Flamingo Blog.

MSP vendors are squeezing margins with annual price increases while making it prohibitively expensive to switch platforms. We break down the real switching costs (up to $325K for large MSPs), reveal the vendor lock-in tactics keeping you trapped, and explore why forward-thinking MSPs are turning to open source alternatives to regain control of their infrastructure costs.

For years, the SaaS business model has dominated the IT and service industries. Its promise of scalability, ease of deployment, and recurring revenue streams made it the gold standard. However, as AI accelerates the commoditization of software, pure SaaS is no longer enough to stay competitive. Businesses and service providers are shifting toward **hybrid models** — the combination of software and high-touch services.

The Managed Service Provider (MSP) business model is often structured around a per-seat pricing approach. This setup bundles commercial software and IT services into cohesive packages that are sold to clients on a subscription basis, typically priced per user. While it provides simplicity and predictability for clients, this model positions MSPs less as service providers and more as software resellers — a distinction with significant financial implications.