The Ultimate Guide to Service Tier Pricing Models for MSPs

Nearly every physical security integrator exploring a managed services model needs a clear way to package and price those services. That’s where service tier pricing models come into play. By structuring your offerings into distinct plans—from entry-level coverage to all-inclusive premium solutions—you’ll attract a broader range of customers and lock in sustainable monthly revenue. In fact, tiered pricing is the most common approach to Software as a Service (SaaS) today, with an average of 3.5 tiers offered by many providers in 2025 [1]. Good news: this approach can work just as well for physical security integrators becoming Managed Service Providers (MSPs), helping you move from one-time system installations to predictable, recurring income.

Below, you’ll find an ultimate guide to crafting, delivering, and refining your service tiers. We’ll walk through the basics, share a recommended three-tier model, and show you how to align it with your clients’ needs. You’ll see why so many security integrators are offering multi-layered subscription services—and how you can do the same.

Understand the big picture

Transitioning from a traditional project-based integrator (often known as a Systems Integrator, or SI) to an MSP requires a different way of thinking about pricing. Rather than delivering a single-installation project, you’re focusing on long-term partnerships. This is especially important in the physical security realm, where ongoing device monitoring, camera health checks, and proactive response are critical.

Why pivot to MSP pricing?

According to the Security Business Magazine State of the Industry Report 2023, about 30% of the security industry has less than half of its revenue in recurring contracts, while only 28% receive over 75% of their revenue from recurring costs. That leaves a large gap for improvement. By adopting service tier pricing models, you’ll:

• Gain consistent monthly or annual revenue.
• Provide clarity to customers about what they’re getting.
• Encourage upgrades or expansions as your clients’ needs grow.
• Build stronger client relationships through proactive support.

Huge advantage: by moving to an MSP approach, you shift from reactive break-fix work or one-off installations to a stable, proactive service model. You’ll identify camera outages, software glitches, or network anomalies and fix them before your client even calls you.

The SaaS lesson for security integrators

Tiered pricing has long helped software companies target different user segments with different features. Security integrators can follow the same logic: a small business might only need basic device monitoring, while an enterprise may require advanced analytics, faster response times, and more thorough on-site support. Offering more than one tier allows you to serve both segments cost-effectively. As a result, you can steadily build your managed services revenue base.

Explore core tier types

Before we dive into a recommended model, let’s look at some common ways that services (particularly in SaaS) are segmented into tiers. Understanding these model types helps clarify which structure best suits physical security managed services.

Feature-based tiers

Feature-based tiers revolve around which features or functionalities a customer unlocks at each level. For instance, your Basic plan might include only remote device monitoring, while higher tiers include advanced analytics (like license plate recognition, or LPR) and AI-based video insights. This approach fits integrators who want to monetize specialized features, such as facial recognition or advanced intrusion detection.

Usage-based tiers

Usage-based tiers charge clients according to how much they use a service. In the security domain, that could translate to charging for the number of camera feeds, hours of remote monitoring, or the total storage for event footage. This structure instantly scales as your client’s demands grow, letting smaller customers pay less, while larger ones pay more. It’s popular because it aligns cost with value—customers see exactly why they’re paying more as they use more resources.

User-based tiers

In user-based tiers, the price scales with the number of user accounts, operators, or managers accessing your platform. If your offering includes a user portal for security staff, for example, you might charge $X per user seat, with volume discounts as seats go up. It’s straightforward and helps you match the cost to how broadly the service is rolled out.

Hybrid approaches

In reality, many integrators blend these tier models. You might charge per device (usage-based) but also tie in advanced features or stricter SLAs as you move up levels (feature-based). The key is to keep your structure understandable. Too much complexity can confuse the client and undermine trust.

Build your Basic, Pro, Premium

A three-tier structure tends to be the sweet spot for many MSPs, as it balances choice and simplicity. In practice, you’d label these tiers something like Basic, Pro, and Premium. Each tier should clarify what’s offered, what SLA you provide, and how you handle on-site visits.

Below is a recommended structure built from five essential components:

1. Service type (infrastructure and devices you’ll manage, like cameras, networks, or analytics)
2. Remote response SLA (how quickly you respond remotely, e.g., next business day versus 24/7)
3. On-site response SLA (how quickly technicians arrive on-site if remote fixes fail)
4. Pricing per device or user (the monthly or annual cost structure)
5. Ad-hoc work (the cost of labor or support outside the agreement)

Here’s a quick table illustrating how these elements could stack across three sample tiers:

Tier	Service type scope	Remote response SLA	On-site response SLA	Pricing model	Ad-hoc work
Basic	Essential infrastructure, cameras with minimal analytics	Next-business-day remote fix	On-request at standard rate	Set fee per device/month	Standard hourly rate for extra tasks
Pro	Infrastructure plus camera analytics (LPR, object detection)	4-hour remote response	Monthly scheduled on-site check	Per device or user	Discounted hourly rate, optional bundles
Premium	Full coverage (servers, advanced analytics, cloud backups)	24/7 remote monitoring	Priority same-day response	Bundled user/device tiers	Includes ad-hoc work up to usage limits

Basic tier in detail

• Service type: Typically covers fundamental hardware (cameras, servers, basic storage).
• Remote response SLA: You promise a next-day response to any alert or ticket.
• On-site response SLA: You roll a truck only after the customer requests it and are paid at your normal rate.
• Pricing per device/user: You may charge a fixed per-camera or per-server fee.
• Ad-hoc work: Anything outside the routine is billed hourly, possibly with a minimum charge.

