Ask an IT provider what a 10-person company should budget and you usually get "it depends, book a call." Fair enough. It does depend. But you still deserve a starting number before anyone asks for your calendar. So here is one, built line by line, with the math shown. We are an MSP, so read it knowing that, but every figure below is checkable against public list prices or our own published rates.
The assumptions: a 10-person Canadian office, mostly cloud-based, running Microsoft 365, no on-premises server, no unusual compliance burden. All figures are annual, in Canadian dollars, before tax. If a line does not match your situation, swap in your own number. That is the whole point of showing the lines. And if terms like MSP are new to you, start with our plain-language guide to what an MSP actually is.
The Annual IT Budget, Line by Line
| Budget line | Low | Typical | High |
|---|---|---|---|
| Microsoft 365 licensing (10 users) | $2,100 | $3,600 | $4,200 |
| Managed IT support ($100 to $250/user/month) | $12,000 | $18,000 | $30,000 |
| Hardware refresh (amortised laptops) | $3,500 | $6,000 | $8,000 |
| Backup (Microsoft 365 and endpoints) | $600 | $1,800 | $3,600 |
| Extra security layers | $0 | $2,400 | $6,000 |
| One-off projects | $2,000 | $5,000 | $12,000 |
| Annual total | $20,200 | $36,800 | $63,800 |
Those totals work out to roughly $2,020, $3,680 and $6,380 per employee per year. Per employee per month, that is about $168 at the low end, $307 in the middle and $532 at the high end, all-in.
One thing worth being clear about: when an MSP quotes you $100 to $250 per user per month, that is the support line only, not your whole IT budget. Licensing, hardware and projects sit on top. Providers do not always say that out loud. Now, each line.
Where Each Number Comes From
Microsoft 365 licensing, $2,100 to $4,200. Business Standard lists around $17.50 per user per month and Business Premium around $30 (list prices in CAD, check current Microsoft pricing before budgeting). For 10 people we almost always recommend Premium: it bundles Intune device management, Entra ID P1 and Defender for Business, which cost more bought separately. The typical line is simple math: 10 users at $30 for 12 months is $3,600. The high line adds a couple of Copilot seats or extra storage. The low line is Standard across the board, which trades away security features to save $1,500.
Managed IT support, $12,000 to $30,000. The BC market runs $100 to $250 per user per month. What moves you within that range is security depth, after-hours coverage and compliance work, not sales talk. At $100 per user you get helpdesk, patching, monitoring and endpoint protection. At $250 you are buying a CIS-aligned security program with compliance reporting. We publish our own tiers on our pricing page, and we break down what drives these fees in what managed IT costs in Canada. If you want to understand per-user versus per-device versus block hours, see our guide to MSP pricing models.
Hardware refresh, $3,500 to $8,000. A decent business laptop costs $1,400 to $2,400 and should be replaced every three to four years. So: $1,400 spread over four years is $350 per person per year, or $3,500 for ten people. $2,400 over three years is $800 each, or $8,000. The spending is lumpy in real life, three machines one year, none the next, but budget it annually so a refresh year is never a surprise. Add docks and monitors when you set your own number.
Backup, $600 to $3,600. Microsoft does not back up your Microsoft 365 data the way most owners assume. Retention policies are not backup. Third-party Microsoft 365 backup runs about $5 to $10 per user per month, which is the low and middle of this line. The high end covers offices that still have a server or NAS and need image-based backup with verified restores. Backup is often bundled into managed plans, so check your quote before paying twice.
Extra security layers, $0 to $6,000. At the low end, the EDR and patching inside your managed plan is the security layer, so this line is zero. The typical and high figures cover phishing simulation, security awareness training and managed detection and response (MDR), roughly $20 to $50 per user per month when priced separately. Cyber insurance questionnaires increasingly force these items, so this line has quietly become less optional every year.
One-off projects, $2,000 to $12,000. Every year something comes up: a Wi-Fi refresh, a firewall replacement, an office move, a migration off some aging system. At our published rates, a day of project labour is $720, and a small office network refresh with hardware lands around $5,000. Companies that refuse to budget this line still spend it. They just call it an emergency instead.
What Changes at 5, 10 and 25 Staff
At 5 staff, the per-user rate is often higher because most MSPs, us included, have monthly minimums. Your total lands somewhere around $10,000 to $20,000 a year, and hourly break-fix support can still be rational if your setup is genuinely simple. This is the one size where "we just call someone when it breaks" can be defensible.
At 10 staff, you get the table above. This is roughly the point where an unmanaged environment starts failing quietly: patches missed, backups unverified, one person hoarding all the passwords. It is also where one day of company-wide downtime costs more in wages than a month of managed support.
