What Should Your Practice Spend on IT? A Realistic Budget Guide

One of the most common questions we get from practice owners: "What should I be spending on IT?" The answer varies by practice size, but there are benchmarks and frameworks that apply broadly. And from what we see, most practices fall into one of two categories: overspending on the wrong things, or underspending on everything.

The Industry Benchmark

Healthcare organizations typically spend 4-6% of revenue on IT. For a dental practice generating $1 million in annual revenue, that's $40,000-60,000 per year on technology, including hardware, software, services, and personnel.

That number surprises most practice owners. Many are spending significantly less and wondering why their technology frustrates them daily.

Breaking Down the Budget

Hardware (25-30% of IT budget)

Computers, servers, networking equipment, monitors, printers, and peripherals. Plan to replace workstations every 4-5 years and servers every 5-6 years. Trying to squeeze another year out of aging hardware creates more problems than it saves.

For a $1M practice: $10,000-18,000/year

Software and Licensing (20-25%)

PMS (Dentrix, Open Dental, Eaglesoft), imaging software, Microsoft 365 or Google Workspace, antivirus/endpoint protection, backup software, and any specialty applications. Software licensing is increasingly subscription-based, which means predictable monthly costs.

For a $1M practice: $8,000-15,000/year

IT Support and Services (30-35%)

Whether you use a managed service provider (MSP) or break/fix support, this is the labor cost of keeping everything running. Managed services typically run $100-200 per workstation per month, which covers monitoring, maintenance, patching, and help desk support.

For a $1M practice (10 workstations): $12,000-24,000/year

Security (10-15%)

Dedicated security spending beyond basic antivirus: email filtering, backup and disaster recovery, security awareness training, cyber insurance, and periodic risk assessments. This is the category most practices underfund.

For a $1M practice: $4,000-9,000/year

Internet and Connectivity (5-10%)

Business-class internet, phone systems (VoIP), and any cloud connectivity costs.

For a $1M practice: $2,000-6,000/year

Where Practices Overspend

• Premium hardware they don't need: A front desk workstation doesn't need a high-end graphics card or 64GB of RAM. Match the hardware to the workload.
• Software they don't use: Review your software subscriptions annually. Cancel what you're not using.
• Emergency repairs: Break/fix IT costs more per incident than proactive managed services. You pay a premium for reactive support.

Where Practices Underspend

• Backup and disaster recovery: A $50/month backup solution protects against losses that could cost tens of thousands. This is the highest-ROI line item in your IT budget.
• Security training: $500-1,000/year for a staff training platform is trivial compared to the cost of a successful phishing attack.
• Network infrastructure: A $200 consumer router running a 10-workstation practice is a false economy. Business-grade networking equipment costs more upfront but provides reliability, security features, and manageability that consumer gear can't match.

The Bottom Line

Technology is infrastructure, like plumbing or electrical. You wouldn't try to run a practice without functioning plumbing. Don't try to run one without functioning IT. Budget for it appropriately, spend proactively rather than reactively, and prioritize security within that budget.