A Managed Service Agreement (MSA) is a legally binding contract that outlines the terms and conditions for providing management services to a client.

 It serves as a detailed agreement between a Managed Services Provider (MSP) and a client, defining the scope of services, responsibilities, service levels, payment structure, and other relevant aspects of the service relationship. 

The MSA also establishes the effective date, duration, and renewal terms, ensuring both parties understand their obligations and expectations, thereby reducing risks and promoting a successful partnership.

A managed service agreement template typically includes the following key elements:

• Period of Service and Automatic Renewal: This section outlines the initial term of the agreement, its effective date, and whether it will automatically renew under certain conditions.
• Limitation of Liability: This clause defines the maximum liability of the MSP and client in case of breaches, defects, or damages.
• Modification or Termination of Agreement: This section outlines the procedures for modifying or terminating the agreement, including the requirement for reasonable efforts and notification within specific days of receipt.
• Terms of Service: Details the specific services to be provided, including remote work, similar services, third parties, and additional services.
• Confidentiality and Non-Disclosure: This clause addresses the protection of confidential information shared between the parties.
• Coverage Summary: Provides an overview of the services included, with references to monthly fees, cost considerations, and the fixed model for pricing.

Other Terms and Conditions: This may include provisions such as force majeure clauses (important in events like the pandemic), attorney fees, addendum terms, disclaimer, and dispute resolution.

The primary purpose of a management services agreement is to establish a clear and legally binding contract for the provision of management services. 

It outlines the responsibilities, duties, and authorities of the Managed Services Provider (MSP) and the client. 

Key objectives of an MSA include:

• Defining the scope of services: Clearly specify the services to be provided, including service levels, performance metrics, and response times, especially in areas like remote work.
• Protecting the interests of both parties: Establishing terms and conditions that safeguard the rights and interests of both the MSP and the client, including third parties.
• Providing a legal basis for actions: Serving as a reference point for resolving disputes or misunderstandings related to the provision of services, such as when dealing with a problem client.
• Ensuring accountability: Outlining the performance metrics and accountability measures to hold the MSP responsible for their actions.
• Facilitating effective communication: Providing formal channels for communication, especially around submission, receipt, and dispute resolution.

While both managed service agreements (MSAs) and service agreements outline the terms and conditions for providing services, there are key distinctions. 

MSAs typically involve ongoing, comprehensive services, often with a focus on technology or IT support. They often include elements like service level agreements (SLAs), performance metrics, and remote monitoring. 

In contrast, service agreements can cover a wider range of services, from one-time projects to recurring tasks. They may not have the same level of detail or ongoing management aspects as MSAs.

An MSC/MSA is a valuable tool for businesses seeking to outsource services while ensuring a successful and mutually beneficial partnership.

Here is why an MSC/MSA is essential, based on the benefits outlined in the image:

• Clearly outlines service expectations: An MSA defines the specific services to be provided, ensuring there's no ambiguity about what the client can expect.
• Facilitates long-term partnerships: By establishing a solid foundation for the relationship, an MSA can help foster a long-lasting partnership between the client and MSP.
• Defines clear roles and responsibilities: The MSA outlines each party's duties, ensuring accountability and minimizing misunderstandings.
• Improves service quality: By setting clear expectations and service level agreements (SLAs), an MSA can help drive higher-quality service delivery.
• Establishes service levels and metrics: SLAs and performance metrics provide a way to measure the MSP's performance and ensure they are meeting the client's needs.

To avoid the hassles of creating an MSA from scratch, download the free managed service agreement template from Zomentum.

Revising your MSP managed services agreement should be a regular practice to ensure it remains aligned with your evolving business needs and industry best practices. 

While there's no strict timeline, consider these factors when determining the frequency of revisions:

• Changes in business requirements: If your business undergoes significant changes, such as expanding, downsizing, or adopting new technologies, your MSA may need to be updated to reflect these shifts.
• Industry developments: Keep an eye on industry trends and regulatory changes that could impact your service relationship.
• Performance reviews: Regular performance reviews with your MSP can identify areas for improvement or changes that may require adjustments to the MSA.
• Contractual terms: Review the terms of your existing MSA to determine if there are any clauses that need to be updated or renegotiated.

A good rule of thumb is to review your MSA annually and make revisions as needed. However, more frequent reviews may be necessary depending on the dynamic nature of your business and the services being provided.

Pricing a managed service contract (MSC) requires a careful evaluation of several factors. 

First, assess the scope of services to be provided, including the complexity of tasks, the frequency of service delivery, and the level of support required. 

Next, consider the resources needed to deliver the services, such as personnel, technology, and infrastructure.

Calculate the direct costs associated with these resources, including salaries, equipment, and overhead expenses. 

Once you have determined the direct costs, add a profit margin to cover your operating expenses and generate revenue. 

It is also important to consider factors like competition, market trends, and the value you bring to the client.