How Much Should Your Business Budget for Technology Costs in 2023?

If you’ve looked at a calendar recently, you’ve probably noticed that we’re nearing the end of 2022. That means it’s time to start thinking about your business budget for next year and one important area to consider is technology costs.

Of course, every business is different, so there’s no one-size-fits-all answer to this question. However, there are some general guidelines you can follow when creating your budget for technology expenses in 2023.

What Kinds of Technology Costs Should You Include in Your Budget?

The first step is to identify what kinds of technology costs you need to include in your budget. This will vary depending on the size and type of business you have, but some common examples include:

  • Computer hardware and software: If you need to purchase any new computers or upgrade your existing ones, this will be a significant expense. Similarly, if you use any specialized software for your business (such as accounting or design software), you’ll need to factor in the cost of licenses and upgrades.
  • IT support: Whether you have an in-house IT team or you outsource these services, there will be costs associated with keeping your systems up and running.
  • Website and online marketing: If you have a website, there are costs associated with hosting, domain names, and keeping your site updated. You may also want to budget for online marketing efforts like search engine optimization (SEO) and pay-per-click (PPC) advertising.
  • Data storage and backup: If you have a lot of data, you’ll need to budget for storage and backup solutions. This could include everything from cloud storage to physical servers.

How Much Should You Budget for Technology Expenses?

Once you’ve identified all the potential technology costs your business could incur, it’s time to start thinking about how much you should budget for each item. Again, there’s no hard and fast rule here, but a good starting point is to allocate 3-5% of your overall budget to technology expenses.

Of course, you may need to adjust this percentage up or down depending on your specific business needs. For example, if you’re a startup with limited funding, you may need to keep your technology budget on the lower end. On the other hand, if you have a large and complex IT infrastructure, you may need to set aside a larger portion of your budget for technology costs.

Are There Any Other Considerations?

Once you’ve created your preliminary budget for technology expenses, it’s important to review it carefully and make sure there are no glaring omissions. For example, you may want to consider adding a line item for cybersecurity costs, especially if you store sensitive customer data or handle online transactions.

You should also keep in mind that technology costs can fluctuate from year to year, so it’s important to review and update your budget regularly. This will help ensure that you always have accurate information when making financial planning and budgeting decisions for your business.

Technology costs are an important part of doing business in the 21st century, but they can also be a major expense for many companies. By following these guidelines and being mindful of potential cost fluctuations, you can develop a budget that meets your business’s needs without breaking the bank.