Three Ways an MSP Can Sell Phones, and Why Each One's a Bad Trade

Say a client asks you to handle their phones and you decide to say yes. Good instinct: voice is sticky, recurring revenue and it belongs in your account, not a competitor’s. The trouble starts at the next question: how?

The industry offers a smaller IT shop three traditional routes. We’ve watched partners try all three over the years, and each one asks you to give something up that you shouldn’t have to. Here they are, in plain terms.

How can an MSP offer phone service to clients?

An MSP has four routes: refer clients to a carrier for a fee, host its own PBX, buy into a white-label platform directly, or join a fully managed partnership. The first three each force a trade between keeping the customer and keeping it simple. Only the managed partnership lets the MSP keep the client and skip running a phone company.

Trap 1: the carrier referral

The easy one. You refer the client to a big carrier or a UCaaS brand, they sign the client up, and you collect a referral fee.

The catch is what you traded for that fee. It’s usually thin, often one-time, and in exchange the provider owns the billing, the relationship, and the customer. You’re out of the loop on the thing your client uses every single day.

And here’s the part that actually costs you: when their support fumbles a call, and at that scale, eventually it does, your client doesn’t blame the faceless carrier. They blame you, because you’re the one who sent them there. You took the reputational risk and gave away the asset. That’s the worst version of the trade: you keep the liability and hand over the revenue.

What it costs you: the customer and the recurring revenue, in exchange for a crumb.

Trap 2: do it yourself

The tempting one. Host your own PBX or stand up your own SIP, and on paper the margin looks fantastic. You’re the provider now. Why give anyone a cut?

Because the margin was never the hard part. The operation is. The moment you become the provider, you inherit a second business you didn’t mean to start: FCC Form 499 filings, STIR/SHAKEN caller-ID authentication and robocall mitigation, E911 and Kari’s Law compliance, telecom taxes in every jurisdiction your clients touch, and a 24/7 responsibility for infrastructure you now own. The 2 a.m. outage is yours. The carrier relationship is yours. The regulatory paperwork is yours.

We go deeper on this one in its own post, because it’s the trap that looks the most attractive and turns out to be the most expensive.

What it costs you: a compliance and support burden you were never staffed to carry.

Trap 3: direct white-label

The grown-up one. Buy into a white-label platform directly and you finally get both the brand and the real margin. This is a genuinely good model, for a shop big enough to run a telecom practice.

For everyone else, the gate is the problem. Direct white-label usually comes with an entry fee, monthly minimums, seat commitments, and full ownership of billing, tax, and a 24/7 support desk. For a two-person break/fix shop, the minimums alone are the wall. For a mid-size MSP, the wall is different but just as real: it’s a whole telecom operation to stand up and staff, sitting next to the managed-IT business that’s actually your margin. Either way you’re committing to run a phone company to get the phone-company economics.

What it costs you: upfront fees, minimums, and a support desk you now have to operate.

The pattern hiding in all three

Line the three up and the same shape appears every time. Each route makes you choose between keeping the customer and keeping it simple.

• The carrier referral keeps it simple but hands over the customer.
• The DIY build keeps the customer but destroys the simplicity.
• Direct white-label can give you both, but only after you’ve cleared a gate built for a bigger company.

That trade, customer or simplicity, pick one, is the real problem. It’s not a pricing problem or an effort problem. It’s structural. And once you see it as the actual obstacle, the useful question stops being “which of these three do I pick?” and becomes “is there a way to say yes that doesn’t force the trade at all?”

There is. It’s a fully-managed partnership: you bring the client and stay their trusted advisor, and someone who already runs the infrastructure, the support desk, the billing, the taxes, and the compliance does all of that under the hood, while the customer stays yours, in writing, and you keep half the profit every month. No entry fee. No minimums. No telephone company to run.

That’s the fourth way, and it exists specifically because the first three each fail a shop that would rather sell phones than run them.

Read next: Why the DIY route quietly makes you a telephone company.

Greg Steinig is the Vice President of Sales at Spark Services, a 3CX Titanium Partner and RingLogix Master Agent in Muskogee, Oklahoma. He has run hosted voice since 2014 and wrote the VoIP Profit Blueprint.