MSP services cost breakdown: What to expect and how to budget

If you’re thinking about using a Managed Service Provider (MSP) to improve your use and management of your contingent labour needs, one of the first questions you probably have is: “How much is this going to cost us?” 

Here’s the good news—most MSP programs are supplier-funded, which means the provider is paid by the staffing suppliers, not directly by you. Some people worry that this just leads to inflated bill rates, but that’s not usually the case. During the contract negotiation or implementation process, the MSP and client typically agree on clear rate cards or markups, so pricing stays competitive and under control. 

And those “hidden fees” you might have heard about? They’re not really a thing—any potential costs, like implementation fees, are usually discussed and locked in during contract talks. So you’re not flying blind—you’ll know exactly what you're signing up for. 

How MSP pricing works: The core cost drivers   

MSP services aren’t one-size-fits-all, so pricing varies. But most providers structure costs around these key components:   

MSP fee  

The MSP fee covers the services your provider delivers—like managing your contingent workforce, ensuring compliance, streamlining onboarding, and providing workforce insights. Most of the time, this fee is supplier-funded. That said, it’s still smart to understand what you’re paying for, how the fee is structured (flat fee, percentage, etc.), and what kind of value you're getting in return. 

When you partner with a Managed Service Provider (MSP), one of the key cost components is the MSP fee—what it costs to have a team oversee and optimise your contingent workforce program. 

But the MSP fee isn’t just profit. It covers the full cost of delivering the service, including staff, tech, reporting, supplier management, audits, and compliance. Yes, there’s profit built in—but it’s only a portion. 

• Percentage of spend: The most common model. You’re charged a small percentage (usually 2–3.5%) of your total contingent workforce spend. This scales with your usage and gives the provider an incentive to run the program efficiently. Note: While you might hear “up to 5%,” that’s rare—fees that high can push suppliers away. 

• Flat monthly fee (management fee): Less common, but used in global programs or to fund specific services (like global headcount tracking). For example, a client might pay a fixed $250,000/year to cover specific tracking or reporting requirements across regions.   

• Tiered pricing: Not widely used. While it sounds flexible, it can create complexity in billing systems, VMS platforms, and supplier relationships—so most MSPs and clients avoid it.   

What to watch for: Some MSPs promote low MSP fees but quietly add markups elsewhere, so always request a detailed breakdown to understand what you’re really paying for.   

VMS fee  

Many MSPs use a Vendor Management System (VMS) to handle job requisitions, timesheets, invoicing, and reporting. The VMS fee might be included in the supplier markup or charged separately, depending on the model. Either way, this tech plays a big role in automating  your contingent workforce program. 

Most MSPs rely on a Vendor Management System (VMS) to streamline hiring, onboarding, and payment processes, so it’s important to understand how those tech costs are structured. 

• Software subscription pricing: This is the fee for accessing the VMS platform, which may be included in your MSP package or billed as a standalone charge.  c 

• Custom reporting & analytics: Some providers offer advanced dashboards and reporting tools for deeper workforce insights—but these often come at a premium.   

• Integration with your HR/accounting systems: Connecting the VMS to your internal systems can improve efficiency but may involve extra setup or support fees.   

A note on global pricing: It’s not one-size-fits-all 

If your workforce spans multiple countries, MSP pricing can get more complex—and it’s important to plan accordingly. 

• Labour costs, markups, and statutory requirements vary widely by country. 
  A 3% fee in the U.S. might not cover the cost of delivery in the UK, Germany, or Singapore. 

• Some countries require additional compliance checks, insurance, or payroll structures that affect pricing and timelines. 

• Global rate cards must be tailored by market—and managed with local insight to avoid overpaying or underpaying talent. 

Labour costs (The biggest expense)   

Labour is by far the largest piece of the puzzle—it’s what you’re actually paying workers for their time, skills, and output. Here’s what’s typically included: 

• Wages and salaries: Base pay depends on the role, experience level, and market. For example, a software developer in London will have a very different rate than a warehouse worker in Manchester. Understanding these nuances helps with benchmarking and cost control. 

• Benefits and payroll taxes: Even if contingent workers don’t get the same perks as full-timers, employers may still be on the hook for things like National Insurance, pensions, or other statutory contributions depending on location and contract type. 

• Overtime and bonuses: These can creep up fast. If overtime is consistently high, it could point to staffing gaps or inefficient scheduling—something your MSP should be flagging. 

Rate cards and markups 

Rate cards and supplier markups determine how much you’re actually paying for each role. Companies usually set these during MSP implementation—or they might ask the MSP to go out to bid (RFP) to suppliers to get better rates or fix issues like under-market pay that’s hurting fill rates. 

Whether your organisation sets the rates or the MSP handles it, the goal is the same: create a fair, competitive structure that keeps roles filled without overpaying. Your MSP should help you review and adjust rate cards regularly based on market trends and supplier performance. 

Why it matters:  MSP pricing can seem complex, but with the right structure and visibility, it often leads to significant cost savings and contingent workforce management improvements. A good provider will walk you through each component, benchmark your spend, and work with suppliers to make sure you're getting the best value—not just the lowest rate. A good MSP should regularly review these costs with you and offer insights to help you get the best value for your workforce investment. 

• Background checks & screenings: These services verify a worker’s identity, qualifications, and criminal history to ensure safety and credibility.  

• Tax and labour law compliance: Staying compliant with laws helps avoid costly fines, misclassification risks, or audits.   

• Insurance (workers’ comp, liability, etc.): Insurance coverage protects your business against workplace injuries, legal claims, or contractual disputes.  

