Break/Fix

Definition

Break/fix is the reactive IT support model: the client calls when something is broken, you fix it, and you bill for the time and parts – hourly, per incident, or against a prepaid block of hours. There's no monitoring, no maintenance obligation, and no recurring fee; the relationship is active only while something is wrong.

Why it matters to an MSP

Break/fix is how most MSPs start, because it's how small businesses are used to buying IT, and the model to leave behind fast. The economics are inverted: you earn more when the client's systems fail more and nothing when they run well, so the incentive is to fix the symptom and wait for the next call rather than remove the cause. Clients sense that and haggle every invoice. Revenue arrives in lumps you can't forecast, so you can't hire ahead of demand, and a lender or acquirer prices the business on MRR and discounts hourly revenue to almost nothing.

Managed services flip the incentive. A fixed monthly fee per user or device means you profit when tickets go down, so you're paid to patch, monitor, and standardize. The numbers favor the switch: hourly rates of $125–$250 are typical in US markets, but a flat-fee agreement at $100–$250 per user with an RMM handling routine work commonly runs 50–60% gross margin, against the 30–40% typical of time-and-materials. Some hourly clients will refuse a monthly fee: set a conversion deadline, hold a $500-plus monthly minimum, and let the rest go. Aim for at least 50% recurring revenue in the first year, and treat every break/fix invoice as a sales conversation about the agreement that would have prevented it. Fee structures that replace hourly billing are compared in MSP pricing models.

Related terms: MRR, Per-Seat Pricing, All-You-Can-Eat Pricing, MSP