Service Multiple of Wages
Service revenue earned for every dollar paid in service delivery wages.
Formula
Service revenue ÷ Delivery team loaded wages
Why Track It
It ties pricing and labor productivity into one number the owner can act on. A falling multiple means wages are rising faster than prices, or the team is doing work nobody is paying for.
How It Is Measured
Divide service revenue for the period (managed services, projects and hourly work, excluding resale) by the fully loaded wages of the delivery team: technicians, engineers, service managers and project staff, including payroll taxes and benefits. Source: accounting for revenue, payroll for wages.
Constraints
Depends on classifying who is a delivery employee consistently. Outsourced labor paid as a vendor cost can raise the multiple without better economics.
Measurement Note
Excendio, citing Service Leadership, puts best-in-class MSPs at a service multiple of wages of 2.9x and the bottom quartile at about 1.9x. There is no published band between the two, so read the trend against those two markers.
Referenced In
Related KPIs
- Adjusted EBITDA MarginEarnings before interest, taxes, depreciation and amortization, adjusted for one-time and owner-specific items, as a percentage of revenue.
- Effective Hourly RateThe service revenue actually earned for each hour of technician labor delivered, across agreements, projects and hourly work.
- Service Revenue per EmployeeAnnual service revenue divided by total headcount, a single measure of pricing, productivity and staffing combined.
Glossary and Answers
More in People
How productive, stable and engaged the team is. These numbers show whether the MSP has the right headcount and whether it is burning out the people who deliver the service.
- Employee Net Promoter Score (eNPS)Operations Manager
- Employee Turnover RateOperations Manager
- Service Revenue per EmployeeOwner
- Technician Billable UtilizationService Manager