This tier is ideal if your clients want a lower-cost option or only need simple monitoring. The margin might be smaller, but it opens your door to those just starting with managed security services.

Pro tier in detail

• Service type: Encompasses more advanced features, typically analytics like license plate recognition (LPR) or object detection.
• Remote response SLA: A shorter window, such as within four hours after an alert.
• On-site response SLA: You commit to a monthly site visit to check system performance.
• Pricing per device/user: Could shift to a slight discount per camera or user seat as volume rises, plus a monthly plan fee.
• Ad-hoc work: Major tasks or expansions outside the contract might be billed at a reduced rate.

Pro typically hits the sweet spot for mid-sized clients who want to ensure valuable features—like analytics—and a predictable schedule for system check-ups.

Premium tier in detail

• Service type: Every major feature you offer, from advanced analytics (facial recognition, AI anomaly detection) to robust cloud backups.
• Remote response SLA: 24/7 coverage. You’ll likely monitor in real time or respond as soon as any alert triggers.
• On-site response SLA: Priority support, meaning same-day or in some cases, within a few hours.
• Pricing per device/user: Often structured in tier bundles: e.g., up to 50 cameras or 100 user seats, up to 100 cameras or 200 user seats, etc.
• Ad-hoc work: Some Premium plans waive additional labor fees for expansions, or at least include a certain allowance of free hours per month.

Premium is for enterprise-level organizations or those who can’t afford downtime. By pairing fast responses with advanced coverage, you become a strategic partner, not just a vendor.

Implement your strategy

Designing service tier pricing models isn’t just about listing features. You’ll want a systematic approach that resonates with your market and aligns with the realities of security operations.

1. Study your customer base

Kick off by assessing your existing and prospective customers. What are their major pain points? Some may be more worried about data compliance, while others might need advanced analytics for high-traffic locations. A 2025 analysis by CloudZero highlights that tiered pricing is most effective when each plan addresses a distinct customer segment. This ensures more accurate alignment between price, features, and the perceived value.

2. Decide your tier structure

Using the Basic, Pro, Premium framework is a great start—but you can adapt it if needed. Maybe you’ll add a fourth “Enterprise” level for extremely large clients, or a “Startup” plan with usage-based fees. Keep in mind that multiple-tier pricing sometimes works better for large integrators dealing with a wide variety of clients. Smaller or niche integrators often find that three tiers suffice.

Good news: it’s easier than it sounds to fine-tune your tier labels. Just make sure each level is easy to remember, clearly stated on your website, and not overloaded with complexities.

3. Validate price points

Once you’ve mapped out your tiers, gather feedback on the price levels. Conduct informal or formal surveys. You might say, “This plan costs $XX per camera per month, does that feel fair?” If you underprice, you risk unsustainable margins and overwork. If you overprice, you might scare away valuable clients. The goal is to land in a profitable range that your market can accept.

Using data from your peers or from existing research is a plus. If you discover that typical camera monitoring pricing is around $5–$10 per camera per month, use that as a baseline. Over time, you can adjust as you see how your customers respond.

4. Choose your tools

For billing and monitoring, you’ll need reliable software. Many MSPs tap into specialized Quote-to-Cash platforms or billing solutions that accommodate tiered pricing structures. For physical security integrators, that might also include integrated remote monitoring tools that automatically send alerts to both you and the client.

Managing these tiers manually can become cumbersome. Tools like Chargebee or custom MSP billing dashboards help you automate monthly invoices, track usage, and upgrade or downgrade clients without a flurry of manual paperwork. A robust system ensures fewer mistakes and fosters a smoother experience for everyone.

5. Demonstrate clarity and value

When you present your tiered plans, lead with clarity. Customers should instantly see the differences between Basic, Pro, and Premium. A common mistake is to vaguely list features with no explanation of how they actually help. Instead, highlight how your advanced analytics can reduce security breaches or how a faster on-site SLA prevents prolonged downtime.

A 2025 study from Stripe found that tiered pricing can combat a major friction point: the inability of customers to see real value. By breaking your services into levels, you encourage them to pick the tier that best matches their budget and operational risk tolerance.

6. Communicate regularly

Customers appreciate ongoing updates. Let them know exactly what’s included in your tiers via email campaigns, one-on-one calls, or short videos. If they’re on a Basic plan but keep facing advanced threats, gently suggest an upgrade to Pro or Premium. Show them how the expanded features could solve their pain points.

You can also provide easy upsell paths. For instance, if a client needs more cameras covered, let them slide from Basic to Pro mid-contract. The more frictionless you make it, the happier your customers will be.

