How Much Should a Small Business Spend on Software?

“How much should we spend on software?” is one of the most common questions we hear from small business owners. The honest answer is: it depends. But that’s not very helpful, so let’s make it more concrete.

Where the money goes

Most small businesses spend on software in three buckets:

Subscriptions. CRM, email, accounting, project management, hosting, analytics. These are monthly or annual fees that add up. A typical small business with 5-15 people might spend GBP 500-2,000/month across all their tools. Some spend much more without realising it.

Custom builds. If you’ve hired a contractor to build something specific — a booking system, an internal tool, a customer portal — that’s usually a one-off cost ranging from GBP 2,000 to GBP 50,000+ depending on complexity.

Maintenance. The cost of keeping things running after they’re built. This includes hosting, updates, monitoring, and fixes. Many teams underestimate this. We wrote about how to think about maintenance in more detail.

Signs you’re spending too much

• You’re paying for tools that nobody uses, or that only one person uses occasionally
• Multiple tools do the same thing because different team members signed up for different services
• Your hosting costs are higher than they should be for your actual traffic
• You’re paying premium tiers when the free or basic tier would cover what you need

A quick subscription audit — logging into every tool and checking the plan, the usage, and the last login date — usually reveals 15-30% in savings.

Signs you’re spending too little

• Your team spends hours on manual tasks that a simple tool could automate
• You avoid changes because the system feels fragile and nobody wants to touch it
• There’s no monitoring, so you find out about problems from customers instead of alerts
• You haven’t updated dependencies or reviewed security in months

Underspending on software often costs more in the long run through wasted time, missed opportunities, and avoidable failures. The build supervision case study shows what this looks like — 27% cloud waste removed just by reviewing the setup.

A practical framework

Rather than a fixed percentage of revenue, think about software spending in terms of these questions:

1. Is every tool earning its place? If you can’t explain why you need a tool, you probably don’t.
2. Is manual work costing more than automation would? If someone spends 5 hours a week on something a tool could handle in minutes, the tool pays for itself quickly.
3. Are you maintaining what you’ve built? A product that isn’t maintained will cost more to fix later. Budget for ongoing support, not just the initial build.
4. Do you know what you’re spending? Many businesses don’t have a clear picture of total software costs. Get that number first — it’s often higher than expected.

When to get help

If you’re not sure whether your spending is right, a short review can answer the question. Our launch audit includes a cost structure review as part of the standard scope — it looks at what you’re paying, what you should be paying, and where the biggest savings are.

The goal isn’t to minimise spending. It’s to make sure every pound is doing something useful.