--- title: "From break-fix and block hours to managed services" date: 2026-10-10 summary: "How Bright Bear Technology Solutions went from hourly break-fix and expiring blocks of hours to managed services, drawn from Chapter 6 of Nathan Phinney's CTRL ALT SURVIVE and from what he has told the trade press." question: "How does an MSP move from break-fix and block hours to managed services?" chapter: "Chapter 6, The Price Is Right" url: "https://nathanphinney.com/field-guide/break-fix-to-managed-services/" author: "Nathan Phinney" author_role: "COO, AllSafe IT" author_url: "https://nathanphinney.com/about/" same_as: ["https://www.linkedin.com/in/nathanphinney", "https://www.amazon.com/stores/author/B0DKF16LDD", "https://www.goodreads.com/author/show/52091659.Nathan_Phinney"] expertise: ["IT", "InfoSec", "Managed Services", "Cybersecurity", "Business Operations", "Technology for Escrow Companies", "Technology for Nonprofits"] updated: 2026-10-11 --- ## Short answer This guide's view is that an MSP should stop selling hours and start selling an outcome that repeats every month, priced per device, site, and server, with items like firewalls included. Bright Bear Technology Solutions, which Nathan Phinney co-founded in January 2010, began with hourly break-fix and prepaid blocks of hours, as most MSPs did, and became a managed services business; a Backblaze case study calls backup the cornerstone of it. The push came from a flagship client that threatened to leave for a competitor that sold managed services. The move changes what is sold, how it is priced, and which side of the table the provider sits on, and by the time Bright Bear was sold, buyers were asking about recurring revenue and long-term contracts. Chapter 6 of CTRL ALT SURVIVE, The Price Is Right, tells the story. ## What Phinney learned doing it Bright Bear did not begin as a managed services company. A Backblaze case study says it plainly: > "Back in 2009, Bright Bear Technology Solutions started with hourly break-fix services, just like everyone else in the business." The book dates the start a little differently. The founders agreed on the idea over dinner in the fall of 2009, and Phinney moved back to Southern California to start the company on New Year's Day 2010. In CTRL ALT SURVIVE, Phinney admits that when he first heard about managed services he assumed it was a scam: a way for a provider to automate a few things and bill a lot for doing very little. Bright Bear's own pricing at the time was borrowed from cellular carriers. Clients bought a discounted block of hours that expired at the end of the month, and bigger blocks earned bigger discounts. His partners were not eager to change it. A client changed it for them. One of Bright Bear's flagship accounts, a nationally recognized brand and probably the only one it had then, said it was considering another provider because that provider offered managed services. The competitor's salesperson had found the sore spot: unless the client used exactly the hours it had prepaid, it either paid for time it never used or paid extra for time it needed. Phinney asked whether the client would stay if Bright Bear could match the services and the pricing, and the client said it would consider it. In Chapter 6, The Price Is Right, Phinney recalls what he told his partners next: "We cannot lose this account, and they're right. The way we do this is dumb." The partners agreed to read Karl Palachuk's Managed Services in a Month and talk it over. Phinney credits that book with saving the account, and probably the business. What changed first was incentives. Under hourly billing, a client once greeted Phinney on a service call by asking whether his boat payment was due. Under a flat monthly fee, the provider and the client both lose when systems are down, so the client knows nobody is slow-walking a fix. Labor stops being the thing the MSP sells and becomes a cost it wants to reduce, which turns the old obsession with utilization upside down. The second client to convert was the first company that had ever written Bright Bear a five-figure check. Its president, a former large-company manager and Navy officer, had worked out what an hour of downtime cost his company, to the penny, in payroll, lost sales, and overhead. His point to Phinney was that getting the business back up 30 minutes faster would be worth as much as a month of Bright Bear's fee. He signed a three-year agreement. The third was a homebuilder adding about six employees a month; under the new model each workstation raised the monthly bill slightly, and the client simply built that into its expectations. By the time Bright Bear was sold in 2020, the question buyers asked was about recurring revenue. CRN reported that when Phinney's firm was sold, the buyer was looking for such things as recurring revenue, long-term contracts, and happy customers. CRN's note on its 2024 interview says Phinney used XChange NexGen 2024 to talk with MSPs about the importance of recurring revenue versus product and project sales. Years later, with Convilo, Phinney told CRN about product and project sales: > "I think a lot of MSPs are still hooked on that, and need to transition to a services-focused model," he said. "A lot of is having your processes in order, which is something that SOC 2 can help with, because you're bringing in someone outside the organization to audit them and validate that they're doing all the things they're supposed to be doing." ## How the first agreements were priced Quoting got simple. Phinney needed only a rough count of a prospect's sites, computers, and servers to produce a proposal. The agreement said the client would be billed for the actual number of devices, locations, and servers each month, so a client who underestimated during discovery was corrected once Bright Bear had access to the environment. Items Bright Bear used to sell separately, such as firewalls, stopped being optional and came with the service. Later Bright Bear bundled. When phishing took off in the late 