What Businesses Really Spent on IT in 2025: A Look Back at MSP Costs, Labor, Equipment, and the Windows 10 Replacement Surge
Now that 2025 is behind us, many businesses are reviewing their IT budgets and asking whether their spending aligned with industry norms or whether their MSP costs were higher than they should have been. With major shifts in cybersecurity, cloud adoption, and one of the largest workstation replacement cycles in a decade, 2025 became an unusually expensive year for many organizations.
Using real world data from companies ranging from 4 to 130 employees, this retrospective breaks down what businesses actually spent on IT support in 2025, how much went toward labor vs. equipment, and how the Windows 10 end of support deadline dramatically influenced budgets.
Why IT Spending Rose in 2025
Several industry forces pushed IT costs higher than in previous years:
Increased MSP labor rates
Higher cybersecurity requirements
Expanded cloud service usage
Rising hardware prices
The end of support for Windows 10, which forced widespread workstation replacements
That final factor had the single largest impact on equipment spending.
The Windows 10 End‑of‑Support Effect: A Historic Hardware Refresh Cycle
Microsoft officially ended support for Windows 10 in October 2025, and this created one of the largest forced hardware refresh cycles since the retirement of Windows 7.
A significant percentage of older systems especially those purchased between 2015 and 2018 could not upgrade to Windows 11 due to missing TPM 2.0 support or incompatible processors. As a result:
Businesses replaced far more workstations than in a typical year
MSPs saw a surge in procurement and deployment labor
Equipment spending spiked across nearly every industry
Per employee IT costs rose in many organizations
For many companies, 2025 wasn’t just a normal refresh cycle it was a mandatory modernization event.
2025 IT Spending Benchmarks (Real Data)
15 Person Firm
Total: $22,598
Labor: $13,265
Parts: $9,33312 Person Firm
Total: $25,188
Labor: $16,037
Parts: $9,1516 Person Firm
Total: $10,855
Labor: $6,620
Parts: $4,2354 Person Firm
Total: $2,977
Labor: $2,525
Parts: $45211 Person Firm
Total: $16,862
Labor: $9,476
Parts: $7,38611 Person Firm
Total: $16,862
Labor: $9,476
Parts: $7,38661 Person Firm
Total: $68,639
Labor: $37,452
Parts: $31,187130 Person Firm
Total: $136,990
Labor: $83,065
Parts: $53,925
Average per‑employee IT cost across companies <20 employees : $1,538 per employee
Average per-employee IT costs for the larger firms :$1,410 per employee
This falls within the typical national range of $1,200–$2,200 per employee annually, though the upper end was more common in 2025 due to hardware replacement demands.
Key Insights From 2025 IT Spending
1. Labor Remained the Largest Cost Driver
Labor made up the biggest portion of overall IT spending, consistently outweighing equipment and other expenses across all organizations.
2. Equipment Costs Were Higher Than Normal
The Windows 10 retirement created a one time spike in workstation replacements, pushing equipment spending well above typical levels.
3. Smaller Companies Paid More Per Employee
Fixed costs spread across fewer employees naturally increased per employee averages.
4. Larger Organizations Benefited From Scale
Larger companies enjoyed noticeably lower per employee IT costs because their expenses were spread across a bigger workforce, making support more efficient and cost effective.
Was Your MSP Overcharging You in 2025?
Higher than normal spending in 2025 doesn’t automatically indicate MSP overbilling. You may have simply been caught in the Windows 10 replacement wave.
However, you may have been overpaying if:
Your per employee cost exceeded $2,000 without major hardware upgrades
You saw unexplained labor spikes
Your MSP pushed unnecessary equipment
You were billed premium rates for basic tasks
You paid for services you didn’t use
A healthy MSP relationship should be predictable, transparent, and proactive even in a year with unusual industry events.
Final Takeaway: 2025 Was an Abnormal Year for IT Budgets
Looking back, 2025 stands out as a year where IT spending surged not because MSPs universally raised prices, but because the industry underwent a forced modernization event.
Windows 10 reached end‑of‑support
Many older systems couldn’t run Windows 11
Businesses replaced more hardware than usual
Equipment and deployment labor costs rose accordingly
Most organizations should expect their IT spending to normalize in 2026 and beyond, returning closer to traditional refresh cycles and more predictable MSP costs.