Clarity in client relationships isn’t just good advice—it’s essential for survival when delivering IT services. As your MSP grows, the handshake agreements and informal understandings that might have worked with your first few clients become increasingly risky. Adding service level agreements (SLAs) as a standard part of your operational procedures will remove this risk and add a new level of trust and accountability between you and your clients.
What is a service level agreement (SLA)?
A service level agreement is a documented contract between a service provider and a client that specifies the standards, responsibilities, and expectations regarding the services delivered. It defines the metrics for assessing successful service delivery and the remedies available for failing to meet standards. These metrics can detail everything from uptime and response times to escalation procedures.
Though an SLA is a set of metrics and thresholds, it is also a promise to clients and your protection against scope creep and unreasonable expectations. The outlined details set the stage for collaboration, issue resolution, and ongoing improvement in a format that is easy for a client to understand.
For example, let’s say your client's email server goes down. Without an SLA, the client might expect immediate resolution regardless of when the issue occurs. With a properly structured SLA, both parties know what to expect, such as a 30-minute response time and a 4-hour resolution window during business hours, with different parameters for after-hours support.
Beyond the contract terms, though, a good SLA is dynamic and evolving as client needs change and offerings expand. As the scope of services changes, such as adding new software integrations, migrating clients to the cloud, or introducing advanced security monitoring, your SLA needs to reflect the current state of your offerings and responsibilities.
Why SLAs matter for MSPs
Service level agreements go beyond contractual obligations and help MSPs in measurable, technical, and operational ways:
1. Setting clear expectations
When new clients come on board, their understanding of "good service" might differ. One client might consider a 2-hour response time to a critical issue exemplary, while another might expect a resolution within that timeframe. SLAs eliminate this ambiguity by explicitly defining what constitutes acceptable service. They also reduce misunderstandings by outlining each party’s responsibilities, minimizing the risk of conflict.
2. Building trust
By making measurable commitments and regularly reporting on your performance against them, clients will see the value you’re delivering. This accountability will also help deepen their trust in your MSP, as they will see it as reliable, reactive, and consistent.
3. Protect revenue streams
Clients who understand what they’re paying for are less likely to dispute invoices and renew or expand service contracts. MSPs can point towards agreed-upon deliverables instead of defaulting to offering free labor or compensation to disgruntled clients.
4. Protecting your team
Without defined service boundaries, your technical team becomes vulnerable to client demands that can quickly lead to burnout. A client may feel empowered to call at midnight expecting an immediate resolution for a non-critical issue impacting a team’s work-life balance. Well-crafted SLAs create necessary guardrails that protect your team's well-being and your ability to provide sustainable service.
5. Differentiating your offering
In a market where many MSPs offer similar capabilities, an SLA demonstrating reliable, high-touch support can set you apart from competitors relying on vague service promises.
Key components of an effective SLA
An SLA should be detailed enough to cover critical aspects of service delivery yet flexible enough to adapt to changing client needs. Though every MSP may tailor their SLA template for their specific procedures and offerings, core elements often include:
1. Service definition and scope
This section outlines what services are covered and what is out of scope. For example:
- Network monitoring and management
- Server administration and maintenance
- End-user support and helpdesk services
- Security monitoring and incident response
- Backup and disaster recovery management
- Software updates and patch management
- Hardware support and replacement
Each service area should include specific details about what delivering that service encompasses and what might require additional fees. For instance, if you provide security monitoring, does that include remediation of detected threats or just notifications?
2. Responsibilities and roles
Outline who’s responsible for which tasks both within the MSP teams and client-side responsibilities. For instance, your MSP team may be responsible for proactive monitoring and patching while the client handles on-site hardware. Defining these boundaries reduces confusion, especially during crises.
3. Performance metrics
This section translates service promises into measurable metrics. These metrics should be realistic, measurable, and directly tied to your client’s business goals. Standard performance metrics for MSPs include:
- Uptime percentage: The percentage of time the system is operational
- Mean Time to Respond (MTTR): How quickly you respond to a ticket or alert
- Mean Time to Repair/Resolve (MTTR): The average time it takes to fix an issue
Get specific within metrics when possible. For example, when stating expectations for the MSP team response times, list out different standards and definitions for different situations like:
- Critical (service outage affecting all users): 15–30 minutes
- High (service degradation affecting multiple users): 1–2 hours
- Medium (issue affecting individual user productivity): 4–8 hours
- Low (minor inconvenience, feature request): 24–48 hours
4. Issue escalation procedures
Define the process for handling issues that aren't resolved within expected timeframes. Questions to address in the SLA include:
- Who gets contacted when standard procedures aren't sufficient?
- First-level support: Help desk or NOC (Network Operations Center)
- Second-level support: More specialized technical staff
- Third-level or vendor support: Escalation to vendor or specialized senior engineers
- What triggers automatic escalation?
- How does after-hours escalation differ from business hours?