Additional costs to look out for 

While many Managed Service Providers offer competitive headline rates, it’s important to understand the full scope of services included and where additional costs may apply. Being aware of these common add-ons upfront may help you plan your budget more accurately: 

• Implementation fees: These are one-time charges for configuring the system, aligning workflows, and integrating with your existing tools.   
• Early termination penalties: These are fees which apply if you end your agreement before the full contract term. They are usually discussed and negotiated upfront during the contract phase 

• Extra charges for custom reporting or support: Premium features like tailored dashboards or priority support may not be included in the base package.   

How to get the best value from an MSP 

Align MSP goals with business objectives 

• Start by ensuring your MSP understands what matters to you—cost savings, faster hiring, workforce flexibility, DE&I, or niche talent access. 

• Set clear KPIs and SLAs that measure performance and how the MSP supports your broader workforce strategy. 

Leverage technology and analytics

• Ensure your MSP uses a robust Vendor Management System (VMS) to track metrics like spend, time-to-fill, and compliance. 

• Use built-in dashboards and talent insights to guide planning, benchmark rates, and optimise supplier performance. 

Optimise costs without cutting corners

• Work with your MSP to control spend using rate benchmarks and supplier scorecards—but don’t focus only on bill rates. 

• Look at the full picture: quality of hire, speed, retention, and long-term cost efficiency. 

Drive strategic supplier management

• Let your MSP manage supplier performance and alignment with your goals (like diversity or speed). 

• Use a tiered supplier strategy to match the right vendors to the right roles, improving both value and outcomes. 

Expand the scope over time

• Start with contingent staffing, then expand to SOW management, IC compliance, Direct Sourcing, or Total Talent Management as needed.

• The more workforce channels your MSP manages, the more insight and cost efficiency it can deliver. 

Commit to regular business reviews

• Use Quarterly Business Reviews (QBRs) to track results, solve problems, and plan improvements. 

• Bring in finance, HR, procurement, and operations so everyone stays aligned and informed. 

Check references and case studies

Don’t just take their word for it—look for real-world results. For example, Airswift Resourcing's MSP solutions show how clients have cut costs and streamlined operations through tailored workforce strategies. 

Final decision-making checklist   

Before signing with an MSP, make sure you’ve asked the right questions to protect your budget and ensure a strong fit: 

Clarify internal goals

• How will you help me meet key objectives like cost savings, scalability, visibility, and compliance? 
• Can you help me assess my current contingent labour usage and highlight areas for improvement?
• How will your solution align with my broader HR, procurement, and business strategy?

Engage key stakeholders

• How do you typically involve stakeholders like HR, Procurement, Legal, IT, Finance, and business unit leaders during implementation? 
• Will you work with a designated project lead or executive sponsor on my side to ensure alignment? 
• How do you incorporate hiring manager feedback and address their pain points?

Define scope and service needs

• What worker types can you support — temps, independent contractors, and SOW consultants? 
• Can you cover all the regions and business functions relevant to my organisation? 
• What specific services do you provide, including VMS technology, talent curation, supplier management, and compliance oversight?

Build your business case

• Can you help me quantify the potential cost savings and ROI of engaging your MSP services? 
• How do you demonstrate improvements in risk reduction and compliance? 
• What tools or insights do you provide to help me showcase benefits to leadership, such as improved speed, quality, and visibility?

Evaluate your MSP provider's experience

• Do you have experience working in my industry or with similar clients? 
• Are you equipped to support multi-country or regional programs, if needed? 
• What does your current supplier network and technology stack look like? 
• Can you share relevant case studies or references from current or former clients?

Review technology compatibility

• Will your technology integrate with my existing systems, like HRIS or ERP? 
• Do you offer real-time analytics and reporting that I can use for decision-making? 
• How flexible is your platform — can it be customised to match my workflows and requirements?

Address compliance and risk

• How do you manage co-employment risks and worker classification issues? 
• What measures do you have in place for data privacy and cybersecurity? 
• How do you ensure legal and regulatory compliance across different operational regions?

Define supplier strategy

• Can you help me streamline or consolidate my current supplier base? 
• How do you measure and manage supplier performance across programs? 
• Will your approach support my organisation’s diversity, equity, and inclusion (DEI) goals?

Prepare for change management

• What is your change management approach for internal teams and external suppliers? 
• Will you provide communication support and training for hiring managers? 
• How do you handle change resistance and ensure continued executive support? 

Establish governance and performance metrics

• What KPIs and SLAs will we use to track success, such as time-to-fill, cost savings, or quality metrics? 
• How frequently will you conduct performance reviews with my team? 
• Will there be a formal governance structure to guide program oversight?

Support implementation

• Can you provide a clear implementation plan with timelines, milestones, and deliverables? 
• What support do you require from my team during implementation? 
• Will you test all integrations and workflows before we go live?

Drive long-term optimisation

• How do you monitor early performance and make adjustments? 
• Will you collect feedback from end users and stakeholders to improve the program? 
• How do you support long-term optimisation, innovation, and potential program expansion? 

MSP cost transparency: Making informed workforce decisions 

MSP pricing doesn’t have to be a black box. With a clear understanding of what’s included—MSP fees, VMS technology, labour costs, and potential add-ons—you’ll be equipped to make informed decisions that protect your budget and support your workforce goals. 

The right provider will offer transparency, market insights, and ongoing optimisation, not just a price tag. Whether running a local program or managing a global workforce, a well-structured MSP partnership can deliver significant value, cost control, and strategic workforce improvements. 

Contact us today to learn more about our MSP services.