The Real IT Operations Cost: Four Line Items Swedish SMBs Miss
SaaS licenses are just the start. The four cost areas that make up what IT actually costs, with real numbers and what you can do about each one.
A lot gets written about SaaS cost per employee. The figure that circulates most is around €10,800 per person per year, and it's roughly accurate. But it's not the full picture.
Software licenses are the visible part. Below the surface there are three more cost areas that most SMB owners don't account for until they sit down and do a proper review. Put together, they can easily double the actual IT cost.
Here's the complete picture, with real numbers.
Line item 1: Licenses (yes, we start here anyway)
We cover this in more depth in our article on SaaS costs and open-source alternatives, but the short version: the average is €10,800 per employee per year, and 25 to 30% of licenses are rarely or never used.
€10,800
Per employee per year
25-30%
Licenses never used
10-15%
Average annual price increase
What you can do: audit what you're actually paying for, cancel unused accounts, and replace expensive tools with open-source alternatives on a shared VPS. That's the starting point. The rest of this article is about what comes after it.
Line item 2: Hosting and infrastructure
The common mistake here is looking at the advertised base price without accounting for what actually gets added. At major cloud providers, the base price is intentionally low. Revenue comes from bandwidth, backup storage, and support plans.
Hidden costs in cloud hosting
- • Egress costs: Traffic leaving the cloud is billed per GB, typically €0.08 to €0.15. An app handling images or video files can generate thousands of euros in egress every month.
- • Backup storage: A separate cost at most providers, not included in the server price.
- • Support plans: Basic developer support at AWS starts at around €270 per month. Without it, you're on community forums.
Quick comparison: A VPS with 4 CPU, 8 GB RAM, and 160 GB SSD costs around €30 per month at Hetzner in Frankfurt (EU jurisdiction, GDPR-compliant). The same configuration with egress, backup storage, and Developer Support at AWS typically lands between €190 and €430 per month. That's not a technical difference. It's a pricing model difference.
Moving from variable cloud pricing to a fixed monthly fee at a European VPS provider means you know what it costs next month, and next year.
Line item 3: The electricity bill is an IT cost
Most IT cost breakdowns skip this one. But if you run network equipment, a local server, a NAS, or a UPS on-premises, the electricity for that equipment is a direct IT operations cost.
A standard office server draws 150 to 300 watts continuously. Running 24/7 at €0.15 per kWh that comes to €200 to €400 per year per server. Add switches, access points, UPS, and monitors and the IT-related electricity cost for a 10-person office can easily reach €800 to €2,000 per year.
Estimated IT electricity cost (10-person office, EU average tariff)
This cost line is rarely tracked in IT budgets, but it's real and it responds to active management. For Swedish businesses in particular, Ellerva has written a useful guide on cutting hidden costs across IT and electricity contracts (in Swedish), which covers exactly this intersection. Worth reading alongside this article.
What you can do: compare energy contracts actively every two years, make sure your office is on a business tariff rather than a consumer one, and factor energy costs into TCO calculations when choosing between cloud and on-premises infrastructure.
Line item 4: The labor cost that never shows up on an invoice
This is the hardest one to measure and the easiest to ignore.
Every SaaS tool requires ongoing administration: account management, permissions, offboarding departing employees, support tickets, updates, integrations that stop working, and the time spent comparing alternatives when prices go up. A conservative estimate is 3 to 6 hours per tool per year.
Quick calculation:
15 business-critical tools × 4 hours per year × €55/h internal cost = ~€3,300 per year in hidden administration cost. It never appears on an invoice, but it's still a cost.
Open-source solutions on a shared server also require maintenance, but it's maintenance you pay for once and own. You're not paying a vendor to manage access to your own data.
What drives up the labor cost
- • Onboarding and offboarding: every new or departing employee triggers a round across every tool
- • Contract reviews and pricing negotiations at every renewal cycle
- • Troubleshooting when integrations between SaaS tools break
- • GDPR compliance work per vendor: DPA management, data register updates, deletion requests
The full picture: a cost comparison for 10 employees
With all four line items included, the cost picture for a typical 10-person business looks like this:
| Cost area | SaaS stack/mo | Self-hosted/mo |
|---|---|---|
| Software licenses | ~€2,300 | ~€0 |
| Hosting and infrastructure | ~€230 | ~€65 |
| Electricity (IT-related) | ~€50 | ~€40 |
| Hidden labor overhead | ~€280 | ~€185 |
| Total per month | ~€2,860 | ~€290 |
| Total per year | ~€34,300 | ~€3,480 |
Note: The self-hosted figure includes €185 per month for internal operations time. That's a conservative number covering routine maintenance without external consultants. If you'd rather not spend internal time on infrastructure, there are providers who handle operations for you.
Frequently asked questions
What is a reasonable IT budget for a small SMB?
For a 10-person SMB, a realistic IT budget is €1,400 to €2,800 per month using a SaaS stack, or €280 to €650 per month if you replace the majority with open-source software on a VPS. That includes licenses, hosting, electricity, and internal labor time.
Should electricity be counted as an IT cost?
Yes. If you run network equipment, local servers, a NAS, or other IT infrastructure on-premises, the electricity for that equipment is a direct IT operations cost. For most SMBs, this ranges from €70 to €200 per month depending on equipment volume and energy tariff.
How do you reduce hosting costs without sacrificing performance?
Move from major cloud providers with variable pricing to dedicated European VPS providers with fixed monthly fees. A 4 CPU, 8 GB RAM, 160 GB SSD server costs around €30 per month at Hetzner in Frankfurt. The same configuration at AWS with egress and support typically runs €190 to €430 per month.
What does IT TCO mean?
TCO, Total Cost of Ownership, is the sum of all costs for an IT solution: licenses, hosting, energy, training, maintenance labor, and any external support. Without a TCO analysis it's easy to make decisions based on the list price rather than the actual cost over time.
Want to see the full cost picture for your business?
We help SMBs calculate the TCO of their current IT stack, identify where money is leaking, and build a plan to cut costs with open-source alternatives. The typical outcome for a 10 to 25-person company is €25,000 to €35,000 in annual savings.