Key takeaways
- A small business IT budget has five buckets: support, software and cloud subscriptions, hardware replacement, security and backup, and one-off projects; most owners only budget for the first.
- As a typical market range, ongoing IT support for a Dallas small business commonly runs somewhere around $1,200 to $2,100 per employee per year, which is $100 to $175 per user per month.
- Hardware should be budgeted as a replacement cycle, roughly a fifth to a quarter of your computer fleet each year, not as a surprise when a laptop dies.
- Security and backup are the cheapest bucket to fund and the most expensive to skip; a single recovery job can cost more than years of backups.
- Projects like a move, a build-out or a migration belong in their own line, quoted separately, so they never eat the support budget.
The short answer
A small business should budget for IT in five buckets, not one number: ongoing support, software and cloud subscriptions, hardware replacement, security and backup, and one-off projects. Added together, and as a typical market range rather than a rule, a Dallas office commonly spends somewhere around $2,000 to $4,000 per employee per year on all five, with support and subscriptions making up the biggest share. A 10-person office would therefore plan on roughly $20,000 to $40,000 a year across everything, with the total moving up if there is a server, specialised software or a move on the calendar, and down for a simple cloud-only office.
Those are market figures, not my prices. My managed plan is quoted per user or per device after a short conversation, and my hourly rates are published. The point of this article is to give you a structure, because the owners who get into trouble are rarely the ones who spend too little overall. They are the ones who budget for support and forget that laptops age, that subscriptions creep, and that a move or a migration is a separate bill. If you want a place to start, use the sample budget further down and adjust it to your headcount.
What are the five buckets of a small business IT budget?
Here are the five, with what belongs in each and a typical market range per employee per year for a Dallas small business. These ranges are for planning; your real numbers depend on your setup.
| Bucket | What goes in it | Typical market range per employee per year |
|---|---|---|
| 1. Ongoing support | Managed IT plan or hourly support: monitoring, updates, help desk, onsite visits, network management | $1,200 to $2,100 for a managed plan (that is $100 to $175 per user per month); less for hourly if your office is simple |
| 2. Software and cloud | Microsoft 365 or Google Workspace, line-of-business applications, file storage, phone system, password manager | $300 to $1,000, driven mostly by your industry software |
| 3. Hardware replacement | Computers, monitors, docks, network gear, printers, replaced on a cycle | $250 to $500, assuming a business laptop is replaced every four to five years |
| 4. Security and backup | Endpoint protection, email filtering, backup storage, multi-factor authentication, recovery testing | $150 to $400, often partly inside the support fee |
| 5. Projects | Office move, cabling, server migration, new phone system, second location | Zero in most years, then a separate quote in the year it happens |
Bucket 1 is what most owners mean when they ask what to budget for IT support. It is the biggest recurring line and the one I compare in detail in how much managed IT services cost in Dallas. The other four are why a support quote alone is not a budget.
How should I budget for ongoing IT support?
Ongoing support is either a monthly plan or hourly break/fix, and the budget looks different for each. With a managed plan, the budget is simple: your per-user or per-device rate times your headcount times twelve, plus after-hours work if your office ever needs it. As a typical Dallas market range, that is $100 to $175 per user per month. I quote mine after a short conversation, and the managed IT services page lists what is inside the fee, which for me includes updates, unlimited remote support, onsite visits when remote cannot fix it, antivirus and email security, backups, and management of your network equipment.
With hourly support, the budget is an estimate, and the honest way to make it is to count last year's hours, add the preventive hours nobody called for, and add a cushion for one bad week. My published rates are $100 an hour remote and $150 onsite in business hours, with a one-hour minimum. A 6-person office that calls twice a month might budget a few thousand dollars a year and be fine; a 15-person office on hourly support is usually spending more than a plan would cost and getting less. I lay out the crossover in hourly versus monthly IT support.
Whichever way you go, put after-hours support in the budget as its own line, even if the number is small. An internet outage on a Saturday before a Monday deadline is when the after-hours rate applies, and it is better to have planned for two or three of those a year than to be surprised.
How do I plan a hardware replacement cycle?
Hardware is the bucket that ambushes small businesses, because nothing is spent for two years and then four laptops die in the same quarter. The fix is a replacement cycle. Decide how long a computer lives in your office, usually four to five years for a business-grade laptop or desktop, and replace a fifth to a quarter of the fleet each year. The budget becomes flat and predictable, and nobody in the office is working on a machine that takes ten minutes to boot.
