Standards meant to guarantee that service providers safely handle customer data are called SOC 2. How much, though, does it cost to reach SOC 2 compliance? Usually running from $80,000 to $350,000, Type 1 audits cost between $5,000 and $20,000, while Type 2 audits run from $7,000 to $150,000.
The final price tag is determined in part by the audit’s scope, the type of evaluation used, the hourly rates of auditors, and whether Big 4 companies are engaged. Organizations also have to consider internal expenses, such as consultants ($10,000-$20,000), staff training, cybersecurity insurance plans, vulnerability assessments ($1,000- $4.5k yearly), and legal review fees.
Adopting automation solutions, including security monitoring software and compliance management systems, can help reduce expenses by cutting the demand for consultants and speeding up security processes.
Selecting the correct CPA company depending on past performance might offer improved value without sacrificing standards. Although it’s not inexpensive, any company handling private client data would be wise to get SOC 2 compliant.
Recognizing SOC 2 Compliance Expenses
Preparing for a SOC 2 audit entails thinking through several elements that affect the total SOC 2 certification cost, including the audit scope, size of your company, and system complexity.
The sort of audit you choose—type 1 or type 2—also affects the price tag; type 2 audits are usually more costly because of their thorough character, which examines the efficiency of controls over a longer period.
Elements influencing the expense
Several elements affect the cost of reaching SOC 2 compliance; hence, good budgeting and planning depend on an awareness of these elements. The following lists the main elements influencing SOC 2 compliance’s cost:
The cost is largely affected by the breadth of the SOC 2 audit. More time and resources will be needed to complete a larger audit, which includes several systems, procedures, and controls, than in a smaller audit, therefore increasing the expenses.
Type 1 and Type 2 SOC 2 audits exist in two separate forms. While Type 2 audits evaluate the operational effectiveness of controls over a period of time—typically 6–12 months—type 1 audits examine the design of controls at a certain moment in time. More thorough and consequently more costly than Type 1 audits are Type 2 audits.
Larger companies with sophisticated IT systems, many systems, and a broad spectrum of services will pay more SOC 2 compliance costs than smaller, simpler companies. The audit takes more time and work, and the more comprehensive the systems and procedures are.
Organizations with well-established and mature security controls, policies, and practices will usually have fewer compliance expenses. However, if a company has to install several controls to satisfy SOC 2 criteria, the expenses will be higher since extra time and resources are needed.
The chosen auditing firm will affect the cost of SOC 2 audits. Generally speaking, the big four accounting firms—Deloitte, PwC, EY, and KPMG—charge more than smaller, specialized security audit companies. The auditing firm’s reputation and experience, however, can also affect the value of the SOC 2 report.
Organizations with internal security knowledge and resources committed to compliance may have reduced outside costs since they can manage some of the compliance processes within. On the other hand, a company without internal knowledge could have to pay consultants or extra workers, raising its overall expenses.
Using security tools and technologies to enable SOC 2 compliance—such as vulnerability scanners, intrusion detection systems (IDS), and security information and event management (SIEM) solutions—can help offset the cost. Over time, though, these tools can also help simplify compliance initiatives and cut manual labor.
SOC 2 compliance is a continual process for which companies must constantly observe and maintain their security systems. Annual audits, penetration testing, staff training, and security tool and technology maintenance could all be ongoing expenses.
Failing to reach or sustain SOC 2 compliance can lead to major expenses, including lost commercial prospects, harm to reputation, and possibly legal consequences. The expenses of non-compliance can far outweigh those of reaching and preserving conformity.
Types of SOC 2 audits ( Type 1 against Type 2)
Apart from the financial considerations, knowledge of the several forms of SOC 2 audits is essential. The two basic varieties are SOC 2 Type 1 and SOC 2 Type 2. The following comparison chart clarifies the variations:
SOC 2 Type 1 SOC 2 Type 2
Evaluate the design of controls at a certain moment; then, over some time—usually six to twelve months—assess their operational efficacy.
| SOC 2 Type 1 | SOC 2 Type 2 |
|---|---|
| Assesses the design of controls at a specific point in time | Assesses the operating effectiveness of controls over a period of time (usually 6-12 months) |
| Less comprehensive and less expensive | More comprehensive and more expensive |
| Provides a snapshot of the organization’s security posture | Provides a more thorough evaluation of the organization’s security posture over time |
| Suitable for organizations just starting with SOC 2 compliance | Suitable for organizations that have already undergone a Type 1 audit and want to demonstrate sustained compliance |
| Costs start around $5,000 | Costs can range from $7,000 to over $100,000 |
Preparing for a SOC 2 audit calls for more than just the audit itself. Apart from the expenses, companies should take into account the following:
- Companies often spend money on readiness assessments, gap analyses, and remedial actions before the real audit to ensure their systems and procedures match SOC 2 criteria. The size and complexity of the company will determine the range of preparatory expenses, which range from $15,000 to $85,000.
