Short answer: published benchmarks put total technology spending at roughly 3 to 7 percent of revenue for small businesses, with the share depending on how dependent the business is on its systems. A simpler model for a Maine office of 5 to 50 people: a monthly line for support and security (managed IT or an on-demand plan), a replacement reserve of about one fifth of your hardware’s value each year so every computer is replaced on a five-year cycle, and software subscriptions counted honestly. The plan has to cover three things or it is not a plan: stability, security and protection (backups).
First published in 2018 as “3 keys to keeping computers working properly”, rewritten October 2026 with budget figures.
| Budget line | Rule of thumb | Example: 10-person office |
|---|---|---|
| Support and security (monthly) | $100 to $250 per user per month managed; or an hourly plan | $1,200 to $2,000 per month |
| Hardware replacement reserve | Replace PCs every 5 years; set aside 20% of the fleet’s replacement cost per year | 10 PCs at $1,200 = $12,000 fleet, so about $2,400 per year |
| Software and cloud | Microsoft 365 or Google Workspace, line-of-business apps, backup, security tools | $150 to $400 per month |
| Network and server | Firewall every 5 years, switches and Wi-Fi every 5 to 7, server every 5 (or cloud) | $500 to $1,500 per year averaged |
| Projects | Moves, migrations, upgrades; quoted separately | Varies |
The per-user support figures are vendor-published ranges that match what we see in Southern Maine; this guide explains them.
What percentage of revenue should go to IT?
Industry surveys put the median somewhere between 3 and 7 percent of revenue, higher for firms whose product is information (accountants, engineers, software) and lower for trades and retail. Treat the range as a sanity check, not a target. A $1.5 million landscaping company at 2 percent is spending $30,000 a year; a $1.5 million CPA firm at 6 percent is spending $90,000. Both can be right. What is never right is zero, which is what “we’ll deal with it when it breaks” actually budgets.
Key 1: Stability. What does it cost to keep computers working?
Stability comes from two things: equipment that is not past its useful life, and someone watching it. The replacement reserve is the part most small businesses skip. A business desktop or laptop costs about $900 to $1,500 and should be replaced at five years; past that, failures, slowdowns and operating system cut-offs (Windows 10 is the current example) cost more in lost time than a new machine. Setting aside a fifth of the fleet’s value each year turns a surprise into a line item. The watching part is monitoring and patching, which is what managed IT is.
Key 2: Security. What is the minimum?
Eight controls, most of them included with Microsoft 365 or a managed plan: MFA, patching, managed endpoint protection, email filtering, backups, disk encryption, a business firewall with separate guest Wi-Fi, and quarterly staff training. The baseline is here. Budget for the tools (a few dollars per device per month) and for the time to run them.
Key 3: Protection. What does a real backup cost?
Less than one hour of downtime. A business-grade backup of a server, the workstations that matter and Microsoft 365, stored off-network with versions kept for a year, runs tens of dollars a month for a small office. The question we still ask every new client, as we did in 2018: if you lost the last 60 days of your data, would it matter? If the answer is yes, the backup is the cheapest line in the budget. See data backup and recovery.
How do we build the plan?
- Inventory. Every computer, server, firewall, switch, access point and printer, with age and warranty status. One afternoon.
- Replacement schedule. Anything over five years goes on next year’s list; the rest get a year. That produces the reserve number.
- Subscriptions list. Everything billed monthly or yearly, who uses it, and whether it is still needed. Most offices find two or three they are paying for and not using.
- Support model. Managed, on-demand, or co-managed with an existing employee. How to decide.
- Write it down as four lines in the annual budget and review it each quarter with whoever does your IT.
Frequently asked questions
Is leasing computers better than buying?
Leasing smooths cash flow and forces the replacement cycle; buying is cheaper over five years. Either works if the cycle is kept. Not replacing is the expensive option.
Does moving to the cloud reduce the IT budget?
It moves money from hardware to subscriptions and usually lowers the project and surprise costs. It does not remove the need for support, security or backup. See whether cloud is right for you.
What should an IT budget look like for a 3-person business?
Microsoft 365 or Google Workspace, a backup subscription, MFA everywhere, and an on-demand support arrangement with a yearly check-up. Low hundreds per month all in.
Where does cyber insurance fit?
As its own line, and as a reason to fund the security controls: most policies now require MFA, backups and endpoint protection to pay a claim.
Cite this page: “How Much Should a Small Business Budget for IT? Three Things Every Plan Needs”, Information Systems of Maine, Portland, ME, updated October 2026.
Want an inventory and a replacement schedule for your office? Request a free evaluation or call 207-653-4143.
