Why UK MSPs Should Stop Chasing Hardware Margin and Start Selling Monthly Outcomes

If you run a small UK MSP and your revenue still depends on shifting boxes — PCs, servers, firewalls — the maths is turning against you. Typical hardware markup for a channel partner sits between 20 and 28 per cent, and that figure has been falling for years as customers compare prices online and vendors squeeze distribution. Meanwhile, Canalys forecasts that managed services revenue across the channel will grow 13 per cent in 2025, outpacing overall channel growth of 9 per cent. The gap between those two numbers tells you where the money is heading.

Dell APEX, HP Amplify, and Lenovo TruScale all now offer as-a-service routes specifically designed for partners who want to wrap hardware into monthly contracts rather than one-off invoices. Each programme takes a different approach — Dell leads with storage incentives, HP rewards portfolio breadth, and Lenovo lets you own the contract — but all three share the same underlying bet: that the channel's future is recurring revenue, not box-shifting. The question is no longer whether to pivot. It is whether you can afford not to, and which vendor programme fits the way your practice already works.

The Margin Trap

Small MSPs built on hardware resale face a structural problem. A server deal might land a £2,000 margin once every three years, but the same client paying £800 a month for a managed outcome — compute, storage, support, patching — generates £28,800 over that period. The one-off deal looks attractive on the day. The recurring contract builds a business worth buying.

Private equity investors looking at the UK channel in 2026 are explicit about what they want: recurring revenue, predictable cash flow, and low customer churn. Hardware-heavy resellers with lumpy quarterly numbers get lower valuations, longer due diligence, and tougher earn-out terms. If your exit strategy involves anything beyond winding down gracefully, the direction of travel is clear.

Vendor consolidation and product commoditisation are accelerating this. When a customer can buy the same Lenovo ThinkPad from six different resellers on the same distributor's portal, your margin evaporates. The only durable advantage is the service you wrap around the tin.

The numbers from PE research back this up. Firms evaluating UK channel acquisitions in 2026 routinely discount hardware-led businesses by 20 to 30 per cent compared to managed services peers at the same revenue level. The multiple gap is not subtle — it is the difference between a 4x and a 7x EBITDA valuation for businesses turning over £2 million to £5 million.

There is also a cash-flow problem that nobody talks about at vendor conferences. Hardware deals create feast-and-famine revenue patterns. You close a big refresh in March, coast through April, then scramble for pipeline in May. Your staff costs stay flat regardless. A subscription model smooths that curve and lets you plan hiring, tooling, and training around a number you can actually predict.

Dell APEX — The Referral and Resale Routes

Dell APEX bundles compute, storage, networking, and data protection into subscription contracts that customers pay for monthly or quarterly. For partners, there are two participation models: referral and resale.

Referral is the lower-friction route. You identify the opportunity, Dell handles the contract and billing, and you earn a referral fee plus ongoing services revenue for any management you layer on top. Resale — available to Titanium and Alliance partners — lets you own the billing relationship and set your own margin.

The incentive structure is worth understanding. Dell offers a 3x services tier revenue accelerator for partners selling Storage+ with services and storage-based APEX Subscriptions. Rebates run up to 20 per cent of committed contract value on storage and data protection, and up to 10 per cent on services. For a small MSP managing a handful of mid-market storage deployments, those rebates can shift the gross margin profile of the entire practice.

The catch: APEX works best when you already have a Dell-heavy installed base. If your clients are running HPE or Lenovo iron, the migration conversation is harder. And the resale model requires Titanium or Alliance tier status, which smaller partners may not hold. The referral route is more accessible but gives you less control over pricing and less direct client ownership.

HP Amplify — The Portfolio Play

HP Amplify takes a different approach. Rather than leading with infrastructure-as-a-service, HP wants partners selling across the full portfolio — print, PC, peripherals, workplace services — and rewarding breadth with higher compensation.

The SuperPower Booster programme, introduced in 2025, increases partner compensation for cross-portfolio sales. The logic is straightforward: a partner who sells a fleet of HP EliteBooks on a Device-as-a-Service contract, bundles HP Wolf Security, and adds managed print services generates far higher lifetime value than one who ships boxes and moves on.

HP drives 80 per cent of its revenue through the channel, so the alignment is real. The company has 150,000 business partners worldwide and is investing in AI-led tools to help partners identify upsell opportunities within existing accounts.

For a small UK MSP, Amplify is the strongest fit if your practice already touches end-user devices and print. The subscription wrapper here is Device-as-a-Service (DaaS) rather than infrastructure, which means shorter contract cycles — typically 24 to 36 months — and lower per-unit values, but higher volume and faster cash-flow recognition.

One practical consideration: DaaS contracts require you to manage device lifecycle — procurement, imaging, deployment, support, and end-of-life disposal. If you do not already have those processes documented, the operational overhead can eat into the margin gains. Get your device management house in order before signing up.

