The Reseller Shift to Managed Services: Where to Start and Why It Matters
Resellers are feeling the pressure: escalating cybersecurity demands, tighter customer budgets, and increasingly commoditized product sales. Managed services provide a path forward to offer recurring revenue, stronger customer retention, and a more scalable business model.
From Project-Based Revenue to Predictable Growth
Traditional VARs rely on one-time hardware and software sales, which expose them to market volatility, long sales cycles, and price competition. Managed services shift the model to recurring monthly or annual revenue, delivering more predictable growth and often better margins.
Instead of chasing projects, resellers can focus on delivering continuous value. Margins are typically stronger, and services like managed detection and response (MDR) meet real security needs that most SMBs can't handle alone.
And the need is urgent:
- 61% of cyberattacks target small and midsize businesses specifically
- 82% of ransomware attacks hit companies with fewer than 1,000 employees
- The average cost of a breach for SMBs has climbed to $3.31 million
These numbers make it clear that offering managed security isn’t just a revenue opportunity, there’s a real business need.
Start with Endpoint Management
Endpoint management is the easiest entry point into managed services. Most customers already have endpoint tools such as WatchGuard Endpoint Security or Microsoft Defender in place but lack the time or expertise to manage them well. Offering this as a managed service is low-friction, high-impact, and easy to explain.
This approach also creates a natural pathway to MDR, which adds 24/7 monitoring and response on top of those existing tools. A per-user pricing model makes the service easier to package and easier for customers to budget.
Market Momentum Is on Your Side
Industry analysts are seeing strong growth in the MDR market, driven by several important trends:
- Rising adoption: According to Gartner, more than 600 vendors now claim to offer MDR services, signaling increasing customer demand for outsourced threat detection and response.
- Shift to exposure reduction: MDR providers are evolving beyond alerts and containment to help identify and reduce risk proactively, something customers increasingly expect.
- AI and automation: While automation is improving response speed and efficiency, businesses still prioritize MDR solutions that include expert-led investigation and remediation.
- Results-driven services: Buyers are moving away from tools and looking for services that deliver clear results ‒ such as fewer incidents, faster response, and measurable compliance improvements.
These trends highlight why MDR is becoming an essential part of the modern IT stack ‒ and why offering it through a managed service can help resellers remain relevant.
Focus on the Right Customers
Success starts by targeting customers who both need protection and are ready for a service-based approach. Start with:
- Small and midsize businesses that don’t have in-house security staff
- Verticals with compliance mandates (healthcare, finance, education, energy)
- Customers impacted by security incidents (or who know others who were)
- Existing clients already buying endpoint, firewall, or security tools
Smaller customers, often overlooked, also benefit from MDR when it’s positioned correctly ‒ as a simple, affordable way to get enterprise-grade protection.
If you're considering specialization, focusing on a single vertical or compliance-driven market can be a smart way to gain traction faster. It allows you to tailor your services, messaging, and pricing to the specific needs of that audience to make it easier to sell, deliver, and scale.
For example, healthcare providers often face strict compliance mandates (like HIPAA in the United States) and are frequent targets of ransomware. By building a service package that includes MDR, endpoint protection, and audit-ready reporting, you can speak directly to their pain points and position yourself as an expert in their space.
Here are a few ways focusing on one vertical could benefit your organization:
- Prospects quickly understand how your services apply to their needs.
- You stand out from generalist MSPs who take a one-size-fits-all approach.
- Once you’ve built a successful package for one client, it’s easy to replicate across similar organizations.
- With focused case studies, testimonials, and messaging, you can build credibility faster.
Start with one industry you already serve, like dental offices, legal firms, or schools, and build a playbook. From there, you can expand into adjacent markets with similar needs.
Skip the DIY SOC
Standing up your own 24/7 security operations center (SOC) sounds impressive, but it’s rarely realistic. Staffing alone is costly, and talent turnover makes long-term sustainability difficult.
A fully staffed SOC requires at least seven to 10 full-time employees to cover all shifts, including:
- Tier 1 and Tier 2 analysts
- Incident responders
- Security engineers
- A SOC manager
With average cybersecurity salaries ranging from U.S. $90,000 to $150,000 per year, staffing alone can quickly exceed U.S. $1 million annually, not including turnover, training, or management overhead.
That doesn’t even account for platform costs, integrations, alert tuning, compliance, and liability.
For most resellers, it’s not just expensive, it’s unsustainable. The smarter route is to partner with a proven MDR provider. This lets you launch quickly, avoid large capital outlays, and reduce the operational burden while still offering competitive, high-quality protection.
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