TL;DR: A small business IT budget should cover what you already run, the support that keeps it running, and the replacements and projects you can see coming. Many “surprise” IT costs aren’t surprises. Microsoft 365 prices rose on July 1, 2026, and Windows 10 security updates doubled in price in October. Both were announced in advance. List every recurring cost, put renewal and end-of-support dates on a calendar, and review it quarterly.
A small business IT budget often gets built backward. Something breaks or a renewal notice shows up, the money gets found, and that number becomes next year’s guess.
It feels like technology is unpredictable. Much of it isn’t. The costs that blow up a budget are often the dull ones: a subscription that renewed at a higher price, an old operating system that now costs money to keep patched, a warranty that ran out in March.
Nearly all of those had a date on them months ahead. Nobody put the date where the person holding the checkbook would see it.
If you’re a Louisville business owner planning for 2027, two of those dates have already landed this year. They’re worth real line items, and I’ll walk through both below.
What Should a Small Business IT Budget Include?
Include everything you pay for technology today, the support that keeps it working, and what you expect to replace or add during the year. It’s easy to miss recurring costs that are billed to different cards or buried in other departments, so start with a full list before you assign any numbers.
Here’s the checklist I’d start from:
- Computers and equipment. New and replacement devices, plus monitors, docks, and the labor to set them up.
- Software and cloud subscriptions. Microsoft 365 or Google Workspace, accounting, industry software, and every per-user tool.
- Support. Your IT provider or internal IT staff.
- Security. Endpoint protection, email filtering, multifactor sign-in, and security awareness training.
- Backup and recovery. Including backups of your cloud data, which your Microsoft 365 or Google Workspace subscriptions do not include.
- Internet and network. Service, firewall, switches, Wi-Fi, and their licenses.
- Phones and communication. Phone system, mobile plans, and video meetings.
- Website and domains. Hosting, domain renewals, and maintenance.
Many “Surprise” IT Costs Came With a Date
The expensive surprises in IT are rarely dramatic. They’re boring, and that’s why they get ignored. A price change is announced in a vendor blog post. An end-of-support date sits on a lifecycle page for years. A firewall license expires on the anniversary of the day someone installed it.
Each of those is a known cost with a known date. It becomes a surprise only because the date lived with the vendor and not with you.
So the most useful thing to add to a budget isn’t a bigger cushion. It’s a calendar. For every item on your list, write down when it renews, when its warranty ends, and when the vendor stops supporting it.
The next two sections are this year’s examples.
How Much Did Microsoft 365 Go Up in 2026?
Microsoft raised list prices on July 1, 2026. Business Basic went from $6.00 to $7.00 per user per month, and Business Standard went from $12.50 to $14.00. Business Premium stayed at $22.00. Existing customers move to the new price at their first renewal on or after that date.
Those figures come from Microsoft’s own pricing and packaging update, and Microsoft announced the change in December 2025. That’s seven months of notice.
Those are list prices, and what you pay can differ. Pricing depends on whether you’re on an annual commitment paid monthly or a month-to-month agreement, so check which one your business has before you plug in a number.
The math is small per person and adds up across a team. At list price, a 20-person office on Business Standard pays $1.50 more per user each month, or $360 more a year, for the same licenses.
Many of the businesses I work with run Business Standard, so this is the line I’d check first. If your renewal falls in 2027 and nobody updated the number, your budget is already short.
It’s also a reason to look at your plan. The gap between Standard and Premium is now $8.00 per user, down from $9.50. Premium adds security and device management tools that Standard doesn’t have. Whether that’s worth it depends on your business, and it’s a better conversation to have before renewal than after.
What Does It Cost to Keep Windows 10 Computers in 2027?
More than it did in the first year. Windows 10 support ended in October 2025. Businesses can pay Microsoft for Extended Security Updates, and the price doubles each year. Year one cost $61 per device. Year two began October 14, 2026, at $122 per device, and year three is $244.
