For a 10- to 50-user professional services firm, there isn't one reliable percentage of revenue or per-employee number that determines the right technology budget.
A better approach is to build the budget from four categories:
Recurring Technology Costs + Lifecycle Replacements + Strategic Projects + Contingency = Annual Technology Budget
Recurring expenses include managed IT, cybersecurity, Microsoft 365, backup, cloud services, and business applications. Lifecycle spending covers computers, servers, firewalls, switches, Wi-Fi equipment, and other hardware that will eventually need replacement. Projects include planned initiatives such as office moves, cloud migrations, software implementations, and network upgrades. Contingency provides room for technology needs that weren't specifically anticipated.
For 10- to 50-user professional services firms in Las Vegas and Southern Nevada, this approach produces a much more useful budget than starting with an arbitrary industry average.
What Should a Professional Services Firm Include in Its IT Budget?
A complete technology budget should account for seven major areas:
| Budget Category | What to Plan For |
| Managed IT | Monitoring, maintenance, administration and user support |
| Cybersecurity | Endpoint, email, identity and other security services |
| Microsoft 365 & Cloud | Microsoft licensing and other cloud platforms |
| Hardware | Computers, servers, firewalls, switches, Wi-Fi and related equipment |
| Backup & Continuity | Backup services, recovery systems and continuity planning |
| Business Applications | Industry-specific and general business software |
| Projects & Contingency | Migrations, office changes, upgrades and unplanned technology needs |
Some of these costs occur every month.
Others may only happen every three, four, or five years.
A good technology budget accounts for both.
For example, a 25-person firm may have very predictable monthly expenses for managed IT, Microsoft 365 and cybersecurity. But if eight computers are due for replacement next year and the firewall reaches the end of its lifecycle shortly afterward, those expenses should also be visible in the budget.
The objective isn't to predict every expense perfectly.
It's to make sure predictable technology expenses don't become unexpected technology expenses.
- Managed IT Services
For many professional services firms, managed IT is one of the largest recurring technology expenses.
As discussed in our Managed IT Pricing Guide, a practical 2026 planning range for Las Vegas firms is approximately:
$150 to $300 per user per month
That produces the following managed IT planning ranges:
| Users | Monthly Range | Annual Range |
| 10 | $1,500–$3,000 | $18,000–$36,000 |
| 25 | $3,750–$7,500 | $45,000–$90,000 |
| 50 | $7,500–$15,000 | $90,000–$180,000 |
These are planning ranges, not quotes.
The actual cost depends on the environment and the agreement. A standardized cloud-based firm with relatively low support needs may cost less to support than a similarly sized organization with servers, multiple locations, legacy applications, aging equipment, or heavier support requirements.
The service model matters too.
Some providers bundle most proactive and reactive services into a fixed monthly fee. Others separate some support labor, projects, cybersecurity, licensing, or other services.
For budgeting purposes, the important question isn't simply:
“What are we paying per user?”
It is:
“What does that amount include, and what technology expenses still need their own budget line?”
That distinction prevents one of the most common budgeting mistakes: treating the MSP invoice as though it represents the company's entire technology budget.
- Cybersecurity
Cybersecurity should usually have its own line in the technology budget, even when some security services are included in the managed IT agreement.
Depending on the firm's needs, security spending may include:
- Endpoint detection and response
- Email security
- Multi-factor authentication and identity protection
- Security awareness training
- DNS or web filtering
- Vulnerability management
- Security monitoring
- Backup and recovery protections
Not every firm needs every available security product.
The appropriate level of spending should reflect the type of information the firm handles, contractual obligations, cyber-insurance requirements, remote work, business risk, and the firm's overall technology environment.
When preparing the budget, identify which security services are already included in the MSP agreement and which are billed separately.
That gives leadership a clearer picture of the total cost of protecting the environment, rather than assuming that “managed IT” and “cybersecurity” are the same expense.
- Microsoft 365 and Cloud Services
For most professional services firms, Microsoft 365 and other cloud services are core operating expenses.
