IT & Connectivity Spend Benchmarks for SMBs

Every business owner eventually asks the same question: how much should we be spending on IT and connectivity? It feels like there ought to be a clean answer — a percentage of revenue you can measure yourself against and know instantly whether you are winning or losing. There isn't. Anyone who hands you a single magic number is selling confidence, not insight.

That doesn't mean benchmarks are useless. It means the useful benchmark is one you build for your own business, using your own history and a handful of honest comparisons. This guide walks through how to think about spend, what belongs inside a telecom budget, and how to spot the two failure modes that matter: overpaying for what you have, and underinvesting in what you need.

Why “spend as a share of revenue” varies so much

The most common way businesses frame IT and connectivity spend is as a percentage of total revenue. It's a reasonable starting lens because it scales with the size of the business. But the ratio that's healthy for one company can be wildly wrong for another, because the number is driven by factors that have nothing to do with waste.

The biggest driver is connectivity-dependence — how much of your revenue actually rides across the network. A law firm with a dozen people, cloud document management, and VoIP phones lives and dies by its internet, but its total bandwidth needs are modest. A logistics operation running warehouse scanners, telematics, and multi-site coordination has a fundamentally heavier footprint. A managed-services or SaaS company might spend a large share on connectivity and infrastructure because that is the product. None of these are “overspending” relative to each other; they're different businesses.

Other legitimate movers include:

• Industry. Professional services, retail, healthcare, and manufacturing each carry different baseline requirements for uptime, compliance, and redundancy.
• Number of sites. Multi-location businesses pay for access circuits, routers, and often redundancy at each site, which changes the math entirely.
• Cloud vs. on-premise. Moving systems to the cloud usually lowers hardware spend but raises the stakes on your internet connection.
• Growth stage. A business scaling headcount or opening locations will run a higher ratio for a while, then see it settle.

What's actually inside a telecom & connectivity budget

Part of the reason comparisons go wrong is that people compare different things. “Telecom spend” at one company means the internet bill; at another it captures a full stack. When you build your own benchmark, account for all of it so you're comparing apples to apples year over year. A reasonably complete picture includes:

• Access circuits. The internet and data connectivity into each location — fiber, cable, fixed wireless, or dedicated lines. Usually the largest recurring line item.
• Voice. Business phone service, whether legacy lines, SIP trunks, or cloud voice (UCaaS), plus any conferencing and call-center tooling.
• Mobility. Cellular plans, data for tablets and IoT devices, and mobile hotspots for field staff.
• Security. Firewalls, managed detection, secure access, and the network side of your cybersecurity posture.
• Redundancy. Backup circuits, failover connections, and SD-WAN — the money you spend specifically so an outage doesn't stop the business.

Redundancy is worth calling out because it's the piece most often left out of a “too high” complaint. A second circuit looks like pure cost until the day your primary line goes down. Whether that spend is justified depends entirely on what an hour of downtime costs your specific operation.

Signs you're overspending

Overspending rarely looks like one giant bill. It accumulates quietly, usually through inertia rather than a bad decision. Watch for these patterns:

• You haven't tested the market in years. Carrier pricing and available technology at your address change constantly. A contract signed years ago at a fair rate can be well above current market today.
• Auto-renewals you never revisited. Contracts that quietly rolled over often lock in yesterday's pricing on autopilot.
• Zombie services. Circuits to a closed location, phone lines nobody uses, or add-ons that outlived their purpose — still billing every month.
• Paying for headroom you never touch. Buying far more bandwidth than your usage justifies “to be safe” is a common and quiet leak.
• No line-item visibility. If you can't say what each charge on the invoice is for, you almost certainly can't say whether it's fair.

Two of our other guides go deep on these: our playbook on reducing your business telecom costs covers where the savings usually hide, and our piece on telecom expense management shows how to audit your bills and catch billing errors before they compound.

Signs you're underinvesting

The opposite mistake is quieter and often more expensive. Cutting connectivity spend below what the business needs doesn't show up on the telecom invoice — it shows up everywhere else. Red flags include:

• A single point of failure. One circuit, one carrier, no failover, in a business that can't function offline.
• Recurring slowdowns during business hours. If video calls stutter and file transfers crawl when everyone is working, you've undersized the pipe.
• Staff working around the network. People tethering to phones, using personal hotspots, or driving somewhere with better internet is a cost you're paying in productivity, not on a bill.
• Security bolted on as an afterthought. Skimping here doesn't save money; it defers a much larger bill.

The goal isn't the lowest possible telecom bill. It's the lowest total cost of being connected — including the cost of the outages, slowdowns, and workarounds you're quietly absorbing.

How to build your own internal benchmark

Instead of chasing an industry average, build a benchmark you can actually defend. It's more useful and far harder to argue with.

1. Pull your true total. Add up every category above across every location for the last twelve months. Now you have a real number, not a guess.
2. Trend it against yourself. Compare this year to last year, normalized for headcount, sites, or revenue. A ratio creeping up without a matching change in the business is your signal to investigate.
3. Break it down per unit. Cost per employee, per site, or per location tier often reveals more than a single company-wide percentage. One outlier site usually explains a lot.
4. Compare like peers, carefully. Talk to businesses of similar size, industry, and connectivity-dependence. Treat anything you hear as a loose range, not a target.
5. Re-test the market on a schedule. The cleanest way to know whether your access and voice pricing is fair is to see what the same address would cost today. It's worth getting fresh bids across carriers every year or two, even if you don't switch.

The bottom line

There is no universal “right” percentage of revenue for IT and connectivity, and the businesses that chase one usually end up either overpaying for peace of mind or underinvesting into a hidden productivity tax. The better move is to know your own total, watch how it trends, understand what each dollar buys, and periodically confirm your pricing against the live market. Do that, and you'll always be able to answer the question — not with a borrowed number, but with your own.