Most small business IT budgets are built by taking last year's spending and adding a little. That works until a year arrives with dated deadlines and price changes baked in, and 2027 is that kind of year. Windows Server 2016 reaches end of support in January, Microsoft's July 2026 price increase hits renewals throughout the year, Windows 10 security updates get more expensive in October, and hardware costs more than it did at your last refresh. This guide gives you a simple six line structure for IT budget planning, the 2027 dates that move money, and a way to build the numbers without leaning on made up benchmarks.
Why a percentage of revenue is the wrong place to start
You will find articles claiming a small business should spend a fixed share of revenue on IT. Those figures usually come from surveys of much larger companies, they blend industries with very different needs, and they say nothing about your actual equipment, software, or risks. A 20 person law firm holding confidential client files and a 20 person landscaping company have little in common on this line. We make the same argument about security spending in our post on why the cybersecurity budget percentage rule fails.
Build your IT budget for small business from the bottom up instead. List what you run, what it costs, when it expires, and what has to change in the next 12 months. The total is whatever that honest list adds up to, and you can defend every line of it.
The six line structure: one budget your accountant and IT provider can both read
Group every IT dollar into six lines: licenses and subscriptions, hardware refresh, security, support, projects, and contingency. Each line answers a different question. Licenses cover what you rent. Hardware covers what you own and must replace. Security covers what protects the business and satisfies insurers and regulators. Support covers the people who keep it running. Projects cover the changes you choose to make. Contingency covers the month something breaks. Keeping them separate stops a server emergency from quietly eating the training budget, and it makes year over year comparisons meaningful.
Line one: licenses and subscriptions, after Microsoft's July 2026 price change
Microsoft raised commercial list prices on July 1, 2026, and existing customers move to the new rates at their first renewal after that date. Business Basic went from $6.00 to $7.00 per user per month, Business Standard from $12.50 to $14.00, Office 365 E3 from $23.00 to $26.00, and Microsoft 365 E3 from $36.00 to $39.00. Business Premium stayed at $22.00. If your renewal lands in 2027, budget at the new rate. A 25 person office on Business Standard pays $450 more per year for the same seats, and the smaller gap to Business Premium may make the upgrade worth pricing.
Then list every other subscription: your practice management or accounting system, design tools, backup service, domain names, website hosting, and the tools individual departments bought on a credit card. Note each renewal month and whether it is billed annually or monthly. Cancelling two forgotten subscriptions often pays for something you actually need.
Line two: hardware refresh on a schedule, at 2026 prices
Pick a refresh cycle and replace a fixed share of computers each year, rather than replacing machines only when they die. If you plan to replace every computer within four years, a quarter of them get budgeted each year, which smooths spending and keeps old machines from piling up. Our computer replacement cycle guide explains how to set the cycle for your team.
Budget more per unit than last time. In February 2026, Gartner forecast that memory and storage prices would rise about 130 percent by the end of 2026 and that average PC prices would climb 17 percent over 2025. Our post on the 2026 RAM shortage covers whether to buy now or wait.
Servers need their own line in 2027. Windows Server 2016 reaches end of extended support on January 12, 2027, on the same day as IIS 10 on Windows Server 2016, .NET Framework 4.6.2, and Windows 10 Enterprise LTSC 2021, according to Microsoft's 2027 lifecycle list. Your options are a newer server, moving the workload to the cloud, or paying Microsoft for Extended Security Updates as a short bridge. SQL Server 2017, which sits under many accounting and practice management systems, follows on October 12, 2027. Ask your software vendors now which versions they will support. Equipment purchases may also qualify for faster tax deductions, which we cover in our Section 179 deduction guide, so involve your CPA early.