A practical way to build the line:
- Inventory what you have with the purchase date or the age of each computer. A managed plan gives you this automatically; on hourly support, a spreadsheet works.
- Rank by age and by the person's needs. The bookkeeper's five-year-old desktop and the designer's five-year-old workstation are not equally urgent.
- Price the replacements. As a typical market range, a business-class laptop with a dock and a monitor commonly runs somewhere around $1,000 to $1,800; workstations for CAD or design software cost considerably more. I work with Dell and Lenovo business lines and quote hardware at cost, with setup billed as time.
- Add the network gear. Firewalls, switches and access points also age. Plan on refreshing them every five to seven years, and budget the printer separately because it will fail when it is least convenient.
- Write the yearly number down and spend it even in years when nothing has broken yet. That is the whole point.
The buying side of this is a topic of its own, which I cover in buying and supporting Dell and Lenovo business computers.
What am I already paying for in software and subscriptions?
Software is the bucket that creeps. A small business signs up for a tool to solve one problem, then another, and three years later there are fourteen monthly charges on the company card and nobody remembers what four of them do. Before you budget, audit.
List every subscription: Microsoft 365 or Google Workspace, your practice or agency management system, accounting, file storage, video meetings, e-signature, the phone system, the website hosting, the domain names, antivirus, backup, and every "free trial" that quietly became paid. Put the per-user monthly cost next to each, and the number of users actually using it. In almost every office I do this with, there are licenses assigned to people who left, two tools doing the same job, and a plan tier higher than the office needs.
Once the list is clean, the budget is the sum times twelve, plus a small allowance for growth. Two rules of thumb that hold up:
- Your industry software is the big line. A law firm's case management, a dental practice's imaging and practice management, an agency's management system: these dwarf the cost of email and office applications. Budget them at the vendor's quoted rate and check every year whether the tier still fits.
- Bundle where it is real, not where it is marketing. Microsoft 365 business plans include email, files, meetings and, at some tiers, security features that replace separate subscriptions. Buying the right tier once is cheaper than four add-ons. I handle this kind of licensing clean-up under Microsoft 365 and Google Workspace support.
Why is security and backup the bucket you should never cut?
Of the five buckets, security and backup is the smallest and the one most often trimmed when money is tight, because nothing visible happens when you spend it. It is also the one where a single event costs more than years of the budget. A ransomware incident in a 10-person office means days of lost work, possible client notification duties, and a recovery bill; a failed server with no tested backup can mean losing files the business cannot recreate.
The line items are modest. Endpoint protection on every device, email filtering, multi-factor authentication on email and remote access, a backup of servers and cloud data that is tested by actually restoring something, and a written plan for what happens if the office cannot open on Monday. As a typical market range that comes to somewhere around $150 to $400 per employee per year, and in many managed plans, including mine, most of it is inside the support fee already. What I bundle is on the cybersecurity, backup and disaster recovery page.
Two situations make this bucket non-negotiable. If you are a law firm, a dental or medical practice, or an insurance agency, you have confidentiality or HIPAA duties, and a good security setup helps you meet them. And if you carry cyber insurance, your carrier's application asks whether you have multi-factor authentication, endpoint protection and tested backups; the honest answer affects both your premium and whether a claim is paid. Budget the bucket, and budget an hour or two a year to review it.
How do I budget for projects like a move or a build-out?
Projects are anything planned, with a start and an end, that changes how the office works: moving to a new suite, running cable in a new build-out, replacing a server or retiring it for the cloud, adding a second location, changing phone systems. They do not belong in the support bucket, because they are not support, and they should never be paid for by skipping laptop replacements.
The right way to budget them is to put them on a calendar. Most small businesses can see a move or a lease change a year out. When you can, get a written quote early, so the number is in the budget before the deposit on the new space is paid. Cabling in particular is cheapest when it is done before the walls are closed, so the moment to plan it is when the architect is still drawing. I do that work under data cabling and IT room setup and office move and new office IT setup, and both are quoted separately from any support plan.
In a year with no project, this bucket is zero, and that is fine. What I recommend is a small standing reserve, a few hundred dollars per employee, for the project you did not see coming: a landlord's electrical work that takes the network down, an internet provider that leaves the building, a vendor that ends support for the software your office runs on. Unspent, it rolls into next year's hardware line.
