Budgeting for Your IT Infrastructure in 2025 and Beyond

As a business owner in 2025, you’re likely juggling a dozen priorities – and technology probably plays a part in each of them.

But here’s a question that’s may not be top-of-mind: How much should I budget for IT infrastructure this year?

With technology driving everything from sales to security, getting this number right can make or break your growth plans.

Let’s break it down so you can plan smart and keep your business humming.

Why IT Budgeting Matters More Than Ever in 2025

We’re in a digital-first world, and 2025 is no exception. Inflation’s still nibbling at profit margins, cyber threats are spiking (up more than 30% year-over-year, thanks to AI-powered attacks), and customers expect seamless online experiences.

Your IT infrastructure – think computers, networks, cloud services, and cybersecurity – isn’t just a back-office expense anymore. It’s the backbone of your operation. It’s how work gets done. Skimp here, and you risk costly downtime or data breaches, or losing ground to competitors who’ve gone all-in on tech.

But how do you know what’s “enough” without overspending? The answer depends on your business size, industry, and goals, but here are some solid benchmarks and strategies to guide you.

The Numbers: What’s the Average Spend?

Industry insights suggest small businesses (under $50 million in revenue) typically allocate 4–6% of their annual revenue to IT, according to surveys like those from Statista. For a business pulling in $500,000 a year, that’s $20,000–$30,000. If you’re in a tech-heavy field like e-commerce or finance, you might lean toward the higher end—closer to 7–8%. A mom-and-pop retail shop? You could hover around 3–4%.

Breaking it down further, here’s where that budget often goes:

• Hardware (20–25%): Laptops, servers, routers – the things that keep your team working.
• Software/Cloud Services (30–35%): Think subscriptions like Microsoft 365, QuickBooks, or cloud storage.
• Cybersecurity (10–15%): Antivirus, firewalls, and training to fend off threats and keep your team working safely.
• Support (20–25%): Whether it’s an in-house IT expert or a managed service provider (MSP).
• Buffer (5–10%): For surprises like a crashed server or a sudden need for more cloud space.

So, a $25,000 IT budget might look like $6,000 for new laptops, $8,000 for software, $3,000 for security, $5,000 for support, and $3,000 as a safety net.

Sound about right? Let’s tweak it to fit your reality.

Factors That Shape Your Budget

No two businesses are alike, and your IT spend should reflect that. Here’s what to consider:

1. Team Size: Five employees need less gear than 50. A rough rule of thumb is $1,000–$3,000 per user annually for basic IT needs, scaling up with complexity.
2. Industry: A legal firm handling sensitive client data needs beefier security than a bakery selling cupcakes online.
3. Growth Plans: Planning to double your customer base or go remote? Factor in scalable solutions like cloud infrastructure (projected to hit $1.3 trillion globally in 2025, per IDC).
4. Current Setup: If your computers are chugging along on Windows 10 (support ends October 2025), it’s time for upgrades.
5. Risk Tolerance: Can you afford a day offline? The potential cost of downtime may mean you need a bigger budget for cybersecurity, backups, and disaster recovery planning.

Real-World Example: The Coffee Shop vs. The Consultant

Take a local coffee shop with five staff and $300,000 in revenue. They might spend $12,000 (4%) on IT: $3,000 for a POS system and Wi-Fi upgrades, $4,000 for cloud-based inventory and payroll tools, $2,000 for basic security, and $3,000 for occasional tech support. It’s lean but functional.

Now, a freelance marketing consultant earning $150,000 might budget $9,000 (6%): $2,000 for a high-end laptop, $3,000 for premium design software and cloud storage, $2,000 for advanced cybersecurity (client data’s gold), and $2,000 for a part-time IT helper. Same ballpark, different priorities.

Tips to Stretch Your IT Dollars

You don’t have to break the bank to build a solid IT foundation. Here’s how to get more bang for your buck:

• Go Cloud-First: Ditch the pricey on-site server for scalable cloud options—pay only for what you use.
• Audit Your Gear: Replace only what’s obsolete, not everything at once.
• Outsource Wisely: MSPs charge $80–$250 per user monthly, often cheaper than a full-time IT hire for small teams.
• Prioritize Security: A $500 antivirus subscription beats a $50,000 ransomware cleanup.
• Plan for Flexibility: Build in 5–10% extra for unexpected hiccups.

The Bottom Line

For 2025, start with 4–6% of your revenue as a baseline, then adjust based on your unique needs. A $10,000 budget might suffice for a tiny operation, while a growing firm could easily hit $50,000. The key? Align your IT spend with your goals. Whether you’re focused on staying secure, supporting remote work, or scaling up fast, your IT infrastructure supports your entire business – and it deserves the proper investment.

Not sure where to start? Audit your current setup, chat with your team about pain points, and maybe even call an IT pro for a quick consult. In a year where tech can make or break you, a smart IT budget isn’t just a cost, it’s your ticket to thriving in 2025.

Find Your Ideal IT Solutions with Lighthouse

For more than 20 years, Lighthouse Technology Services has helped businesses in Buffalo and beyond find the right technology and the right talent to power their growth. Looking for someone to help you find the right solutions? Explore our managed IT services offerings and learn how we might be able to help better manage your IT environment.