Most small businesses do not need an IT budget built around a magic percentage of turnover. They need a budget that reflects how the business actually works, what systems the team depends on, the level of security required, and what equipment or projects are coming up.
A 15-person accounting firm handling sensitive client data can have very different technology requirements from a 15-person trade business. Both may be the same size, but the systems, risks and support expectations can be quite different.
The useful question is not simply, “what percentage should we spend on IT?” It is, “what do we need to run the business securely, support the team properly, and avoid large surprise costs?”
The short answer
For most small businesses, we think the clearest way to budget is to separate IT into three areas: recurring monthly services, planned equipment replacement, and project or improvement work.
As a broad 2026 Australian market guide, managed IT and security services commonly sit somewhere around $150 to $300 per user per month, depending on what is actually included. That is only one part of the overall IT budget. Microsoft 365 and other software, hardware, internet, phones, backup, projects and specialist systems may sit inside or outside that monthly figure depending on the provider.
This is why comparing two providers on the headline monthly price alone can be misleading. One agreement might cover helpdesk support, monitoring, security, Microsoft 365 management and backups, while another may charge separately for several of those items.
Photo by Jakub Żerdzicki via Unsplash.
Why we would not budget from a percentage of revenue alone
You will often see rules suggesting a business should spend a fixed percentage of revenue on IT. That can be useful as a rough sense check, but we do not think it is a good way to build the budget.
A business with high revenue and a fairly simple technology setup may spend a relatively small percentage of turnover on IT. A professional services firm with lower revenue per employee may need to spend proportionally more because almost every part of the business depends on secure access to email, files, applications and client data.
Starting from users, devices, systems and risk gives management a much clearer picture of what the business is actually paying for.
What should be included in a small business IT budget?
Managed IT support and system management
This is the day-to-day layer that keeps the team supported and the environment maintained. It can include helpdesk support, monitoring, patching, user onboarding and offboarding, vendor coordination, device management and regular technology planning.
A good managed IT service should also make the ongoing cost reasonably predictable, rather than turning every support request into a separate invoice.
Cybersecurity
Cybersecurity should be part of the normal technology budget, not something added only after an incident. Depending on the business, that can include multi-factor authentication, endpoint protection, email security, monitoring, security awareness training, access controls and system hardening.
The Australian Signals Directorate recommends small businesses start with measures such as multi-factor authentication, software updates and backups, and then work towards Maturity Level One of the Essential Eight. The right level still needs to reflect the business and its risk. You can read more about how we approach this on our cybersecurity page.
Microsoft 365 and other business software
Email, file storage, collaboration, device management and identity services are usually recurring per-user costs. Many businesses also have accounting, practice management, CRM, industry-specific or cloud applications that need to be included.
It is worth reviewing these regularly. Old licences, duplicate services and accounts that were never removed can quietly add cost without adding any value. Our Microsoft 365 work includes helping clients keep that environment manageable and secure.
Backup and recovery
Backup is easy to under-budget because it is invisible when everything is working. The important question is not only whether something is being backed up, but whether the business can recover the data and systems it would actually need after an incident.
That can include Microsoft 365 data, line-of-business applications, servers, cloud workloads and important local files. We cover this in more detail on our backup and recovery page.
Hardware replacement
Computers, networking equipment, firewalls, UPS units and other hardware do not last forever. Rather than treating each replacement as an unexpected expense, it is usually better to maintain a simple replacement schedule and spread the cost across the expected life of the equipment.
If ten laptops are likely to need replacing over the next two years, that should already be visible in the budget before the first one fails.
Internet and business phones
Connectivity is part of the technology budget too. The right spend depends on how important internet access and phones are to the business, whether a backup connection is needed, how many locations are involved, and what level of support is expected when something goes wrong.
For businesses where connectivity is important, we normally look at business internet and Q10 Phones as part of the wider setup rather than completely separate decisions.
Projects and improvements
Not everything should be forced into the monthly support fee. Office moves, large Microsoft 365 migrations, major network replacements, new sites, application projects and substantial security uplift work may need to be scoped separately.
The important part is knowing about those projects early enough to plan for them. A useful IT provider should help identify what is coming and give the business enough warning to budget for it properly. Larger work can then be handled through projects and consulting when needed.
A simple way to build the budget
We normally think about the budget in three buckets.
1. Monthly baseline
Add the predictable costs required to keep the business operating. This can include managed IT, security, Microsoft 365, backup, internet, phones and other recurring applications.
2. Equipment lifecycle
List the larger pieces of equipment and when they are likely to need replacement. Instead of discovering a $20,000 replacement requirement in the month it happens, spread that expected cost across the years leading up to it.
3. Known projects and changes
Add anything already visible over the next 12 to 24 months. That might be a new office, additional team members, a software migration, a security improvement, a server replacement or a move away from an ageing system.
That gives the business a much more useful budget than simply taking a percentage of last year’s revenue and hoping it is enough.
What changes the amount a business should spend?
The biggest factors are usually the number of users and devices, the sensitivity of the information being handled, the age of the existing environment, how many locations or remote workers need support, the applications the business relies on, and how quickly support is expected when something fails.
A business that can comfortably work around a computer problem for a day has a different requirement from a medical, legal or accounting firm where a system outage can stop an entire team or delay client work.
The cheapest IT budget is not necessarily the lowest monthly price
There is nothing wrong with keeping technology costs under control. We would not recommend replacing systems or buying security products simply because a vendor says you should.
But a low monthly figure can become expensive if important things are excluded, equipment is never planned for, security gaps are left sitting there, or every larger issue becomes a separate project and invoice.
The aim should be a technology budget that is predictable, covers the things the business genuinely depends on, and gives management a reasonable view of what is coming next.
Want a clearer view of your IT costs?
Q10 provides cybersecurity and IT support to help businesses reduce risk, improve security and keep their team supported. We can review the current setup, identify the recurring costs and upcoming replacement items, and help put a more predictable technology budget around it.
You can see how our managed IT pricing is structured, or get in touch if you would like to go over what a sensible budget would look like for your business.