GTIA's Q2 2026 Quarterly Economic Tracker surveyed 300 IT solution providers. Buried in the sentiment data is the only number on the page that changes what you do Monday morning.
68 percent of ITSPs name higher COGS as their top negative tariff impact. Hardware costs sit at the top of the list of business areas tariffs hit hardest, at 47 percent.
Now look at what those same providers do about it.
19 percent pass the full cost to the customer. 44 percent pass part of it. 25 percent absorb all of it. 13 percent have not dealt with it yet. Rounding puts that at 101, which is the report's number, not mine.
Read the middle two together. 69 percent of providers are eating some or all of a cost increase they did not create, on a product line that already runs thin. A quarter of them are eating every dollar of it. That is a margin problem you own.
The sentiment numbers are noise. Skip them.
The tracker spends most of its pages on how ITSPs feel. Strong sentiment on the U.S. economy dropped to 36 percent. Neutral climbed to 29 percent. Twelve month optimism held at 48 percent for the third straight quarter. 42 percent say tariffs hurt their business, and 37 percent expect trade policy to hurt them over the next year.
None of that changes a decision in a 15 person shop. You are not going to reprice a quote because the channel feels ambivalent.
What matters is that the cost increases are real, they are persistent across four consecutive quarters, and most providers are handling them badly.
Why you're absorbing it
I have had this conversation with a lot of owners. It comes down to two things, and usually both.
1. Your quotes have no expiration and no cost adjustment clause
You quote a project in March. The client signs in June. Your distributor price moved twice in between. You honor the March number because that's what you sent, and you eat the difference.
That is not a tariff problem. That is a document problem. A quote without an expiration date is a standing offer you gave away for free.
Same thing happens inside multi-year agreements. You priced a hardware refresh into a 36-month contract at 2024 costs. There is no language that lets you adjust. So you don't.
2. You don't want to have the conversation
This is the bigger one, and nobody says it out loud.
You have a client you've had for nine years. They're profitable, they pay on time, they refer you business. Telling them the firewall costs $340 more than it did last year feels like risking that relationship over $340.
So you absorb it. Then you absorb the next one. Six months later you're looking at a hardware line that runs at 4 percent margin and you can't figure out when that happened.
The client conversation you're avoiding takes about four minutes. The margin you've given up to avoid it is permanent.
Fix the documents first
Do this before you talk to a single client. If you have the conversation without the paperwork behind it, you're negotiating. If the paperwork is already in place, you're informing.
Quote expiration language
Put this on every quote, above the signature line, in the same font size as everything else. Do not bury it in the footer.
This quote is valid for [NUMBER] days from the date issued. Hardware and equipment pricing reflects supplier costs as of the issue date. Quotes accepted after the expiration date require re-quoting at current supplier pricing.
Fifteen to thirty days works for most shops. Pick a number and hold it. The point is not the number. The point is that the offer ends.
Cost adjustment clause for agreements
Add this to your master services agreement and to any statement of work that includes hardware.
Hardware, equipment, and third-party product pricing is based on supplier costs at the time of quotation. Client acknowledges that supplier pricing is subject to change due to tariffs, duties, freight costs, currency fluctuation, and manufacturer price adjustments. Where supplier costs increase by more than [PERCENTAGE] percent between quotation and order placement, Provider will notify Client in writing and provide updated pricing prior to purchase. Client may accept the revised pricing or cancel the order without penalty.
Five percent is a reasonable trigger. It's high enough that you're not sending notices over rounding, low enough that it covers a real tariff move.
The cancellation clause matters. It makes the terms feel fair, and it gets signed. Clients rarely use it.
Separate hardware from your monthly number
If hardware sits inside a bundled per-seat price, you have no mechanism to adjust anything without renegotiating the whole agreement. That is why owners with bundled pricing absorb the most.
Break it out. Managed services on a recurring line. Hardware and equipment on a separate line, quoted per project, with the language above attached.
You lose the tidy single number on the invoice. You gain the ability to price hardware at what hardware actually costs.
The conversation itself
Here's the version that works. Send it before they ask.