Typical costs may include:
- Microsoft 365 licensing
- Cloud file storage
- Collaboration platforms
- Hosted applications
- Email archiving
- Cloud backup
- Identity or access tools
The important budgeting distinction is between licensing and management.
Your MSP may administer Microsoft 365 as part of the managed IT agreement while the actual Microsoft licenses are billed separately. Another provider may bundle both together.
Either structure can work.
What matters is making sure the budget reflects the full cost.
For a 25-user firm, even a modest difference of $10 per user per month in cloud licensing equals $3,000 per year. That is why recurring software and cloud costs deserve their own line items instead of disappearing inside a general “IT” category.
- Hardware and Lifecycle Replacements
Hardware is one of the easiest technology expenses to predict—and one of the most common to overlook.
Computers, servers, firewalls, switches, wireless access points, battery backups, and other equipment all have useful lifecycles.
Instead of waiting until equipment fails, professional services firms should plan replacement spending several years in advance.
A simple example:
A 25-user firm with 25 primary computers may choose to replace approximately five computers per year on a five-year cycle.
If each fully configured business-class computer costs approximately $1,500 to $2,500, that creates an annual workstation budget of roughly:
$7,500 to $12,500 per year
That is much easier to absorb than unexpectedly replacing 15 computers in one year.
The same concept applies to network equipment and servers.
A good hardware lifecycle plan should identify:
- Equipment age
- Warranty status
- Operating system support
- Performance
- Security requirements
- Expected replacement year
- Estimated replacement cost
The goal is not to replace equipment simply because it is old.
The goal is to know when replacement is likely and what it will cost.
- Backup and Business Continuity
Backup and business continuity are related, but they are not the same thing.
Backup protects copies of data.
Business continuity focuses on how the company keeps operating or restores operations after a significant disruption.
Depending on the environment, the budget may include:
- Cloud backup
- Microsoft 365 backup
- Server backup
- Offsite data storage
- Backup monitoring
- Recovery testing
- Business continuity systems
- Disaster recovery planning
The amount a firm should spend depends heavily on how quickly systems and data need to be recovered.
A business that can tolerate a full day without a particular application has different requirements than a company that needs critical systems restored within a few hours.
This is why backup should not be evaluated only by asking:
“Do we have backups?”
A better question is:
“How quickly could we restore the systems and information our employees need to work?”
That answer should guide the technology budget.
- Business Applications
Professional services firms often spend a significant amount on software that has little to do with the MSP itself.
Depending on the business, those applications may include:
- CRM platforms
- Document management
- Project management
- Accounting systems
- Time and billing software
- Estimating software
- Design applications
- Industry-specific line-of-business platforms
- Electronic signature tools
These costs should be included in the technology budget because they are part of the total cost of operating the firm's technology environment.
They can also grow quietly.
A platform that costs $75 per user per month for 10 employees may not receive much attention.
At 40 users, that same service costs $36,000 per year.
For that reason, firms should review recurring software costs at least annually and ask:
- Are all licenses still being used?
- Are we paying for duplicate tools?
- Did pricing increase?
- Are users on the correct license level?
- Has another system replaced this functionality?
Software sprawl can become a meaningful technology expense even in relatively small organizations.
- Projects and Contingency
Not every technology expense fits neatly into a monthly recurring cost.
Projects might include:
- Office moves
- Network replacements
- Cloud migrations
- Server replacements
- Microsoft 365 migrations
- New office buildouts
- Major software implementations
- Security improvements
These should be budgeted separately whenever possible.
It is also useful to maintain a contingency amount for technology needs that were not specifically anticipated.
That does not mean creating a large pool of money for vague emergencies.
It means recognizing that some technology expenses will occur even with good planning.
Use a Four-Bucket Technology Budget
For most professional services firms, the simplest budgeting framework is:
- Recurring Costs
Monthly or annual expenses such as:
- Managed IT
- Cybersecurity
- Microsoft 365
- Backup
- Cloud services
- Business applications
- Lifecycle Replacements
Planned replacement of:
- Computers
- Servers
- Firewalls
- Switches
- Wireless equipment
- Other infrastructure
- Strategic Projects
Known initiatives such as:
- Migrations
- Office moves
- Major upgrades
- New systems
- Contingency
A reasonable reserve for unplanned technology needs.
