You know that sinking feeling when a prospect asks for your quote and you just KNOW they're going to use it to beat down their current provider's price? Yeah. That's commoditization, and it's killing MSPs in 2026.
Here's the uncomfortable truth: if you're still trying to be everything to everyone, you're basically a tech vending machine. And vending machines compete on one thing, price. Welcome to the race to the basement, where margins go to die and you're one RFP away from working for free.
But there's a way out. And it's been hiding in plain sight since Mike Michalowicz wrote The Pumpkin Plan over a decade ago.
The Commoditization Death Spiral (And Why You're Probably In It)
Let's paint a picture. You've got clients in healthcare, manufacturing, legal, retail, and maybe a few dental offices because… well, they called. Your service offerings? "We do managed IT services." Your value proposition? "We're responsive and affordable."
Congratulations. You sound exactly like the other 47,000 MSPs out there.
When you're undifferentiated, prospects can't tell you apart from the competition. So they do what any rational buyer does: they compare you on the one thing they can measure: price. And suddenly you're stuck in a bidding war with some kid running an MSP out of his mom's basement who thinks $75/user/month is "premium pricing."
Does any of this hit dangerously close to home?
The problem isn't that you're not good at what you do. The problem is that nobody can tell you're good because you look like everyone else. You're competing in an undifferentiated market, and undifferentiated markets always: always: devolve into price wars.
Enter The Pumpkin Plan (And Why It's More Relevant Than Ever)
If you haven't read Michalowicz's book, here's the CliffsNotes version: Farmers who want to grow giant prize-winning pumpkins don't try to grow hundreds of average pumpkins. They plant many seeds, identify the most promising pumpkins early, and then they do something radical: they kill off all the weak ones and pour ALL their resources into the few with the most potential.
The result? Pumpkins that weigh over 1,000 pounds.
For MSPs, the Pumpkin Plan means identifying your best clients (the ones who pay well, don't call you at 2 a.m., and actually value your expertise), figuring out what they have in common, and then: here's the scary part: firing everyone else so you can focus exclusively on growing more clients just like your best ones.
And here's where vertical specialization comes in.
Why Vertical Specialization Is Your Pumpkin Plan on Steroids
When you specialize in a specific industry vertical, something magical happens: you stop being a commodity.
Think about it. Would you rather hire a "general IT person" or a cybersecurity expert who only works with dental practices and knows every regulatory requirement, every common vulnerability, and every software integration challenge your industry faces?
Yeah. You'd pay more for the specialist. We all would.
That's the whole game right there.
Vertical specialization transforms you from an interchangeable service provider into a strategic business partner. Instead of offering "managed IT services," you become "the healthcare IT compliance expert" or "the manufacturing MSP that understands OT security" or "the legal tech specialist who's saved 47 law firms from ransomware."
See the difference?
The research backs this up. MSPs that specialize in vertical markets command up to 30% higher profit margins than their generalist competitors. Their clients willingly pay 10-20% more because the value is so obvious. And here's the kicker: 89% of executives and IT leaders now view vertical specialization as the future of the MSP sector.
The market is telling you where it's headed. Are you listening?
The Defense Against Commoditization: Three Ways Specialization Protects You
1. You Develop Deep Expertise That Generalists Can't Touch
When you focus on healthcare MSPs, you're not just learning "IT security": you're mastering HIPAA compliance, ePHI data security, medical software integrations, EHR systems, patient portal security, and the seventeen different ways a practice can get fined for a data breach.
You become fluent in your clients' actual problems. You speak their language. You understand their regulations better than they do. And when you walk into a meeting, you're not just another IT vendor: you're the expert they've been looking for.
That kind of expertise can't be Googled. It can't be commoditized. It's earned through experience and focus.
2. Your Competitive Advantage Becomes Hard to Replicate
Here's what happens when you specialize: you build industry-specific service packages, you develop tailored compliance checklists, you create vertical-focused marketing that speaks directly to your ideal client's pain points, and you establish yourself as a thought leader in that space.
A generalist competitor looking at your niche sees years of investment they'd need to match. Industry-specific certifications. Case studies. Relationships with industry associations. Content libraries. Specialized toolsets.
They could try to compete with you. But it would take them years to build what you've already got. And by then, you'll be even further ahead.
3. You Escape the Price Conversation Entirely
When you're solving industry-specific problems that your clients desperately need solved, price becomes secondary. You're not competing against other MSPs on cost: you're competing against the consequences of getting compliance wrong or the risk of a breach or the headache of dealing with another generalist who doesn't understand their world.
Your clients aren't buying "managed services." They're buying peace of mind, regulatory safety, and specialized expertise. That's worth paying for.
How to Actually Implement This (Without Burning Your Business Down)
I can already hear the objections. "But Shawn, I can't just fire 70% of my clients! I have bills to pay!"
Fair enough. Here's the realistic path to strategic consulting for MSPs who want to specialize:
Start by analyzing your current client base. Look for patterns in your most profitable, least painful clients. What industries do they serve? What do they have in common?
Set a target: 50% of revenue from your chosen vertical within 18-24 months. You don't have to fire everyone tomorrow. But you do need to stop taking on bad-fit clients and start focusing your sales and marketing efforts on your target vertical.
Build your vertical-specific expertise aggressively. Get the certifications. Join the industry associations. Attend their conferences. Create content that demonstrates you actually understand their world.
Develop vertical-specific service packages. Don't just offer "managed services": offer "HIPAA-compliant healthcare IT" or "manufacturing cybersecurity with OT integration." Make it crystal clear who you serve and what problems you solve.
Market like you mean it. Your website shouldn't say "we serve all industries." It should scream "we're the manufacturing MSP" or "we're the healthcare IT experts." Be bold. Be specific. Be different.
The MSPs that embrace vertical specialization in 2026 will be the ones commanding premium pricing, enjoying higher margins, and actually sleeping at night. The ones that stay generalists? They'll keep grinding in the commoditization pit, competing on price until there's no margin left.
The Bottom Line
The Pumpkin Plan isn't just a cute farming metaphor: it's a survival strategy. In a market that's increasingly commoditized, vertical specialization is your way out. It's how you transform from "just another MSP" into "the only MSP that truly gets our industry."
Mike Michalowicz was right: you can't grow a giant pumpkin by trying to grow a hundred average ones. You have to pick your best opportunities, kill off the rest, and pour everything you've got into becoming exceptional at one thing.
For MSPs in 2026, that one thing is vertical specialization.
The question isn't whether you should specialize. The market's already decided that for you. The question is: which vertical will you own?
Ready to stop competing on price and start competing on expertise? We help MSPs develop and implement vertical specialization strategies that actually stick. Because strategic consulting for MSPs isn't about theory: it's about building a business that's commoditization-proof.
Your competitors are already figuring this out. What are you waiting for?