At 25 staff, per-user support rates usually drop a tier while licensing and hardware scale linearly, so your total roughly doubles rather than growing 2.5 times. What gets added is a strategy line: budgeting, roadmaps and vendor decisions need an owner. Standalone vCIO service in Canada typically runs $1,500 to $6,000 per month, though it is often included in higher managed tiers. The question of hiring internal IT instead usually does not become real until somewhere past 40 users.
The DIY and Break-Fix Route, Priced Honestly
The alternative to a managed contract is paying by the hour when something breaks. Our published rates are $95 per hour standard and $143 per hour emergency, and most providers in BC are in that neighbourhood. A quiet year might need 40 to 60 hours, call it $4,000 to $6,000. On paper, that beats $18,000 easily.
The rest of the cost is just harder to see. First, the unofficial IT person: a $70,000 employee spending 10 percent of their time on printers and password resets is $7,000 a year of salary spent on work done slowly and without tooling. Second, nothing happens between calls. Nobody patches, nobody monitors, nobody verifies the backups, so the incident that eventually arrives is bigger and billed at emergency rates. Third, downtime: ten people idle for a day is thousands of dollars in wages alone before you count lost revenue. Fourth, cyber insurance: renewal questionnaires now ask about MFA, EDR and tested backups, and "we call a guy" is not an answer that keeps premiums down.
Break-fix is not always wrong. Its price tag is just incomplete, and the missing part tends to arrive all at once.
When a 10-Person Company Genuinely Does Not Need Managed IT
Since MSPs rarely say this: some 10-person companies should not buy managed IT yet. You are probably fine without it if all of these are true: your whole business runs in one or two cloud platforms with no server and no specialised hardware, you hold no regulated or sensitive client data, a day of downtime is an annoyance rather than a crisis, and someone on the team is genuinely technical and actually has time to maintain things, not just an interest in computers.
Even then, there is a floor. MFA on every account, a real backup of your Microsoft 365 or Google data, endpoint protection on every machine, automatic updates turned on, and a provider you can call at hourly rates before the bad day. That floor costs a few thousand dollars a year, not zero.
The signals that it is time to switch: you are hiring and onboarding is chaos, an insurer or client sends a security questionnaire you cannot answer, or your technical person quietly asks for their actual job back. When two of those show up in the same year, the math above starts favouring a contract.
Frequently asked questions
Is $36,800 a year really what a 10-person company should spend on IT?
It is a realistic middle figure for a 10-person office once you count everything: licences, support, hardware, backup, security and the project that always shows up. Plenty of companies run at the low end near $20,000, usually by choosing a leaner support tier and stretching hardware. The number to distrust is one far below that, because it usually means backup, security or hardware replacement simply is not happening.
Does managed IT pricing include Microsoft 365 licences?
Usually not. Most MSPs, including North Star, bill Microsoft licensing as a pass-through at or near list price, on top of the per-user support fee. When you compare quotes, confirm whether licensing, backup and security tooling sit inside the per-user price or get billed separately. Two quotes that look $40 apart can be nearly identical once you line up what is included.
What percentage of revenue should a small business spend on IT?
Rules of thumb float between roughly 2 and 6 percent of revenue, but they are not very useful at this size because revenue per employee varies so much between industries. Budgeting per user works better for a 10-person company. Take a support tier, add licensing, amortised hardware and a project allowance, and you get a number you can actually defend, which is exactly what the table on this page does.
Can we save money by running laptops longer than four years?
You can defer the cost, but you rarely avoid it. Laptops older than four or five years fail more often, run slower and often cannot meet the security baselines cyber insurers ask about. A slow machine that wastes 15 minutes a day costs more in wages over a year than the amortised price of replacing it. Stretching a refresh from three years to four is reasonable. Stretching it to six is a false economy.
Is break-fix cheaper than managed IT for 10 people?
In a quiet year, yes, hourly support can total less than a managed contract. The problem is that quiet years are not guaranteed, and break-fix means nobody is patching, monitoring or verifying backups between calls. One bad incident at emergency rates, plus a day or two of ten people not working, can erase several years of apparent savings. If you choose break-fix, at least keep backup, MFA and endpoint protection running.
Should a 10-person company hire an IT person instead of using an MSP?
Almost never at this size. Even a junior IT hire costs $55,000 to $70,000 a year in salary before benefits, tools and training, roughly double the typical all-in budget on this page, and one person cannot cover vacations, sick days or specialties like security and cloud. The internal-hire question usually becomes real somewhere past 40 users, and even then many firms pair that hire with an MSP in a co-managed setup.
Different headcount? Run your own numbers in the free IT budget calculator: same math, your inputs.
Want this budget built for your actual company?
Book a free assessment. We will review your environment, price each line for your real headcount and stack, and tell you plainly if you do not need us yet. Our tiers are published, and founding pricing is available for clients who sign before September 1, 2026.