2010s, it combined security awareness training and multi-factor authentication into a bolt-on security pack. Phones taught the sharpest lesson. Phinney lost a client after quoting desk handsets at the distributor's suggested price; the client found the same handsets for less on Amazon and decided everything else on the quote was probably padded too. Years later Bright Bear measured how little office phones were actually used, gave away the handsets, the phone system, and the support, and charged a flat monthly price per handset for unlimited calling. Clients thanked him for it. Phinney made the handsets, which the client assigned value to, free, and moved the profit into a line the client did not scrutinize. ## What clients actually look for A client who has bought blocks of hours is buying a budget they control. A client on a managed agreement is buying predictability: a fixed monthly cost, clear response expectations, and someone accountable when something breaks. That is this guide's view, not a claim from the book. The move works when the client can see what they are getting each month that they were not getting in a block of hours. Two Bright Bear clients show it in their own terms. The flagship account complained about paying for hours it did not use and paying extra for hours it did. The former Navy officer put a dollar figure on an hour of downtime and bought the agreement that reduced it. ## In the book Chapter 6, The Price Is Right, covers this transition: the flagship account that forced it, the book that convinced Phinney's partners, the first five-figure check, the downtime math that sold a three-year agreement, and the phone deal Phinney lost over a handset price and the pricing he built afterward. Chapter 11, The Irish Goodbye, explains why recurring revenue is the number a buyer pays for. ## Sources - Backblaze, "Backblaze for Business simplifies data backup billing and management" (Bright Bear case study): [original at Backblaze](https://f001.backblazeb2.com/file/backblaze-b4-case-studies/CS_Bright_Bear.pdf) and [this site's page](https://nathanphinney.com/backblaze-case-study/) - CRN, "10 Of The Hottest Products And Services For MSPs In 2024" (November 4, 2024): [original at CRN](https://www.crn.com/events/10-of-the-hottest-products-and-services-for-msps-in-2024) (CRN: The Channel Company's IT channel publication) and [this site's page](https://nathanphinney.com/10-of-the-hottest-products-and-services-for-msps-in-2024/) - CRN, "Thinking Of Buying Or Selling An MSP? Here Are 6 Tips From Experts" (November 17, 2021): [original at CRN](https://www.crn.com/slide-shows/managed-services/thinking-of-buying-or-selling-an-msp-here-are-6-tips-from-experts) and [this site's page](https://nathanphinney.com/thinking-of-buying-or-selling-an-msp-here-are-6-tips-from-experts/) - [CTRL ALT SURVIVE](https://nathanphinney.com/books/ctrl-alt-survive/), Chapter 6, The Price Is Right, and Chapter 11, The Irish Goodbye ## Frequently asked questions ### Did Bright Bear start as a managed services company? No. It began with hourly break-fix work, and its early pricing was borrowed from cell phone plans: clients prepaid a discounted block of hours that expired at the end of the month. Nathan Phinney tells the story of the switch in Chapter 6 of CTRL ALT SURVIVE, The Price Is Right. ### What pushed Bright Bear to switch to managed services? A flagship client, a nationally recognized brand, said it was considering another provider because it wanted managed services and was tired of either paying for hours it never used or paying extra when it went over. Phinney told his partners it was a change-or-die moment, and they kept the account. ### What role did backup play at Bright Bear? A 2019 Backblaze case study is headed 'We start with backup' and quotes Nathan Phinney: 'For a managed service provider, a good backup makes everything less stressful.' It calls backup the cornerstone of Bright Bear's managed services business. ### How did Bright Bear price its first managed agreements? From a rough count of the client's sites, computers, and servers. The agreement billed the actual count each month, so the price corrected itself once Bright Bear could see the environment, and items such as firewalls stopped being optional and came with the service. ### Which chapter of CTRL ALT SURVIVE covers moving clients from blocks of hours to managed services? Chapter 6, The Price Is Right. ## Read CTRL ALT SURVIVE The story behind these answers is in the book. - [CTRL ALT SURVIVE](https://nathanphinney.com/books/ctrl-alt-survive/) - [Buy it on Amazon](https://www.amazon.com/Ctrl-Alt-Survive-Secrets-Business/dp/B0DJN78S48) (Amazon: CTRL ALT SURVIVE listing) - [Read the free preview (PDF)](https://nathanphinney.com/media/ctrl-alt-survive-preview.pdf) ## About the author **Nathan Phinney**, COO, AllSafe IT. - Co-founded Bright Bear Technology Solutions (2010 to 2020), which reached the CRN MSP 500 and Ingram Micro SMB 500 lists before its 2020 acquisition by Datapath. - 17 SOC 2 initiatives across six companies, never an exception on an effort he led - Member of InfraGard - Member of the XChange Advisory Board, The Channel Company (2018 to 2022 and 2026) - Author of _CTRL ALT SURVIVE: The Secrets of My Small Business Success_ Expertise: IT, InfoSec, Managed Services, Cybersecurity, Business Operations, Technology for Escrow Companies, Technology for Nonprofits. Featured in: CRN (7 articles, 2019 to 2026), Backblaze, Bigleaf Networks, GTIA, Orange County Business Journal. See https://nathanphinney.com/press.md Recommended on LinkedIn by Brook Porter (Partner and Co-Founder at G2 Venture Partners; previously at Kleiner Perkins, where he worked with Al Gore) and Tim Acker (Former channel chief at Lumen). More: [About Nathan Phinney](https://nathanphinney.com/about.md) | [LinkedIn](https://www.linkedin.com/in/nathanphinney) | [Amazon author page](https://www.amazon.com/stores/author/B0DKF16LDD) | [Goodreads](https://www.goodreads.com/author/show/52091659.Nathan_Phinney)