"Whatever it cost last year, plus a bit." In most small businesses we talk to, that is the entire IT budget. It works until it doesn't, and it usually stops working in the same way: a laptop dies in March, a licence renews at a higher price in June, and an insurance renewal in September asks for controls that nobody planned for.
Fall is when most small businesses set next year's numbers, and IT is the line most often filled in last and with the least thought. While nobody can predict exactly what will break in 2027, most of an IT budget is not unpredictable at all. It is a handful of known costs that simply never got written down.
Here is how we would build it, in five lines.
1. Running costs, per person
Start with the cost that scales with headcount: support, security, backup, and administration of your Microsoft 365 or Google Workspace tenant. Under a managed plan this is a single per-user number. Under hourly or break-fix support it is a guess, which is precisely the problem.
For reference, managed IT in Metro Vancouver generally runs $110 to $250 per user per month, depending on what is included. We publish ours, and the market range, in what managed IT costs in Vancouver.
Then ask the question that matters: are you planning to hire? Two new people in May means two more users from May onward. Budgeting for the team you have today, rather than the team you will have, is the most common reason this line runs over.
2. Licences and subscriptions
List every subscription the business pays for, with its renewal date and annual cost. Microsoft 365 or Google Workspace, accounting software, practice-management or job-management software, the password manager, the domain, the website. Most businesses find at least one they forgot about and at least one nobody uses.
Watch the renewal dates closely. Prices tend to change at renewal, not mid-year, and a renewal that lands in the same month as an insurance premium can make for an uncomfortable quarter.
3. Hardware replacement
Laptops and desktops have a working life of roughly four to five years in a typical office. Divide the number of machines by that life and you have the number to replace each year. A twelve-person office should expect to replace two or three machines a year, every year, rather than ten at once when the whole fleet ages out together.
Spreading replacements evenly is the single biggest thing a small business can do to smooth its IT spend. It also means no machine is ever old enough to become a security problem. If any of yours still run Windows 10, they belong at the top of next year's list, for the reasons we set out in Windows 10, a year after support ended.
4. One-off projects
Name them now, with a rough cost and a quarter. A Wi-Fi upgrade, an office move, moving off an old server, getting the business ready for its cyber insurance renewal. Projects that are written down get scheduled into quiet months. Projects that are not get done in a hurry, at a worse time, for more money.
5. A contingency line
Something unplanned will happen. Five to ten percent of the total is a reasonable cushion for a small business. If it goes unspent, it rolls into next year's hardware line, and nobody minds.
Turning it into a number
Add the five lines together and divide by twelve. That is your monthly IT cost, and for most small businesses it is both higher than "last year plus a bit" and far more predictable. The surprise is rarely the size of the number. It is how much of last year's spend was reactive.
Our verdict
We don't doubt that "last year plus a bit" feels simpler. However, it treats IT as a single unpredictable expense when it is really five predictable ones and a small buffer. A business that writes those five lines down in October spends less in 2027, mostly because it stops paying the premium that comes with doing everything in a hurry.
If you want a straight number for your own team, the insurance-readiness review includes a plan recommendation and a monthly figure, and our pricing is published in full so you can check it against everyone else's.