5. Remediation
State what happens if the MSP team does not meet SLA targets, like missing a critical response time objective. Remedies might include service credits or the option to terminate the contract if breaches occur repeatedly. Some SLAs contain exclusions for factors outside the team’s control. Though stipulations differ, being upfront about these terms shows accountability and helps build client trust.
Steps to creating a comprehensive SLA
1. Baseline your current performance
Before making promises, understand what you can currently deliver. Analyze your ticket data for the past 6–12 months and discover your baseline for KPIs like your average response time for issue types and current uptime for managed services. This starting point helps you avoid promising what you can't deliver while identifying areas for operational improvement. Implement tracking and measuring tools for any gaps in data. Once you have this information, you can determine specific deliverables
2. State clear objectives
Before drafting your SLA, identify the business goals you aim to support. For example, do you want to minimize downtime for mission-critical applications or reduce the volume of support tickets? Aligning your objectives with the client’s core needs sets the tone for the rest of the SLA.
3. Make clear definitions
Technical ambiguity creates SLA disputes. Clearly define terms, such as what constitutes an "incident" vs. a "service request,” how severity levels are determined, and what starts and stops the response time clock.
4. Identify KPIs
Decide on the metrics most relevant to those objectives. If the client’s primary concern is a quick response to issues, focus on response times. If the client works in biotech or e-commerce, uptime percentages become the core KPI. Add specific metrics to each trackable data point, such as timeframes, percentages, rates, and quantity to each service offering.
5. Outline roles and responsibilities
Define who’s responsible for each facet of the service. This includes roles within your MSP and the client’s organization. Identify key players like technical leads while outlining expectations around task completion, like client infrastructure standards. Consider including a RACI (Responsible, Accountable, Consulted, Informed) matrix for clarity.
6. Establish communication protocols
Specify how and when you’ll communicate with clients. Transparent processes keep all parties informed and reduce the risk of misaligned expectations. This can include:
- Regular reporting: Weekly or monthly reports on SLA adherence
- Ticket updates: Automated emails whenever status changes or if an engineer adds a note
- Emergency alerts: Immediate phone calls or SMS for high-priority incidents
7. Document escalation and remediation processes
Clients often feel frazzled and rushed when downtime or critical issues occur. A well-defined escalation path ensures problems move swiftly through the correct channels, reassuring clients. Include response-time targets for each escalation level to maintain accountability.
8. Review and approve
After drafting your SLA, test it against various scenarios—like an imaginary ransomware attack—to ensure it includes all necessary details. Then, review it with key stakeholders, like technical experts and client representatives, to confirm that the SLA is feasible and aligns with business requirements.
How to track and measure your SLA performance
It is essential to measure and track deliverables against the SLA. Accurate reporting keeps the MSP on target to meet the outlined service deliverables or identify areas that have not been consistently met. You can update the SLA template based on the collected data to reflect more accurate definitions and standards.
Monitoring key metrics
Beyond expected response and resolution times, consider tracking:
- First call resolution rate: Percentage of issues resolved on first contact
- Mean time between failures (MTBF): Average time between recurring issues
- Customer effort score: How much work clients must do to get issues resolved
- SLA compliance percentage: Overall adherence to SLA commitments
Tools like network monitoring software, ticketing systems, or RMM (Remote Monitoring and Management) platforms can automatically track these metrics. Automating data collection reduces manual effort and improves accuracy and transparency.
Leverage PSA and RMM tools
Most modern Professional Services Automation (PSA) and RMM platforms include SLA tracking capabilities. Configure these tools to automatically flag approaching SLA breaches and generate SLA compliance reports.
Set up PSA or RMM dashboards for your team and clients to view performance metrics. Proactive alerts, triggered when thresholds are close to being breached, help you address issues before they escalate into SLA violations.
Common SLA challenges and how to overcome them
Though a well-written SLA can significantly enhance the success of your MSP, common challenges can also impact its efficacy. Understanding these challenges can help you minimize their impact.
1. Scope creep
You might want to promise to deliver all client requests, but over-commitment sets you up for frequent SLA breaches. Additionally, clients may ask for more work or faster delivery rates, without realizing how it impacts the overall project. Many teams say yes to keep clients pleased, but scope creep can spread resources too thin and yield poor results.
Solution: Clearly define what is covered and what is out of scope in the SLA. Maintain a formal SLA change management process and regularly review client expectations against contractual commitments.
2. Unrealistic targets
MSP sales teams may be inclined to offer aggressive response times or near-perfect uptime to secure a new contract. However, setting unattainable metrics burdens your team and can quickly erode client trust when you fail to meet targets. Often, teams overlook internal resources and technical limitations in the rush to please stakeholders.
Solution: Base your SLA metrics on realistic capacity planning and technical constraints. Involve your engineering or delivery teams in the negotiation process to ensure proposed targets reflect actual capabilities and reduce the risk of breaching service commitments.
