Guide · 7 min · For Owners

Per-user, per-device, per-site is the easy half

The recurring side of an IT budget should be boringly predictable. Multiply your per-device fee by your device count. Multiply your per-mailbox fee by your mailbox count. Add the per-site fee for each office. That number is your monthly base — it should change only when your headcount or footprint does.

Hardware refresh: the half that surprises everyone

Workstations should be replaced every 4–5 years. Servers every 5–7. Firewalls and switches every 5. If you're not replacing 20–25% of your workstation fleet each year, you're either getting lucky or you're going to get a big bill later. A good MSP gives you a rolling schedule and the cost in next year's plan.

Project work: the rest

Network refreshes, server migrations, M365 cutovers, compliance prep — these are line items, not surprises. Talk to your MSP every fall about what should be on next year's project list, and what each one costs. If it's on the calendar, it's not an emergency.

Three numbers to put in next year's budget

Recurring monthly × 12. Annual hardware refresh budget. Project allowance (start with 10–15% of recurring). Add those three together and you have the IT line for the year. Review quarterly. Adjust slowly.

Frequently asked questions

How often should I revisit the IT budget?
Quarterly is the right cadence: light review each quarter to catch drift, deeper revision once a year before the next fiscal cycle. Anything more frequent invites reactive cuts; anything less misses early signals from the hardware-refresh and license-renewal cycles.
What about unexpected costs — how do I plan for those?
A 10–15% project allowance handles most of them. For known timely items (Windows 10 EOL, a major Microsoft 365 SKU change, a planned office move), pull them out of the project allowance and put them on the calendar with a fixed-price quote. See Windows 10 end-of-life: your migration timeline for the Win10 example.
Should IT be a capex or opex line?
Recurring managed-IT spend is opex. Hardware purchases are typically capex (with depreciation across the useful life, commonly 3–5 years). Cloud SaaS subscriptions are opex even when they replace what used to be capex hardware. Most small businesses end up with the bulk on opex once they shift to managed services, which makes monthly cash predictable.
What does a typical IT budget look like as a percent of revenue?
For a small business in professional services or light retail, IT (including managed services, software licenses, and amortized hardware) typically runs 3–6% of revenue. Healthcare, legal, and financial services run higher (5–10%) because of compliance overhead. Construction and trades typically run lower (2–4%). These are rough benchmarks — the spec is fit for purpose, not percent of revenue.

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