credentials and data
The most expensive part of an MSP contract is leaving it. If the MSP holds your admin credentials, your documentation and your backup encryption keys, offboarding happens on their terms and their timeline.
What to look for:
- Who owns admin accounts for Microsoft 365, Google Workspace, firewalls and backups
- Whether network and system documentation is yours, and kept current
- Transition assistance: how many hours, at what rate, for how long after termination
7. Price escalation
A 5 percent annual increase clause compounds to 16 percent over three years, before any change in scope. Many contracts also allow pass-through of vendor increases on top.
What to ask: "Fees are fixed for the initial term. Any increase at renewal is capped at CPI or 3 percent, whichever is lower, with 90 days' written notice."
The bottom line
An MSP contract is a long relationship priced on a per-user number. The number is rarely the problem. The definitions, the exclusions, the missing credits and the exit are where it costs you. Get those right and the per-user rate takes care of itself.
TermLift reads an MSP proposal for every one of these clauses, shows what each is worth, and drafts the email that asks for the version you want.