3. Client-specific constraints
Some clients operate in highly regulated industries, imposing unique requirements or restrictions on service delivery. They may demand specialized compliance measures, immediate escalation paths, or enhanced security protocols that differ from standard offerings. If the SLA does not address these constraints, you risk violating regulations or disappointing the client.
Solution: Before finalizing the SLA, invest in understanding each client’s industry regulations, constraints, and growth plans. Incorporate tailored clauses and processes, such as HIPAA compliance protocols or accelerated ticket triaging, to meet specialized expectations without compromising your core service standards.
4. Inconsistent reporting
When reporting formats or frequencies change sporadically, clients may lose confidence in the data’s reliability. If metrics aren't tracked and communicated consistently, internal teams can easily overlook critical performance indicators, eventually creating blind spots in operations and client satisfaction.
Solution: Adopt standardized templates and reporting schedules and integrate automated data collection wherever possible. Doing so ensures a steady flow of transparent, consistent reports that help you and your clients make informed decisions.
Customizing SLAs for different clients
Using an SLA template saves your team a lot of time. Since SLAs are dynamic, you’ll need to tweak and refine them for each client—or even for different engagements with the same client. Catering the terms for unique considerations will create a more accurate SLA, setting the service delivery up for better success.
Industry-specific considerations
Different industries have unique requirements that should influence your SLA structure. When addressing demographics and clients that work in the following sectors, make sure to include address specific considerations:
- Healthcare clients: HIPAA compliance requirements, patient data information handling, enhanced security measures
- Financial services: Security and compliance requirements, transaction processing uptime, and customs compliance reporting
- Manufacturing: Production system availability, client shift-based support needs, and scheduled maintenance windows
Size-based customization
Beyond industry requirements, client size significantly impacts appropriate SLA structure. A 10-person accounting firm has vastly different needs than a 500-person manufacturing company. Customize the SLA effectively by considering:
- Small businesses: May prioritize cost-effectiveness over rapid response
- Mid-sized organizations: Often need balanced performance and cost
- Enterprise clients: May require dedicated resources and custom SLA metrics
Considering a client’s unique requirements allows you to create agreements that reflect the business relationship rather than generic commitments that satisfy neither party.
Benefits of well-crafted SLAs for MSPs
When expectations are met and set, all stakeholders on both MSP and client sides will receive tangible and measurable benefits.
Financial Benefits
- Reduced revenue leakage: Clearly defined service boundaries prevent scope creep.
- Premium pricing opportunity: Enhanced SLAs that outline tiered work can command higher monthly fees.
- Lower operational costs: Prioritization based on SLA commitments improves resource allocation, helping bottleneck and overextending.
Operational Benefits
- Improved resource planning: Known response commitments enable better staffing models, scheduling, new project kickoffs, and overlaps.
- Clearer prioritization: SLA-based ticket routing and handling improves efficiency.
- Documented success: Performance against SLAs provides quantifiable evidence of value, which encourages clients to return to the same MSP for more work and recommend that company to peers.
Client relationship benefits
- Reduced friction: Clear expectations minimize disagreements.
- Increased retention: Consistently met SLAs to build loyalty with clients.
- Expansion opportunities: Demonstrated SLA compliance creates trust for additional services.
Legal considerations in SLAs
While SLAs focus primarily on performance metrics and responsibilities, they are also legally binding documents that can significantly influence your level of risk exposure. Whether you’re navigating data protection laws, vendor liability issues, or breach resolution protocols, it’s crucial to address the legal aspects upfront to prevent disputes later. Below are key legal considerations every MSP should consider when drafting or reviewing an SLA:
1. Liability and indemnity clauses
Carefully outline how to handle liabilities should either party suffer damages. While you might not be able to eliminate all risks, clearly stating your liability limits is a critical safeguard against lawsuits.
2. Force majeure
Many SLAs include a force majeure clause covering events beyond your control, like natural disasters or widespread cyberattacks that prevent you from delivering services. This protects both parties if the unexpected happens.
3. Termination conditions
Specify conditions under which either party can terminate the SLA. This could be repeated SLA breaches by the provider or non-payment by the client. Clear termination clauses reduce the likelihood of protracted legal battles.
A well-constructed SLA isn’t just a contract—it’s a cornerstone of your relationship with your clients, guiding daily operations, communication, and long-term success. For MSPs, SLAs protect you by clarifying responsibilities and setting achievable performance targets. At the same time, they push you to consistently improve service delivery and stay aligned with clients’ evolving business goals.
By proactively managing, measuring, and reviewing your SLA performance, you justify your service delivery and position your business as a trusted partner in your clients’ success. When everyone knows the expectations, metrics, and escalation paths, the outcome is a more efficient, transparent, and ultimately more profitable partnership.
If you’d like to use trusted and accurate scope quotes from ScopeStack within your SLA, then please get in touch today.
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