A useful IT budget separates support, software subscriptions and money reserved for future equipment. This worked planning example is illustrative: it is not market research, a client case study or a current vendor price quote. It uses North Star's published Professional starting rate for the support baseline and explicit assumptions for licensing and hardware.
Assume 10 users and 10 devices in a mostly cloud-based Canadian office, with no on-premises server or unusual compliance requirements. All amounts are in Canadian dollars. Replace the assumptions with your actual inventory and current quotes before making spending decisions. If terms like MSP are new to you, start with our plain-language guide to what an MSP actually is.
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A Worked Planning Allowance, Line by Line
| Planning line | Calculation | Monthly allowance | Over 12 months |
|---|---|---|---|
| Professional support baseline | 10 users × $129/user/month | $1,290 | $15,480 |
| Assumed licence allowance | 10 users × $35/user/month | $350 | $4,200 |
| Assumed hardware reserve | 10 devices × $1,200 ÷ 48 months | $250 | $3,000 |
| Planning allowance including reserve | $1,290 + $350 + $250 | $1,890/month | $22,680 over 12 months |
The arithmetic is $1,290 + $350 + $250 = $1,890/month; $1,890 × 12 = $22,680 over 12 months. This combines a support starting-rate baseline, assumed subscriptions and a hardware reserve; it is not an invoice or a complete operating budget.
Excluded: tax, onboarding, projects, travel and unlisted services. Excluded amounts are unknown, not zero or free. Confirm backup, security tooling, after-hours support and any site requirements in the written scope, then add separately quoted costs where needed. This allowance is not a fixed quote or a guarantee of included services.
Where Each Number Comes From
Licensing assumption: $350/month. The $35/user/month is an assumed planning input, not Microsoft's Business Premium list price or a claim about any Microsoft bundle. Verify licensing against a current quote for your actual products, seat count, billing term, renewal date and existing subscriptions before use. Start with the questions in our Microsoft 365 pricing in Canada guide, then confirm the vendor's current terms.
Support baseline: $1,290/month. North Star publishes Essentials from $89/user/month and Professional from $129/user/month. Ten Professional users therefore give a $1,290/month starting-rate baseline. Ten Essentials users would give an $890/month support baseline, but that is not a like-for-like recommendation or a complete budget. CIS Aligned uses a scoped monthly site fee, not a per-user rate; request a scoped fee rather than multiplying it by headcount. Review our pricing page, the questions in what managed IT costs in Canada and our guide to MSP pricing models. Confirm coverage, response arrangements, minimums and exclusions in your actual proposal.
Hardware reserve: $250/month. We assume 10 devices at $1,200 each and a 48-month replacement cycle: $12,000 ÷ 48 = $250/month. This is money reserved for future replacements, not an actual invoice, lease payment, accounting depreciation schedule or cash purchase. Buying all 10 devices at the assumed price would require $12,000 when purchased, before tax and other costs. Schedule actual purchases separately and adjust the reserve for device age, accessories and your own quotes.
Backup and security scope. List the data and devices to protect, who checks backup jobs, how restores are tested, who manages updates and account access, and who responds outside agreed hours. Ask which items are included and which require separate licences or services. An omitted line does not establish free coverage, a particular security capability or compliance.
Projects and delivery. Identify migrations, network changes and onboarding separately. North Star publishes a $720/day on-site rate; that is not a hardware bundle or a total project quote. Its dispatch bases are Grande Prairie and Prince George only. Canada-wide service is remote, with onsite work scheduled and scoped; confirm availability, travel and project costs before treating any visit as included.
What Changes at 5, 10 and 25 Staff
At 5 staff, enter your actual user and device counts separately. Shared devices and spare laptops can make them different. Ask whether a provider applies a minimum charge before relying on headcount multiplication.
At 10 staff, the example assumes one device per user and steady costs across 12 months. If hiring starts partway through the year, plan subscriptions and purchases from their actual start dates rather than treating the annualised allowance as cash flow.
At 25 staff, rebuild the inventory, support scope and replacement schedule. Additional sites, servers or compliance work can change the proposal. Do not assume volume discounts or a headcount threshold for hiring internal IT; compare the responsibilities and coverage you need.
The DIY and Break-Fix Route, Priced Honestly
Hourly support can suit a business that can assign routine maintenance to someone with the time and skills. North Star publishes $95/hour for standard scheduled work and $143/hour for emergency response; confirm availability, minimum charges and coverage in the applicable terms. Compare your likely call-out needs and internal responsibilities with a written managed-service scope. Neither approach is automatically cheaper.
Include internal staff time and the effect of interrupted work in your decision, using your own payroll and operational figures. Assign responsibility for updates, MFA, endpoint protection and backup restore checks between calls. Break-fix arrangements do not by themselves establish whether those tasks are being done.
A useful provider comparison records who owns each task, when help is available, what happens during an incident, how access and data are handed back on exit, and which charges require separate approval.
When a 10-Person Company Genuinely Does Not Need Managed IT
A simple cloud setup with a capable internal owner may be manageable without a full managed contract. Check the sensitivity of your data, recovery needs and available staff time before choosing that route. Ten employees alone does not determine the answer.
Record who maintains accounts and devices, checks backups, tests recovery and covers absences. Price any outside help and subscriptions needed to make that plan workable. Neither this example nor a cloud-only setup establishes that your requirements are met.
Consider additional support when onboarding becomes unreliable, nobody owns maintenance or client and insurer requirements exceed the team's capacity. Compare an internal hire, a managed provider and a shared arrangement by responsibilities and coverage rather than an invented salary benchmark.
Frequently asked questions
Is this planning allowance what every 10-person company should spend?
No. The illustrative $1,890/month allowance is $22,680 over 12 months, combining a $1,290 Professional support baseline, $350 assumed licensing and a $250 hardware reserve. It is not a market average, a client case study or a quote. Tax, onboarding, projects, travel and unlisted services are excluded, not zero or free; your actual scope and spending can differ.
Does managed IT pricing include Microsoft 365 licences?
Confirm this in the written quote rather than assuming inclusion or pass-through pricing. This example adds an assumed $35/user/month licence allowance separately; it is not Microsoft's Business Premium list price. Verify a current quote for your actual products and billing term, and check for overlapping subscriptions before use.
What percentage of revenue should a small business spend on IT?
This example does not establish a revenue percentage. Build a plan from users, devices, support scope, actual licensing quotes and a replacement reserve. Add separately scoped costs and compare the resulting plan with cash flow and operational needs rather than treating a percentage as a spending target.
Can we save money by running laptops longer than four years?
A longer replacement cycle lowers the calculated monthly reserve if the assumed device price stays the same, but it does not establish lower total cost. Check condition, warranty, software support, security requirements and repair risk. The 48-month cycle here is a planning assumption, and the reserve is not a purchase payment.
Is break-fix cheaper than managed IT for 10 people?
It depends on actual service needs and written terms. Compare quoted hourly charges, internal maintenance time, coverage and interruption costs with a scoped managed proposal. Assign responsibility for updates, account security and backup testing between calls; neither arrangement alone guarantees those tasks are covered.
Should a 10-person company hire an IT person instead of using an MSP?
Compare the work and coverage required with the capacity of an internal hire, a managed provider or a shared arrangement. Include tools, absence cover and specialist needs in that comparison. This allowance is not a salary benchmark and does not establish a headcount at which hiring becomes the right choice.
Different headcount? Use the client-only IT budget calculator with your own inputs. Its sample button loads this illustrative $1,890/month scenario. Licensing and hardware are selected by default with unknown amounts left blank; enter your actual assumptions before relying on a total. A partial allowance is not a quote.
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