“How much should I be spending on IT?” is one of the most common questions Perth business owners ask us. Too little and you're exposed - to downtime, cyberattacks, and hardware failure. Too much and you're wasting money on complexity you don't need. Here's how to think about it.
The Industry Benchmark
Small businesses typically spend between 4% and 8% of revenue on IT, depending on how technology-dependent their operations are. A professional services firm running everything in the cloud will sit at the higher end; a trade business with minimal tech needs may sit lower.
A simpler per-head benchmark: $150–$350 per staff member per month covers managed IT support, Microsoft 365, security tools, and cloud backup for most Perth SMBs. Below $100/head and you're likely underinvesting in security or support quality.
The Four Budget Categories
1. IT Support
This is your ongoing support - someone to call when things break, proactively monitor your systems, and handle day-to-day IT tasks. Options:
- Break-fix (pay as you go) - low monthly cost until something goes wrong, then unpredictable bills. Works for businesses with very few staff and minimal IT complexity.
- Managed IT (flat monthly fee) - covers unlimited support, proactive monitoring, patch management, and security. Predictable cost and better outcomes for businesses with 5+ staff or cloud-dependent operations.
For most Perth SMBs, managed IT pays for itself quickly in prevented downtime and staff productivity - a single major outage easily costs more than six months of managed IT fees.
2. Software & Subscriptions
The biggest ongoing cost for most Perth businesses. Common items:
- Microsoft 365 Business Premium - approximately $38/user/month. Includes email, Teams, Office apps, OneDrive, SharePoint, Intune device management, and Defender security. The single best-value subscription for most SMBs.
- Accounting software - Xero, MYOB, or QuickBooks: $30–$90/month depending on plan
- Password manager - $5–$8/user/month for a business plan
- Industry-specific software - varies widely
Audit your subscriptions annually. Most businesses are paying for tools they no longer use.
3. Cybersecurity
If you're on Microsoft 365 Business Premium, many security tools are already included - endpoint protection, email filtering, MFA, and device management. If not, budget separately for:
- Endpoint Detection and Response (EDR) - $8–$15/device/month
- Email security filtering - $4–$8/user/month
- DNS filtering - $3–$5/user/month
Cybersecurity insurance is also worth considering. Premiums for Perth SMBs typically run $1,500–$5,000/year depending on turnover and industry. Your insurer will ask about your security controls - having MFA and managed backups in place significantly reduces premiums.
4. Hardware Refresh
The most common budgeting mistake: treating hardware as a one-off cost rather than a recurring one. A computer has a practical business life of 4–5 years. After that, it's slower, increasingly unreliable, and may not support current security requirements (like Windows 11).
A simple approach: divide your total hardware fleet value by 4. That's roughly your annual hardware refresh budget. A 10-person business with $30,000 in hardware should budget ~$7,500/year for replacement - whether spent or held in reserve.
Where Perth Businesses Most Often Underspend
- Backups - a proper cloud backup solution costs $20–$80/month for most SMBs. Many Perth businesses are running no backup or an untested one. The cost of a ransomware recovery without backups can be tens of thousands.
- Security awareness training - $10–$20/user/month for a platform that runs simulated phishing tests and training modules. One prevented BEC fraud pays for years of training.
- Documentation - having your IT environment properly documented means faster recovery in a disaster and easier onboarding of new IT providers. Often zero cost if your managed IT provider includes it.
Making the Business Case
When IT spend feels hard to justify, frame it against the cost of failure. One day of downtime for a 10-person Perth business typically costs $5,000–$15,000 in lost productivity and recovery time. A ransomware event without good backups: $20,000–$100,000+. A data breach notification and legal costs: potentially more. The IT budget is business continuity insurance as much as it is a technology cost.
Frequently Asked Questions
What percentage of revenue should a small business spend on IT?
Most small businesses land somewhere between 4% and 8% of revenue, depending on how dependent the business is on technology. A professional services firm running everything through the cloud tends to sit at the higher end, while a trade business with lighter tech needs usually sits lower.
Is a per-head IT budget more useful than a percentage of revenue?
For a lot of small businesses, yes, since it's easier to plan around. Somewhere around $150 to $350 per staff member per month typically covers managed support, Microsoft 365, security tools, and backup for most Perth SMBs, though the right figure depends on your industry and setup.
Why does hardware need its own recurring budget line?
Because computers have a practical working life of around 4 to 5 years, treating a hardware purchase as a one-off cost usually means the whole fleet ages out at once and creates a large unplanned expense later. Budgeting a portion of your total hardware value each year spreads that cost out and avoids the surprise.
Where do Perth small businesses most commonly underspend on IT?
Backups and security awareness training are the two areas we see skipped or under-resourced most often. Both are relatively inexpensive compared to what they protect against, and skimping on either tends to show up as a much larger cost later if something goes wrong.
Our IT strategic planning service includes budget forecasting as part of a 1-3 year technology roadmap for your Perth business.
IT Strategic Planning →Want a clear picture of what your Perth business should be spending on IT?
Call 0433 087 091 - we'll review your current IT setup and give you an honest, itemised recommendation with no obligation.
Book a Free IT ReviewFor related reading, see our guides to Getting Cybersecurity Budget Approved by Your Board or Owners, IT Strategy vs Managed IT: Which Does Your Business Need?, and The Real Cost of IT Downtime.