- Businesses may have to invest in new security tools—such as vulnerability scanners, intrusion detection systems, and access management solutions—that satisfy SOC 2 criteria. Employees also could need instruction on revised security procedures and new tools. The particular requirements of the company will affect the expenses of these investments.
- Another possible expense is consulting legal counsel to review contracts, vendor agreements, and privacy rules. Lawyers can help guarantee that these records meet SOC 2 criteria and guard the company against possible liability. The intricacy of the engagement and the attorney’s hourly charges determine the variations in legal fees.
- Maintaining SOC 2 compliance requires continual monitoring, frequent risk assessments, and periodic security control upgrades. To guarantee compliance over time, companies should budget for regular costs, including annual audits, penetration testing, and staff training.
- Pursuing SOC 2 compliance can mean taking funds away from other corporate projects, such as marketing campaigns or product development. Businesses should consider these opportunity costs when considering whether or not to pursue SOC 2 certification and include them in their whole budgetary process.
Developing a SOC 2 Audit Budget
Budgeting for a SOC 2 audit requires great preparation. Consider the expenses of the audit itself, personnel development, and any required security tools or software.
Considerations for budgetary decisions
Budgeting for SOC 2 compliance calls for both careful planning and Guaranteeing a precise and all-encompassing budget; several important elements should be taken under review:
- Find the particular SOC 2 trust service criteria (TSC), such as security, availability, processing integrity, confidentiality, and privacy, that the audit will specifically cover. The cost increases with an increasing number of criteria incorporated.
- Based on your situation, choose either a Type 1 or Type 2 audit. A Type 2 audit reviews the effectiveness of controls over a period of time, usually six to twelve months, while a Type 1 audit evaluates the design of controls at a particular moment in time. Type 2 audits are both costly and more thorough.
- Evaluate the time and effort needed from your internal team, including compliance, security, and IT staff. Consider the expense of their time and any extra labor.
- Third-party services: Think about the expenses of hiring consultants, outside auditors, or service providers to help with the audit process—that is, for penetration tests or best practice advice.
- Technology and tools: Review whether SOC 2 requirements call for new security tools, software, or infrastructure improvements. Investing in access control systems, incident response systems, or vulnerability assessment tools could all fall under here.
- Training and awareness: Consider the expenses of staff member training initiatives to guarantee that every employee realizes their part in preserving SOC 2 compliance.
- Plan for the annual audits, continual monitoring, policy and procedural changes needed to keep SOC 2 compliance. These expenses will be ongoing.
- Legal and professional fees should cover the cost of contract negotiations, legal reviews, and any other professional services needed to support SOC 2 compliance initiatives.
Organizations that give these elements significant thought can create a thorough budget that fairly shows the expenses related to reaching and preserving SOC 2 compliance.
What is the cost breakdown, including staff training, security tools, audit expenses, etc.?
Budgeting for a SOC 2 audit calls for careful consideration of the expenses involved. :
| Cost Category | Description | Estimated Cost |
|---|---|---|
| Audit Costs | Fees charged by the auditing firm for conducting the SOC 2 audit, which can vary based on the scope and complexity of your organization’s systems and processes. | $5,000 to $150,000 |
| Staff Training | Costs associated with training your employees on security best practices, data protection, and compliance requirements to ensure they adhere to SOC 2 standards. | Varies based on the size of your team and training requirements |
| Security Tools | Expenses related to implementing and maintaining security software, such as firewalls, intrusion detection systems, and access control solutions, to meet SOC 2 criteria. | Depends on the tools selected and the size of your infrastructure |
| Consultant Fees | Hiring a consultant or compliance specialist to guide you through the SOC 2 preparation process and ensure your organization is audit-ready. | $10,000 to $20,000 |
| Documentation and Policy Development | Costs associated with creating and updating documentation, such as security policies, incident response plans, and risk assessments, to demonstrate compliance with SOC 2 requirements. | Varies based on the complexity of your organization’s processes |
Strategies for Lowering SOC 2 Compliance Costs
Automating compliance procedures frees time and money and lowers human error risk. Experience with companies like yours makes the appropriate audit firm qualified. They can help control expenses and simplify the audit procedure.
