PLAN YOUR ANNUAL
IT BUDGET.
Build a complete annual IT budget for your business — managed services, hardware refresh, software, and one-time projects. Get a printable budget document you can share with your leadership team.
EVERYTHING TO CONSIDER
WHEN BUDGETING FOR IT.
Most small business owners underestimate their real IT spend by 30-50% because they only count the obvious line items — the monthly managed services bill, Microsoft 365, and maybe a website hosting fee. The full picture includes hardware refresh cycles, security tooling, compliance documentation, downtime cost, training, and the "hidden" cost categories most budget templates leave out.
Use the framework below to understand what should be in your IT budget. Then use the interactive planner that follows to build the actual numbers for your business.
WHAT BELONGS IN AN IT BUDGET.
A complete IT budget covers eight categories. Most templates only capture three or four. Walk through each and you will see where your current budget has gaps.
Managed IT Services
Monthly per-user or per-computer fee for monitoring, support, security, and patching. Starter ($15/computer + add-ons) or Managed ($75-$150/user/month) depending on your engagement model.
Microsoft 365 / Google Workspace
Email and productivity licensing — always priced separately from managed services. M365 Business Basic $7.50, Standard $15, Premium $27 per user/month. Nonprofit pricing significantly lower.
VoIP Phone System
Cloud phone service at $25/user/extension/month. Includes mobile app, auto-attendant, voicemail-to-email, and call recording. Replaces $40-80/line traditional PBX.
Hardware Refresh
Workstations and servers get replaced on a 3-5 year cycle. Budget ~$1,500 per workstation amortized across 4 years = $375/year per workstation. Servers: $5K-$15K every 5 years.
Cybersecurity Tooling
EDR / antivirus, email security, security awareness training, simulated phishing, dark web monitoring, MDR services. Often bundled into managed tiers (Simply Secure / Compliant) or à la carte.
Backup & Disaster Recovery
Cloud backup of user data, M365 SharePoint / OneDrive, and server data with tested restoration. $10/user/month for cloud user backup; servers vary by capacity.
Compliance & Documentation
HIPAA Risk Analysis, FTC Safeguards WISP, Florida Bar WISP, CMMC SSP / POA&M, PCI ASV scans. Annual cost for documented compliance varies by framework.
Connectivity
Business-class internet (often dual ISP for redundancy), failover cellular, VPN, SD-WAN. Most businesses budget too little here and pay for it in outage cost.
WHAT MOST OWNERS LEAVE OUT.
These categories rarely appear on the IT budget line item. They show up later as one-time surprises, productivity drag, or breach costs. Budget for them in advance.
Downtime
Average cost of IT downtime for a 10-person business: $250-$500/hour in lost productivity (not counting customer impact). A full-day outage costs $2,000-$4,000. Compare to a year of proactive managed IT.
Cyber Insurance Premium Changes
Carriers increased premiums 20-40% in 2024-2025 for businesses without documented security controls. Some now require MFA, EDR, and security awareness training to write a policy at all.
Ransomware Response (Worst Case)
Average ransomware incident for a small business in 2025 cost $30K-$300K including ransom, downtime, incident response, notification, and regulatory fines. Backups + EDR + MFA reduce probability by ~80%.
Compliance Failure Fines
HIPAA: $100-$50,000 per violation, capped at $1.9M/year per category. FTC Safeguards: up to $50,120 per violation. Florida Bar disciplinary action for client confidentiality breach can include disbarment.
Employee Onboarding / Offboarding
Setting up a new workstation, M365 account, security training, and tools costs $300-$800 per employee. Offboarding (account closure, device wipe, access revocation) is often missed entirely — creating breach risk.
Software License Sprawl
Most businesses pay for 20-40% more SaaS licenses than they actually use because nobody audits regularly. A quarterly license review is the highest-ROI hour of work an IT partner can do.
Training Time
When you roll out new tools (M365, Copilot, security software), employee training time is real cost. Budget 2-4 hours per employee per major rollout — it's the difference between adoption and shelfware.
HOW MUCH SHOULD YOU SPEND?
IT spend as a percent of revenue varies significantly by industry. Use these benchmarks as a sanity check against the number your planner produces below. If you are dramatically below, you have gaps. If dramatically above, you may be over-tooled.
Benchmarks are for total IT spend including managed services, licensing, hardware refresh, compliance, and security tooling — not just the managed-services bill.
YEAR ONE COSTS MORE.
The first year of a managed engagement (or a switch to Simply IT) typically runs 15-30% above the ongoing run-rate because of one-time setup work. Budget for it explicitly — do not assume month-1 cost is what year-3 cost will look like.
Higher cost, foundation built.
- → Onboarding fee (documentation, asset inventory, system audit)
- → Network and endpoint remediation for items found during onboarding
- → M365 migration or tenant cleanup
- → Security baseline implementation (EDR rollout, MFA enforcement, training)
- → Compliance documentation if required (HIPAA RA, WISP, etc.)
- → Hardware replacements for devices past end-of-life
- → Employee training on new tools
Predictable run-rate.
- → Monthly managed services + add-ons
- → Licensing (M365, line-of-business apps, security tools)
- → Quarterly business reviews + strategy adjustments
- → Hardware refresh reserve (3-5 year cycle, set aside monthly)
- → Annual compliance documentation refresh
- → Continued security training + simulated phishing
- → Year-end true-up and next-year planning
WHAT IT SHOULD COST AT YOUR STAGE.
Rough monthly IT budget ranges by Simply IT engagement path. Includes managed services + typical add-ons (M365, VoIP, backup) for a representative business at that stage. Hardware refresh budgeted separately.
Starter
Per-computer monitoring ($15) + security ($15) + M365 ($15/user) + selective add-ons + pay-as-you-go support
View Starter Path Details →Managed
Per-user managed tier ($75-$150) + M365 ($15/user) + VoIP ($25/user) + occasional projects. AMC billed at $100/hr remote, $150/hr on-site.
View Managed Path Details →Co-Managed
Custom-scoped engagement, vCIO retainer, enterprise security stack, M365 + VoIP add-ons. Internal IT salary not included here.
View Co-Managed Path Details →Projects
Fixed-scope quote per project. Network installation $2K-$25K. M365 migration $1.5K-$8K. Office move $5K-$20K. Compliance documentation $3K-$12K.
View Projects Path Details →THE 3-BUCKET BUDGET FRAMEWORK.
Don't budget IT as a single line item. Split it into three buckets so unexpected costs don't blow your operating budget.
Predictable Monthly
Managed services, M365 licensing, VoIP, security tooling, cloud backup. The recurring run-rate that should be locked in your operating budget.
Planned Annual
Hardware refresh reserve, compliance audits, annual penetration test, employee training rollouts, one-time projects (M365 migrations, office moves). Set aside monthly, deploy when needed.
Reserve for Surprises
Cyber incident response, hardware failures outside refresh cycle, new compliance requirements, urgent strategic projects. The 5-10% buffer that keeps surprises from becoming crises.
USE THE PLANNER BELOW.
You have the framework. Now plug in your specifics — users, computers, M365 tier, phone extensions, hardware refresh cycle, project line items — and the planner builds your complete annual budget.
WHICH SIMPLY IT PATH
FITS YOUR BUSINESS?
Simply IT offers four engagement paths. Pick the one that matches where your business is today — the planner calculates the right way depending on your choice.