It's one of the most common questions I get from owners, and it deserves a straight answer instead of "it depends." So here's the straight answer, followed by the part that actually matters: the number is less important than what the number is buying.

The benchmarks

Most small and mid-sized businesses land somewhere between 2% and 6% of revenue on technology, all-in. Where you sit in that range tracks how tech-dependent the business is:

  • Lower end (2–3%): field services, construction, distribution — businesses where technology supports the work but isn't the work.
  • Middle (3–5%): professional services, healthcare, manufacturing with modern systems.
  • Higher end (5–6%+): businesses where the product or delivery is digital, heavily regulated industries, and anyone mid-way through a major systems change.

If percentages feel abstract, the per-head view is often more useful: for a typical office-based SMB, all-in technology cost commonly runs a few thousand dollars per employee per year once you count everything — devices, software, support, security, and connectivity.

What "all-in" actually includes

Benchmarks mislead when businesses compare a partial number to a full one. Count all of it:

  • Hardware (computers, servers, network gear) — including the replacement cycle, not just this year's purchases
  • Software and cloud subscriptions — including the ones individual departments quietly signed up for
  • IT support, whether staff, a managed provider, or both
  • Security tools, backup, and compliance costs
  • Internet, phones, and connectivity

That department-level subscription spend is the one almost everyone undercounts. When I do an assessment, it's routine to find the real software total running 30–50% above what the owner thought it was.

Signs you're overspending

  • Your license counts haven't been reconciled against headcount in over a year (see the renewal questions — this is where the money leaks)
  • You're paying for overlapping tools that do the same job
  • Your support costs keep rising while your headcount hasn't
  • Nobody can explain what a given line item is for — but it renews anyway

Signs you're underspending — the quieter, more expensive problem

Underspending rarely shows up on a report. It shows up as risk:

  • Computers and servers past their sensible life, "still working fine" until the week they aren't
  • Backups that exist but have never been test-restored
  • Security that amounts to antivirus and hope
  • One person (or one vendor) who is the only one who knows how anything works

A lean IT budget that skips these isn't lean — it's borrowing against a bad day. The businesses that get hurt worst by outages and breaches are almost never the ones that spent too much.

The number matters less than the mix

Two businesses can each spend 4% of revenue and be in completely different shape. What matters:

  • Is the spend deliberate? Every significant line item should trace to a decision someone made on purpose, recently — not a renewal that fires on autopilot.
  • Is it balanced? Keeping the lights on should not consume the whole budget. If there's nothing left for improvements, the budget is treading water.
  • Does anyone own it? Someone should be able to show you the whole picture on one page. If nobody can, that's the first thing to fix — you can't manage a total you can't see.

The short version

Expect 2–6% of revenue depending on how tech-dependent you are; count everything before comparing yourself to a benchmark; and worry less about the total than about whether each dollar was a decision. If you'd like the one-page picture of where your money is going and whether it's working, that's exactly what a technology assessment produces — or start with the free IT Decision Scorecard and book a call to talk through what it shows.