Hi [CLIENT], quick heads up on hardware pricing. Tariffs and supplier increases have moved equipment costs up across the board this year. We've held our pricing where we could, but going forward equipment on quotes reflects current supplier cost at the time we issue the quote. Quotes are good for [NUMBER] days. Nothing changes on your managed services agreement. If you have a refresh coming up in the next two quarters, let's get it quoted now so we lock the current number.
Four sentences. No apology. No lengthy explanation of global trade policy. And it ends with a reason for them to buy sooner rather than later.
Most clients respond with some version of "yeah, we've seen it on our side too." Because they have. This is happening to everyone.
Know your real number before you do any of this
Half the owners I talk to cannot tell me their actual hardware margin. They know the markup they apply. That's not the same thing.
Pull your last twelve months of hardware sales and subtract everything.
- Supplier cost
- Freight, both inbound and outbound
- Tech time for procurement, receiving, staging, and configuration
- Returns and RMA handling
- The financing gap between when you pay the distributor and when the client pays you
The staging time is where it usually falls apart. If a tech spends three hours imaging and configuring a workstation and you're not billing that separately, that time is coming straight out of your hardware margin.
Run the math on ten recent hardware transactions. That's enough to see the pattern. If the real number is under 15 percent, you're doing procurement as a favor.
Watch the demand side too
Pass-through fixes your margin. It does not fix a client who stops buying.
50 percent of ITSPs report clients cutting technology purchasing as a negative tariff impact. Decreased revenue on product sales sits at 39 percent, up from 33 percent last quarter.
So the buyer is pulling back at the same time your costs are climbing. If your revenue mix leans hard on hardware resale, that's the squeeze.
Two things help.
Move refresh planning into a scheduled conversation instead of a reactive one. A client with a three-year lifecycle plan and a budget line for it buys on schedule. A client who finds out their server is dying on a Tuesday shops the price.
Then look at what you sell that isn't a box. Security services, compliance work, AI governance and enablement, and vCIO work all carry margins that don't move when a container ship gets more expensive. That's the answer to a shrinking hardware line, and it's a better business anyway.
Fuel costs are hitting you too
83 percent of ITSPs report oil prices affecting their business. Major impact climbed from 30 percent to 35 percent quarter over quarter.
For a shop with field techs, this shows up in two places. Vehicle costs on your side, and freight on everything you ship. Neither is huge on its own. Both are quietly eating points.
If you charge an onsite rate that hasn't moved in three years, it has moved in real terms. Raise it or add a trip charge. If you absorb inbound freight on hardware, stop. Freight is a line item.
Do this week
- Add expiration language to your quote template. Twenty minutes.
- Add the cost adjustment clause to your MSA and SOW templates. Send it to your attorney if you want, but add it.
- Pull ten hardware transactions and calculate real margin including tech time.
- Send the heads-up message to your top ten clients by revenue.
- Look at any multi-year agreement with hardware baked into the monthly price. Flag it for renegotiation at renewal.
None of that takes a week. It takes an afternoon. The reason it hasn't happened is not time.
Where this usually goes sideways
Owners add the language and then don't enforce it. A client calls on day 40 with an expired quote and you honor it anyway because you don't want the friction.
The clause only works if you use it. First time you re-quote an expired number, it feels bad. Second time, it's just how you operate. Your clients adjust faster than you do.
The other failure is going too far the other way. Somebody reads this, raises hardware pricing 30 percent across the board, and loses two deals to a competitor who didn't. Pass through your actual cost increase. Not more.
Talk it through
Repricing hardware, restructuring agreements, and shifting revenue mix toward services that hold margin is the work I do with MSP owners in the 10 to 20 employee range. If you are looking at a hardware line you cannot defend and agreements you cannot adjust, we will go through your numbers.
Everything above is a template. Run it yourself this week and never talk to me. What I will not do is hand you a system and tell you your shop is wrong for not matching it.
Not sure this is your actual constraint? Take the MSP Owner Reality Check. Five questions, nine minutes, and it names the two or three things quietly capping your growth. https://themsphero.com/resources/msp-owner-reality-check-assessment
If you already know what is broken, book a 30 minute fit call at https://letschat.themsphero.com
Mike Kolb The MSP Hero
Source: GTIA Quarterly Economic Tracker, Q2 2026 (April to June 2026), Global Technology Industry Association. Survey of 300 IT solution providers. All statistics cited above come from that report. Analysis and recommendations are mine.