Compliance process automation
By streamlining SOC 2 audits, automated compliance systems like Secureframe and Vanta can help to lower expenses and replace the need for pricey experts. These systems speed security processes including policy management, vulnerability scans, and access assessments using artificial intelligence and machine learning.
Combining with more than 300 tools—including databases, apps, and cloud services—they offer a whole picture of a company’s security posture.
Automating compliance procedures guarantees consistency across the company and not only saves time and money but also lowers the possibility of human mistakes. It helps teams to concentrate on higher-value chores—such as incident response and threat detection—rather than on labor-intensive, repetitious duties.
Maintaining a strong security posture and being ahead of the curve depend on investing in automation as the threat scene changes.
Selecting the correct audit firm
automating compliance procedures simplifies SOC 2 audits. However, selecting the correct audit company is as important. Giving an auditor top priority should be experienced. Search for companies that have done many SOC 2 audits and learn about the particular difficulties that your sector is facing.
Talk about the scope of the study, deliverables, and availability of partners upfront. This guarantees that, starting from the same point, everyone will be in agreement.
About audit firms, bigger isn’t always better. Often offering better prices without sacrificing quality are smaller, specialised companies. They give more flexibility and tailored attention.
Their rates also frequently reflect more competitiveness than those of the Big4 accounting companies. Just be sure the company you select has certified public accountants (CPAs) on staff. This guarantees their required knowledge to undertake an exhaustive audit.
Simplifying interior procedures
Reducing SOC 2 compliance expenses calls for first simplifying internal procedures. Through a comprehensive gap analysis, companies can find areas where their present operations fall short of the trust services standards.
This helps them to concentrate on fixing these instances of failure instead of squandering money on pointless improvements. Automating compliance activities, including security awareness training and vulnerability assessments, can also help to lighten staff workload and lower the risk of human mistakes.
Another important component of simplifying inside operations is selecting the correct instruments. Although outsourcing things to a third-party contractor can be enticing, over time this can usually result in more expenses.
Rather, businesses should think about a create rather than a purchase strategy and make investments in products like anti-virus software and customisable communication management systems fit their particular requirements.
Businesses can lower their SOC 2 compliance expenses by aggressively simplifying internal procedures while nonetheless guaranteeing the security and integrity of their client data.
Conclusion
Finally, in essence, SOC 2 compliance expenses might be somewhat expensive, but for companies handling sensitive data they are a required investment. Appropriate strategy and thorough preparation will assist to reduce these expenses and guarantee a good audit.
Renowned cybersecurity specialist with over 15 years of experience in the field, Dr. Ethan Patel, says, “SOC 2 compliance is a critical aspect of modern business operations. It demonstrates a company’s commitment to protecting customer data and maintaining robust information security practices.”
Emphasising the need of knowing the elements influencing SOC 2 expenses, Dr. Patel, with a Ph.D. in Computer Science from Stanford University, has written many research articles on cybersecurity. “Businesses have to think about the extent of their audit, the complexity of their systems, and their degree of readiness before starting the compliance path,” he says.
Regarding the moral and safety issues of SOC 2 compliance, Dr. Patel emphasizes the need for openness. “Businesses have to be open about their security posture and any weaknesses they could have. SOC 2 reports give partners and clients peace of mind that their data is being handled safely and ethically.”
Dr. Patel advises automating compliance procedures wherever feasible if one is to properly include SOC 2 compliance into daily operations. “Automated security technologies and compliance software can greatly ease staff workload and lower danger of human mistake. They also give a real-time view of the security posture of the company.”
Although SOC 2 compliance has advantages, Dr. Patel also notes some negatives. “For smaller companies particularly, the time and expenses needed for compliance might be difficult. Still, the long-term advantages of more security, more consumer confidence, and more market competitiveness usually exceed these first challenges.”.
Dr. Patel advises companies in his final ruling to give SOC 2 compliance top priority in their whole cybersecurity plan. Investing in SOC 2 compliance protects your company, clients, and brand, not only satisfies legal obligations.
Well worth the work and expense are the competitive advantage and peace of mind it offers.