Software budget
Software should have a job description and a salary cap.
There is no useful universal percentage that tells every small business what to spend on software. A better ceiling comes from the value the tool can plausibly create or protect.
Start with the problem's monthly cost
Estimate the value of admin time consumed, revenue lost through missed follow-up, payment delays, avoidable errors, and customer friction. That is the economic pool a software purchase is allowed to draw from.
Do not spend the whole pool
If a problem costs roughly $400 per month, a $390 subscription that merely moves the work around is not a victory. Leave room for implementation time, training, switching friction, and the possibility that the software solves only part of the problem.
Separate core systems from conveniences
Customer records, scheduling, work delivery, billing, and bookkeeping can be operating infrastructure. An extra reporting dashboard, AI assistant, or automation utility may be useful, but it should clear a higher bar if the core stack already works.
Watch the stack total
Five “cheap” $29 tools cost $145 per month before anyone counts the time spent keeping them synchronized. Evaluate the stack as a whole, not only each purchase in isolation.