What your IT really costs you, and how to price it in an hour

Why the stated figure is always wrong

Ask a business owner what their IT costs and they answer with their subscription total. It is the only visible figure: it lands on a bank statement every month.

The trouble is that this amount measures what you buy, not what you endure. Most of the real cost sits elsewhere, invisible because no invoice records it.

The three columns

Column 1: what you pay. Subscriptions, licences, hosting, vendors, maintenance. Open twelve months of statements and list everything IT-related, small amounts included. This is the easy part, and it already holds surprises: two tools doing the same job, or a subscription for a service nobody has used in a year.

Column 2: what it makes you do. This is the biggest, and nobody measures it. How many times a week does someone retype information from one system into another? How long to find a document? How long to prepare a figure the tool should produce on its own?

Take each task, estimate its frequency and duration, multiply by the loaded hourly cost of whoever does it. A twenty-minute task, three times a week, done by someone at €45 loaded per hour, costs about €2,300 a year. One task. There are always several.

Column 3: what it makes you risk. What happens if the system stops for a day? If a client file leaks? If the vendor who knows the setup stops answering? Price a day of downtime: lost revenue, idle staff, clients to reassure. Then estimate the likelihood honestly. The product of the two is your annual risk cost.

The method, in one hour

1. 1Ten minutes: pull twelve months of IT spending and add it up. Column 1.
2. 2Thirty minutes: gather two or three people who do the work daily, not their managers. Ask simply: “what wastes your time every week?” Note each answer with frequency and duration. Multiply. Column 2.
3. 3Fifteen minutes: list three plausible failure scenarios and price a day of downtime. Column 3.
4. 4Five minutes: add the three columns and compare with the figure you had in mind at the start.

What you do with it

The point is not to hold a big number, it is to know where it concentrates. In most cases two or three lines of column 2 account for half the total. Those come first, and they often resolve without changing tools: by connecting two systems that do not talk, or automating one recurring gesture.

One last piece of advice, and it matters: keep the document. Redo the calculation a year later with the same method. It is the only honest way to know whether what you undertook achieved anything.