An MSP often provides its service offering under a service-level agreement, a contractual arrangement between the MSP and its customer that spells out the performance and quality metrics that will govern the relationship.
An SLA may be linked to an MSP's pricing formula. For example, an MSP may offer a range of SLAs to customers, with the customer paying a higher fee for higher levels of service in a tiered pricing structure.
Challenges of managed service providers
Regardless of pricing model, a key challenge for MSP business management is to set pricing low enough to entice customers to buy their services but high enough to maintain an adequate profit margin.