The charges are cumulative. A business that skipped year one and joins in year two pays for both years.
So a computer kept on Windows 10 for all three years costs $427 in update fees alone, and at the end you still have an old computer. For ten machines, year two is $1,220.
Paying for one more year can make sense when a PC runs software that isn’t ready for Windows 11. It works as a bridge. As a plan, it gets expensive fast. Either way, it belongs in the 2027 budget as a named line: the fee for each Windows 10 computer you keep, or the replacement cost for each one you don’t.
Split the Budget Into Run, Replace, and Projects
One big IT number is hard to manage because it hides three different kinds of spending.
- Run. The recurring costs that keep the business working: subscriptions, support, security, internet, phones. This should be the most predictable part.
- Replace. Equipment reaching the end of its warranty or vendor support. Spread it out so you aren’t buying every computer in the same year.
- Projects. One-time work like a new office, a software migration, or a phone system change. Budget the setup and the new recurring cost, plus any overlap while old and new run side by side.
Then hold something back for the unplanned. There’s no reserve percentage that fits every business, and I’d be wary of anyone who quotes one. Base yours on how old your equipment is and how long you could work without it.
Predictable support helps here. A flat monthly fee is easier to plan around than hourly bills, which is one of the things to weigh when you’re comparing IT providers.
How Do You Build an IT Budget Step by Step?
Start from what you actually spent, then add dates. Pull twelve months of technology charges from every card and account, group them into run, replace, and projects, and mark each item’s renewal and end-of-support date. Adjust for hiring and other planned changes, then review the whole thing every quarter.
- Gather twelve months of actual spending. Check every credit card. Subscriptions hide.
- Inventory your equipment with purchase dates, warranty dates, and operating system versions.
- Put the dates on a calendar. Renewals, warranty ends, and end-of-support dates.
- Update for known price changes. This year that means Microsoft 365 and Windows 10.
- Add business changes. New hires, departures, a move, a new location.
- Review it with your IT provider and your accountant, then check it again each quarter.
Your accountant can advise on how purchases should be treated for tax purposes. If you carry cyber insurance, ask your carrier what security controls the policy or application requires, since those can become budget lines too.
Put the Dates Where You’ll See Them
When an IT cost blindsides a business, the information was often available all along. It was sitting on a vendor’s website. A budget built on a complete list, a calendar of dates, and a quarterly check takes much of the surprise out of technology spending.
If you’d like help building that list and calendar for 2027, schedule an intro call with Z-JAK. Planning like this is part of our managed IT services, and it ties directly into your cybersecurity plan.
Frequently Asked Questions
What percentage of revenue should a small business spend on IT?
There’s no reliable universal number. The right amount depends on your industry, how much of your work runs on technology, your compliance requirements, and the age of your equipment. Build the budget from your actual list of costs and dates, not from a percentage.
How often should we review the IT budget?
At least every quarter. A quarterly review catches renewals before they arrive, shows where spending has drifted, and gives you time to plan for price changes vendors have announced.
Should we keep paying for Windows 10 updates or replace the computers?
It depends on the computer. Extended Security Updates cost $122 per device for year two and $244 for year three, and the charges are cumulative. That can be a reasonable bridge for a PC tied to older software. For many others, the money is better put toward a replacement.
Did Microsoft 365 Business Premium go up in price in 2026?
No. Business Premium stayed at $22.00 per user per month. Business Basic rose to $7.00 and Business Standard rose to $14.00, effective July 1, 2026, at the first renewal on or after that date.
Does cyber insurance belong in the IT budget?
The premium is a business cost you should plan for, wherever you record it. Your carrier may also require certain security controls, and those are technology costs. Coverage questions belong with your carrier or broker.
Planning Your 2027 Technology Spending?
Budget season is easier with a full list and a calendar in front of you. If you want a second set of eyes on yours, reach out to our Louisville team and we’ll start with what you’re paying for today.