Windows 10 and Windows 11 dates that carry a price tag
Windows 10 support ended in October 2025, and businesses that kept machines running pay for Extended Security Updates. Microsoft prices commercial ESU at $61 per device for year one and says the price doubles each consecutive year, for a maximum of three years. That means $122 per device for the year that began in October 2026 and $244 for the year that starts in October 2027. ESU is cumulative, so a business that skipped year one must pay for it to join later. For most offices, replacing the machine costs less than two more years of updates. Our Windows 10 end of support guide lays out the options.
Windows 11 has a calendar too. Windows 11 Home and Pro version 25H2 reaches the end of servicing in October 2027, and Windows 11 Enterprise and Education version 24H2 ends on October 12, 2027. Machines need to move to version 26H2, released in September 2026, before then. That costs staff time rather than license fees, but it belongs on the plan.
Line three: security as its own line, not a leftover
Security spending should be listed item by item: endpoint protection and response, email filtering, multifactor authentication, backups with an offsite or immutable copy, security awareness training, around the clock monitoring, and the cyber insurance premium. Read your insurance renewal questionnaire before you set this line, because insurers commonly ask about MFA, backups, and endpoint protection, and a gap can raise the premium or the deductible. Add any compliance work your industry requires, such as a HIPAA risk analysis, a PCI review, or privacy work under California law.
Line four: support, whether it is a person, a provider, or both
Support may be an internal IT person, a managed services agreement, hourly break fix help, or a mix of internal staff and a provider. Whatever the model, write down what is included and what is billed separately, especially after hours work, onsite visits, and projects. Surprise invoices usually come from that gap. Our guide to managed IT services pricing explains the common models and what each tends to include.
Line five: projects with a scope, a quote, and a quarter
A project is any change with a beginning and an end. Common candidates for 2027 include replacing Windows Server 2016, retiring the last Windows 10 machines, tightening Microsoft 365 security, refreshing the firewall or wireless access points, moving a file server to SharePoint, and replacing an aging phone system. Give each one a written scope, a quote, an owner, and a target quarter. If it has no quarter, it is a wish, not a project. A longer view helps here, and our IT roadmap playbook shows how to plan three years out.
Line six: contingency, for the month something breaks
Something unplanned happens every year: a server fails, a key employee leaves, a vendor raises prices midterm, or an incident triggers an insurance deductible. Size this line from your own history rather than a rule of thumb. Look at what surprises cost you in 2025 and 2026 and start there. To make the case for resilience spending, estimate what an outage would cost with our free downtime cost calculator.
How GlobeVM helps with IT budget planning
GlobeVM has supported businesses for 30 years and looks after more than 75 organizations across Southern California. We help owners build budgets from real inventories, renewal dates, and lifecycle deadlines, so the numbers hold up in front of a partner, a board, or a lender. Firewall management, endpoint protection, email filtering, and multifactor authentication are standard in every plan, backed by 24/7 monitoring, and a person in Los Angeles answers in under 15 minutes, often George or Nazy, the owners, in English or Farsi.
Our IT consulting services include annual budget and roadmap planning. Call (818) 405-9930 or book a free IT assessment to start your 2027 plan with an accurate inventory.
IT budget questions owners ask before 2027
How much should a small business budget for IT in 2027?
There is no reliable universal percentage. Add up your licenses, a fixed share of hardware replacement, itemized security, support, planned projects, and a contingency based on your own history. That total, built from your real environment, is your budget.
When does Windows Server 2016 support end?
Extended support ends on January 12, 2027. After that date Microsoft stops releasing free security updates. Paid Extended Security Updates can bridge a short migration, but they are not a long term plan.
Will Microsoft 365 cost more in 2027?
For many plans, yes. New list prices took effect July 1, 2026 and apply at each customer's first renewal after that date. Business Basic, Business Standard, and the E3 plans went up, while Business Premium stayed at $22.00 per user per month.
Should we buy new computers now or wait?
Gartner's 2026 forecast pointed to higher PC prices, not lower ones, so waiting is a gamble. Replace machines on your planned cycle and prioritize any still running Windows 10.