Lenovo TruScale — Owning the Contract

Lenovo TruScale is the broadest of the three. It covers everything from handheld devices through PCs to data centre and edge infrastructure, all under a single as-a-service brand. The headline benefit for partners: you own the contract end to end.

That distinction matters. With Dell APEX referral, Dell holds the billing. With TruScale, the partner holds the paper. You sell the client a managed service platform — consumption model, hybrid cloud, or private cloud — and Lenovo sits behind you as the equipment provider. The client sees your invoice, your SLA, your support number.

For MSPs who have spent years building trusted relationships with local businesses, this model preserves the thing that makes you valuable: you are the single point of contact. The hardware becomes a line item inside your monthly fee rather than a separate procurement event.

UK availability is live through authorised distributors including Misco, and the model supports both device-level DaaS and full infrastructure subscriptions. Lenovo does not publish standard partner rebate percentages in the same way Dell does, so expect to negotiate terms through your distributor rather than relying on a published rate card.

The trade-off with TruScale is complexity. Owning the contract means owning the risk. If a client defaults on payments, that is your problem, not Lenovo's. You need credit assessment processes, clear payment terms, and enough working capital to absorb a bad month. For partners with strong local reputations and long-standing client relationships, the risk is manageable. For those still building their book, it is worth thinking carefully about how much contract exposure you can carry.

The Commercial Maths

Here is where opinion pieces usually wave their hands and say recurring revenue is better. Let us put numbers to it instead.

A traditional hardware resale deal for a 25-seat office refresh — laptops, a server, switches, firewall — might generate £8,000 in margin on a £40,000 sale. That is a 20 per cent gross margin, collected once.

The same deployment wrapped as a 36-month managed outcome — hardware, patching, monitoring, helpdesk, quarterly reviews — might bill at £3,200 per month. Over three years, that is £115,200 in revenue. If your cost of delivery is 55 per cent (hardware lease, labour, tooling), your gross margin is £51,840.

The one-off deal gives you £8,000. The subscription deal gives you £51,840 over three years, with predictable monthly cash flow and a client who is far less likely to shop around at renewal because switching costs are high.

The trade-off is real: you need working capital to fund the first few months before margin accumulates, and you need operational maturity to deliver against a monthly SLA. But the gap between £8,000 and £51,840 explains why every PE firm in the channel is chasing recurring revenue businesses.

There is a secondary benefit that is easy to overlook: client retention. A hardware reseller sees their client once every three to five years at refresh time. A managed outcome provider talks to them every month. That regular contact builds trust, surfaces upsell opportunities, and makes competitive displacement far harder. The subscription model is not just better maths — it is better defence.

Five Signs You Are Ready to Pivot

Not every MSP should rush into subscriptions. If you are still building basic operational discipline — consistent ticketing, documented processes, reliable remote monitoring — the subscription model will expose those gaps rather than fix them.

Here is a quick readiness check. If you can say yes to at least four of these five, the pivot is worth planning:

First, you already deliver some form of monthly managed service, even if it is just break-fix on a retainer. Second, your PSA and RMM tooling is mature enough to track time, costs, and SLA compliance per client. Third, you have a clear picture of your cost of delivery per seat or per device. Fourth, at least one of your vendor relationships — Dell, HP, or Lenovo — already includes an as-a-service programme you could activate. Fifth, your clients trust you enough to accept a monthly invoice rather than a project quote.

If you score three or fewer, focus on the foundations first. The subscription pivot rewards operational rigour, not sales ambition.

Picking the Right Vendor Programme

The choice between Dell APEX, HP Amplify, and Lenovo TruScale depends on where your practice already sits. If your installed base is Dell storage and compute, APEX gives you the highest immediate incentives. If your strength is end-user devices and print, Amplify's DaaS and cross-portfolio rewards are the better fit. If you want to own the contract and present a single-brand managed service to your clients, TruScale gives you the cleanest commercial structure.

None of them is a magic wand. All three require you to rethink how you quote, how you bill, and how you measure success. Monthly recurring revenue is a lagging indicator — it takes 12 to 18 months of disciplined execution before the numbers start to feel comfortable. But once they do, you have built something that compounds rather than resets every quarter.

A blended approach is also worth considering. There is nothing stopping you from running Dell APEX for storage clients, HP Amplify DaaS for device-heavy accounts, and Lenovo TruScale for clients who want a single monthly bill covering everything. The operational overhead of managing three vendor programmes is real, but it gives you flexibility to match the right commercial model to each client's buying preferences.

The vendors are not doing this out of charity. They want predictable revenue too, and locking partners into subscription programmes increases their own forecasting accuracy. That alignment of incentives is what makes the subscription pivot more than a fad. When both sides of the table benefit from the same commercial structure, the model tends to stick.