Comparing pricing models: man-day, output and managed

Three pricing models dominate outsourced operations. None is universally better; each shifts risk and accountability differently. This comparison sets out what you buy under each, who carries the risk, and when the model fits.

Model	What you buy	What the vendor guarantees	Who carries volume risk	Who carries quality risk	Best fit
Man-day	Guards and supervisors per post and shift	Deployed headcount on the roster	Buyer	Buyer	Defined posts, predictable shifts
Output-based	Agreed outcomes and coverage, not headcount	Delivered outcomes against an agreed measure	Vendor	Shared, on the outcome	Sites where coverage, not headcount, is the point
Managed service	Outcomes plus supervision, reporting and governance	The operating layer, end to end	Vendor	Vendor	Multi-site operations that need one accountable partner

Man-day pricing

You pay a rate per person per shift. It is simple to compare and easy to build a contract around, but it buys headcount, not results. The vendor is paid whether or not the post delivers the outcome you wanted, and you carry the risk that more hours or more posts simply raise the bill.

Who it fits — operations where the requirement is genuinely a headcount: a defined post, a defined shift, little variance.

Output-based pricing

You pay for coverage and outcomes — attendance reconciled to the roster, incidents handled and escalated — rather than a fixed body count. The vendor carries the risk that under-staffing or poor supervision fails the outcome.

Who it fits — multi-site operations where a vacant post or a missed incident costs more than the staffing slack needed to prevent it.

Managed service

The most comprehensive model. You pay for the whole operating layer — the staff, the supervision independent of the post, the reporting cadence and the governance. One vendor is accountable for deployment, discipline and documentation.

Who it fits — buyers who want a single accountable partner and an auditable paper trail, not a stack of separate staffing invoices to reconcile.

The pricing principle that applies to all three

Whichever model you choose, read the rate component by component: the labour, the statutory components that vary by state, and the service charge. A vendor that cannot decompose the rate cannot explain what changes when your scope changes.