Optimize and avoid pitfalls

No pricing model is perfect from the moment you launch it. You’ll want to keep iterating and experimenting. Below are some pitfalls, plus ideas on how to avoid them.

1. Overcomplicating your tiers

Some integrators build too many plans with a laundry list of features in each. That confusion deters leads from signing up at all. Start with a maximum of three to five tiers. Keep your marketing pages short and sweet, and highlight only the essential differences. If you do need more layers, consider grouping them under broader headings so your target audience isn’t overwhelmed.

2. Ignoring real usage patterns

Even if you prefer user counts, your clients might be more comfortable with device-based pricing. If you see that 80% of your target market only cares about camera coverage, for instance, that might be your primary metric. The best practice is to track how often different services or features are actually used; adapt your tiers to match real demand.

3. Underestimating support costs

For physical security, on-site visits and 24/7 remote monitoring can add up quickly. Premium customers will expect you to jump the moment an alert appears. Make sure your price for that tier covers labor, equipment, travel, spares, and overhead. If not, your margins can vanish.

One approach is to review your average ticket resolution time and multiply it by labor costs. Then add extra for overhead and potential hardware replacements. Build these expenses into your monthly rate so you’re never operating at a loss.

4. Being unprepared for change

Technology evolves. You might start offering new camera analytics or transition to an AI-based intrusion detection system next year. That means your tiers should be somewhat flexible. A best practice is to schedule a review every six months—especially in the early days of your MSP model—and adjust or refine pricing tiers as needed.

5. Failing to communicate plan benefits

Physical security can be highly technical. If you only list bullet points like “Data encryption” or “LPR camera coverage,” many customers might not see the full advantage. Spell it out: “LPR coverage can help identify unauthorized vehicles approaching your facility. Our advanced analytics trigger real-time interventions, which could decrease theft incidents by 30%.” Data points and real outcomes help your clients see why each plan matters.

Consider a quick image graph

If you’re explaining your three-tier design in a slide deck or on your website, a simple bar chart or layered image can be powerful. For example, illustrate how Basic covers core security tasks, Pro adds advanced analytics, and Premium tops it off with priority 24/7 response. Visual aids help customers compare at a glance.

Recap and action steps

Building recurring revenue by selling managed services can catapult your security integration business forward. With service tier pricing models, you deliver exactly what each client needs—at a price that reflects the value they receive.

1. Identify the core services you’ll package at each level.
2. Use tier names (e.g., Basic, Pro, Premium) that resonate with your market.
3. Decide on a clear pricing model per tier, based on usage, devices, or user count.
4. Communicate how each tier addresses real-world security challenges.
5. Keep refining. Gather feedback, review profitability, and adjust your plans to evolve with new technology or shifting demands.

You’ll find that these simple steps ultimately drive stronger relationships, better contract renewals, and a reputation as a trusted safeguard. You’ve got this.

Frequently asked questions (FAQs)

1. How many tiers should I create?

Most MSPs find that three tiers (like Basic, Pro, Premium) work best because they’re easy for customers to compare. That said, if you have highly diverse clients—ranging from small businesses to massive enterprises—you might want four or more. Start small, see how customers respond, and expand your offerings if necessary.

2. What if customers get confused by multiple tiers?

Confusion often arises from overly complex feature lists. Keep your explanations simple and emphasize the differences that matter most, such as response times or which advanced analytics are included. A short table or visual graph can be a lifesaver here.

3. Is device-based or user-based pricing better?

It depends on your clients and services. Many security integrators favor device-based pricing (e.g., per camera), since that’s a straightforward metric. If your solution also includes a user portal—like for managers or security staff—then user-based pricing might be logical. Try to align your primary pricing driver with the way your clients actually measure value.

4. Should I offer discounts for larger plans?

Offering volume discounts can be a smart way to entice bigger clients. For instance, reduce the per-camera (or per-user) fee as they add more hardware. A flexible, usage-aligned model can encourage gradual upgrades and boost overall revenue.

5. How do I handle out-of-scope work?

Even with the best planning, clients will sometimes ask for extra tasks that don’t fall under their current plan. Decide in advance how you’ll charge for ad-hoc work. In Basic, that might be a standard hourly rate. In Premium, you could include a certain number of free hours. Be transparent so there are no surprises.

6. How do I know if my pricing is too high or too low?

Keep an eye on your close rate. If most prospects say “too expensive,” you may need to adjust or better communicate the value. If you’re gaining many new clients but losing money due to service costs, you might be underpricing. A balanced approach is to gather feedback, do a cost analysis, and regularly reevaluate your tiers.

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Service tier pricing models can help ready your business for a future where proactive, managed services rise above simple installations. The path from security integrator to MSP is a big step, but defining and packaging your recurring services with clear tiers can get you there. By combining the right SLA terms, device coverage, advanced analytics, and on-site visit policies, you’ll serve your clients’ security needs while forging a stable, profitable revenue stream. Go for it, and watch your recurring revenue grow.

References

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