Contract Repricing & Service-Creep

Verdict

MARGIN ERODED

Signed at ~48% margin; today this agreement runs 20% after 6 added users, vendor cost +$3/user, and 16% cumulative wage drift.

Key figures

Margin today	19.8%
Margin eroded	28.2 pts
Recommended MRR	$8,324
Required increase	54.2%
Price / user today	$117
Cost / user today	$94
What to do	REPRICE NOW
Why	Margin eroded 28 points since signing — a 54% correction is overdue. Lead the conversation with the client's growth (6 users added), not your costs.

Assessment

Cost rebuild: labor scaled by wage inflation and ticket-intensity change; vendor delta passed through; recommended price restores the as-signed margin via cost ÷ (1 − margin). Frame the renewal around business change — added users, added scope — never "our costs increased."

Questions for the founder

Which of the added users landed in scope creep vs a signed change order?
Does the agreement bill on the CURRENT user count automatically? (That alone may close half the gap.)
What did after-hours and project spillover add that never hit the agreement?

Assumptions & method

Labor share of delivery cost and margin-at-signing are estimates* if not from your GL.
The platform computes this per client from PSA + accounting data continuously.

Generated by AICost.ai (aicost.msp-contract-repricing), CloudIntelligence.ai LLC. API pricing is sourced vendor-exact from a daily-maintained pricing single source of truth as of 2026-07-20. Values marked with an asterisk are analyst estimates rather than vendor-verified data. This memo is a cost-and-unit-economics analysis prepared for diligence purposes; it is not investment advice, and it does not assess team, market, product or legal risk.