This produces a much more useful formula than relying on a generic percentage of revenue:
Recurring Costs + Lifecycle Replacements + Strategic Projects + Contingency = Annual Technology Budget
Example: A 25-User Professional Services Firm
Consider a 25-user Las Vegas professional services firm.
Its annual technology budget might include:
- Managed IT services
- Microsoft 365 and cloud licensing
- Cybersecurity services
- Backup
- Five planned computer replacements
- Business applications
- One planned network or software project
- A small contingency amount
The exact total will vary significantly depending on the applications, hardware, service model, and security requirements.
The important point is that leadership can now see why the money is being spent.
Instead of one large “IT” number, the company has a budget that separates:
Run the business. Protect the business. Replace aging technology. Improve the business.
That makes technology spending easier to explain, prioritize, and manage.
Common Technology Budgeting Mistakes to Avoid
Professional services firms do not usually get into trouble because they spend too much or too little in one specific category.
More often, the problem is that important costs are missing from the budget entirely.
Three common mistakes are:
Treating the MSP Invoice as the Entire IT Budget
Managed IT is only one part of the picture.
Licensing, cybersecurity, hardware, backup, business applications, projects, and lifecycle replacements may all be separate.
Waiting for Equipment to Fail
Replacing computers, firewalls, servers, and other equipment only after failure creates unnecessary disruption and makes budgeting harder.
A simple lifecycle schedule turns many “surprises” into planned expenses.
Ignoring Recurring Software Costs
Cloud and software subscriptions can increase gradually as the company grows.
Review them annually to identify unused licenses, duplicate tools, and pricing changes.
How ANAX Helps Firms Build a More Predictable Technology Budget
ANAX has been serving businesses for 15 years, and our founder has worked in the managed services industry for 25 years.
We take a local-first approach to hiring and service delivery, with a 100% U.S.-based team primarily living and working in the Las Vegas Valley.
Our goal is not simply to sell a fixed package of technology services.
We help clients understand:
- What they are spending today
- Which costs are recurring
- Which hardware should be replaced and when
- Which projects are likely to be needed
- Where cybersecurity costs fit
- How support usage affects the right service model
That creates a technology budget leadership can actually use.
Frequently Asked Questions
How much should a small professional services firm spend on technology?
There is no single percentage that works for every firm.
A better approach is to calculate actual recurring costs, expected equipment replacements, planned projects, and a contingency amount.
Should managed IT and cybersecurity be separate budget items?
Usually, yes.
Even if some cybersecurity services are included in the managed IT agreement, separating them during planning makes the true cost easier to understand.
How far ahead should we plan hardware replacements?
Ideally, firms should maintain a three- to five-year lifecycle plan for major equipment.
That makes annual budgeting much more predictable.
Should software subscriptions be included in the IT budget?
Yes.
Microsoft 365, cloud applications, business software, backup services, and other recurring platforms are part of the total technology cost.
How often should we review the technology budget?
At least annually.
It is also worth revisiting the budget when the firm adds employees, moves offices, changes major applications, or plans a significant technology project.
Final Takeaway
A useful technology budget is not one large “IT” number.
For a 10- to 50-user professional services firm, the better approach is:
Recurring Costs + Lifecycle Replacements + Strategic Projects + Contingency = Annual Technology Budget
That structure helps leadership understand where the money is going and makes future expenses easier to plan.
Want Help Building a Technology Budget for Your Firm?
If you run a 10- to 50-user professional services firm in Las Vegas or Southern Nevada, ANAX can help you review your current technology spending and build a more predictable plan.
We can help identify recurring costs, upcoming hardware replacements, security requirements, likely projects, and areas where spending may be duplicated or unclear.
Click here to schedule an initial consultation with ANAX.
The goal is not to sell you more technology. It is to help you understand what you are spending, what is coming next, and whether your current technology plan supports the business.
