Anyone can hang a shingle and call themselves a managed service provider, but not everyone plays by the same rules or is an ethical MSP. The fly-by-night operators—known as “man in the van” or “trunk slammers” who offer “cheap” solutions and empty promises—not only undermine trust in the industry but potentially harm clients who rely on MSPs to protect critical data and systems.
“MSPs are tired of having to compete with unethical, underqualified firms that overstate their abilities,” says Amy Babinchak, past president of the National Society of IT Service Providers (NSITSP), a professional association that provides pathways to establishing high standards and ethics in the industry.
Competing against unethical MSPs makes the already hard job of customer acquisition and retention even harder. On top of that, there is increased scrutiny on MSPs, particularly as cybersecurity threats grow, and state and federal regulations loom.
One way to level the playing field and gain a competitive advantage is to make your ethical stance part of the customer conversation. But what does it really mean to run an ethical MSP? Here’s how some top MSP business owners set ethical standards.
What Does “Ethical” MSP Mean?
Mike Bazar, who merged his MSP with Atlanta-based Vector Choice and is co-owner and CRO of the business, says there are two ways of viewing “ethical” practices.
“The first, and easiest,” he says, “is the typical definition of ‘ethical.’ Do we hold ourselves to moral and good standards in how we operate? Do we bill correctly, quote correctly, deal with clients and employees fairly?”
A second and more complex component is how you convey what you’re delivering—and the value, Bazar says. “I often run into well-meaning MSPs that sell very basic cyber solutions to clients,” he notes. “The odds of those clients being hacked, shut down, fined, or otherwise have something bad happen to the business from hackers or the government [noncompliance with laws] are much higher.” While he doesn’t believe all of those MSPs are intentionally unethical, “their indifference to creating a complete and robust offering could be considered negligent.”
Vector Choice has established its own core set of ethics that all staff members must understand and adhere to. “In addition,” says Bazar, “we have a zero-tolerance policy to people being unethical. We understand that mistakes will happen, but if people, clients, or employees are treated in an unethical manner, we won’t tolerate that.”
Related: Read how Mike Bazar grew his former MSP to 7 figures
Transparency In Your Services
If an MSP withholds vital information from a client, nickels-and-dimes with hidden fees, or fails to deliver on promised services, it erodes trust and gives all MSPs a bad name. Ethical MSPs are transparent in three key areas:
1. Deliver What You Promise
Mark Adair, president and CEO of Owasso, Oklahoma-based Adair Technology, says even well-meaning MSPs can easily drift into unethical practices, particularly when recurring revenue is involved. “If you’re taking someone’s money, are you delivering on the value that you agreed upon?” he asks. Adair recommends proactive communication and clear checkpoints to ensure clients understand what they’re paying for—and whether it’s being delivered.
2. The Importance Of “No Surprise Billing”
Bazar says transparency around pricing is critical to client trust. “I often go into sales meetings with prospective buyers where the biggest complaint is, ‘We don’t know what the next bill is going to be.’” That’s because their current MSP sold them a “cheap” solution and then tacked on fees for various services. “The client feels taken advantage of, and that’s what we want to avoid,” Bazar says.
Bazar’s ethical practice includes getting pre-approval for any additional charges. “And typically, the only thing we are charging for [are] projects that are out of scope of labor on a package that we clearly explain doesn’t include certain types of labor. Our goal is no surprises on the billing because there isn’t a faster way to make a client feel like you are taking advantage than to mess with their checking account.”
3. Allow Clients To Own And Control Their Data
Neal Juern, CEO of San Antonio, Texas-based 7tech, has observed that some unethical MSPs hold a client’s data hostage when they want to leave by charging a hefty offboarding fee, plus a project fee to transfer crucial information. Other unethical MSPs selectively withhold data throughout the entire relationship to extract unnecessary fees and make customers overly reliant on the MSP, adds Tommy Thornton, CEO of National City, California-based Automates.
Related: From $270K To $2M In Three Years: Tommy Thornton Reveals His Growth Blueprint For MSPs
Responsible Sales Practices
Sales are important, but trying to sell anything for a quick buck, rather than what the client needs, can tarnish an MSP’s reputation. Tim Conard, president at TS Conard, Inc. Technology Solutions in St. Joseph, Missouri, says unethical sales tactics are unfortunately not rare. “I’ve been in events where the salesperson openly talked about, ‘I’ll tell them anything. I’ll lie my [butt] off to get them to sign an agreement.’”
In contrast, ethical MSPs focus on building long-term relationships. Conard advocates for treating every client interaction—whether they’re signing up or leaving—as a partnership.
Thornton says that means recommendations must always be in the client’s best interest. “It’s very easy for us to give products that [clients] don’t necessarily need, replacing hard drives that weren’t bad or selling upgrades to memory that weren’t needed. That’s not as prevalent anymore, but the lack of transparency is still an issue.”
Regulation Or Regular Ol’ Integrity?
So is regulation the answer to ensure MSPs maintain a high standard of service? It depends on whom you ask. Adair is among those who feel it’s inevitable and probably necessary. “It’s too easy to say you’re something you’re not,” he says.
Thornton feels MSPs “should be licensed as IT technicians,” just like roofers and insurance agents. Juern agrees, adding that the sheer growth in MSP startups makes it harder to ensure consistent quality across the board. Others, like Conard, worry that regulation could become overly burdensome, particularly for small businesses. He stresses the importance of self-regulation and peer audits over government intervention.
The MSP In The Mirror
As the cybersecurity landscape becomes more fraught with risk and clients grow savvier, operating with a clear ethical framework is a necessity. And while regulation may be on the horizon, the best MSPs already have ethical practices in place. After all, says Conard, “You have to be able to look yourself in the mirror and know you’ve done right by your clients.”