A sample IT budget for a 10-person Dallas office
Here is an illustration for a 10-person professional office in Dallas: cloud email and files, no server, a couple of printers, a firewall and two access points, one industry application. The numbers are typical market ranges, rounded, and none of them are my prices; substitute real quotes as you get them.
| Bucket | Assumption | Typical yearly range |
|---|---|---|
| Ongoing support | Managed plan at the $100 to $175 per user market range | $12,000 to $21,000 |
| Software and cloud | Microsoft 365 or Google Workspace, industry application, phones, password manager | $4,000 to $9,000 |
| Hardware replacement | Two to three laptops with docks and monitors, one network item | $2,500 to $5,000 |
| Security and backup | Whatever is not inside the support plan, plus cloud backup storage | $800 to $2,500 |
| Projects and reserve | No move this year; standing reserve | $2,000 to $4,000 |
| Total | Roughly $21,000 to $41,000 |
Two things to notice. First, support is around half of the total, which is why the support quote feels like the whole budget and is not. Second, the range is wide because it depends on choices you control: the tier of your software, the length of your hardware cycle, and whether you bring a server along or leave it behind. A 10-person office that runs everything in the cloud and replaces laptops on a steady cycle lands near the bottom of that range; one with an ageing server, a mix of personal and company devices and no cycle at all lands at the top, and gets worse service for it.
Where do small businesses overspend and underspend?
After years of looking at small-office budgets, the pattern is consistent. Owners overspend in three places and underspend in three others.
Overspending:
- Unused subscriptions and wrong tiers. Licences for people who left, duplicate tools, and a plan tier the office never uses. An hour of audit a year usually pays for itself many times over.
- Emergency hardware. Buying whatever is in stock on the day a machine dies, at retail, instead of a planned business-class purchase at cost.
- Hourly support past the crossover. A 15-person office paying by the hour for problems that a monthly plan would have prevented.
Underspending:
- Backups. Still the most common gap I find in Dallas offices, usually because the backup was set up once and never checked.
- Replacement cycles. Keeping computers until they fail, which costs staff time every day and then costs a rush purchase.
- Planning. Nobody is looking a year ahead, so the move, the software change and the server end-of-life all arrive as surprises. A few hours of IT consulting or fractional CTO time a year is often the cheapest line in the whole budget.
If you want your numbers checked against a real setup, send me your headcount and a rough list of what you have and I will tell you which buckets look right and which look thin. The hourly rates for that kind of review are on the pricing page; it is usually a short conversation.
Questions people ask
What should a small business budget for IT support each year?
For ongoing support alone, a typical Dallas market range for a managed plan is around $100 to $175 per user per month, or $1,200 to $2,100 per employee per year. For the whole IT budget, including software, hardware replacement, security and backup, and a project reserve, small offices commonly plan somewhere around $2,000 to $4,000 per employee per year. Those are market figures; I quote my managed plan per user or per device after a short conversation.
What percentage of revenue should go to IT?
I would not budget IT as a percentage of revenue for a small business, because two firms with the same revenue can have very different needs. A 10-person design studio with large files and workstations needs more than a 10-person consultancy on laptops. Budget from the five buckets instead: support, software, hardware replacement, security and backup, and projects. Build each from what you actually have, then compare the total with your revenue as a sanity check.
How often should a small business replace its computers?
Every four to five years for business-class laptops and desktops is a sensible cycle, sooner for workstations running demanding design or CAD software. Replace a fifth to a quarter of the fleet each year so the cost is flat and predictable, and rank the replacements by age and by what the person does. Network equipment such as firewalls, switches and access points usually lasts five to seven years. Keeping machines until they fail costs staff time every day and then a rush purchase.
Is security and backup included in a managed IT plan or budgeted separately?
It depends on the plan. Mine includes antivirus management, email security, and managed backup and disaster recovery in the monthly fee, so the separate line is small, mainly cloud backup storage and any extra security tools your industry or cyber-insurance carrier asks for. Other agreements bill endpoint protection and backup per device on top of the fee. Ask for the inclusion list in writing and budget whatever is outside it as its own line.
How should I budget for an office move or a build-out?
As a project, in its own line, quoted separately from support. Put it on the calendar as soon as you can see a lease change coming and get a written quote early, because cabling is cheapest before the walls close and internet service takes weeks to order. In years with no project, keep a small standing reserve, a few hundred dollars per employee, for the surprise you did not plan, and roll it into next year's hardware line if it goes unused.
Sources and further reading
Market price ranges in this article are my own observation of quotes in the Dallas market, not a published survey. Where I state a rule or a standard, the source is linked above.
