How much do startups spend on SOC 2?
Companies that wait to get a SOC 2 report until a Series C will spend more than a seed startup. However, the cost of implementation and audit alone for SOC 2 Type 1 and Type 2 typically costs 50-person businesses about $80,000.
TDLR; without managing your SOC 2 process with experts and a software platform, it could cost upwards of $70,000 and last over 18 months.
How can I save money on a SOC 2 report for my startup?
The best way to save money on a SOC 2 report is to start early and maintain controls and best practices. The scope of your SOC 2 can determine the price; larger organizations will need to pay more for a larger scope and more extensive controls.
Gap Analysis and Scope
Before getting into the execution of your SOC 2, a compliance expert will need to evaluate the information security practices already in place. Whether you’re looking to renew your SOC 2 certification or starting from scratch, this is an important step to understanding the scope of work needed.
To get an inside look into the process, check out our blog post on our own SOC 2 gap analysis.
After establishing the gaps that need to be addressed and a remediation plan, your compliance team will dive into implementing SOC 2 controls. While you may think the audit is the most important part of SOC 2, implementation is really the main event. You can learn more about implementation from Laika’s SOC 2 certification here.
This cost varies based on the controls needed, how much you outsource versus build internally, and your timeline. If you handle it internally, you’ll need to make a full-time hire or reallocate other employees’ work, losing some organizational efficiency and productivity.
This cost as something can be absorbed internally if you have specific hires to manage the process. Otherwise, you’ll likely be losing around 60-100 hours of work from your current employees.
After all your controls have been implemented, a compliance task force will need to review the evidence you collected, test the operational effectiveness of your controls, and assess your risk. These steps address audit readiness and involve accepting the amount of risk your organization has deemed acceptable.
SOC 2 Audit
The cost of a SOC 2 audit depends on the time spent evaluating controls, answering questions from auditors, the size of the organization, and the type of audit. Most businesses pursue a SOC 2 Type 1 report first, followed by a SOC 2 Type 2. For more information on SOC 2 Type 1 vs. SOC 2 Type 2, check out our run-down here.
SOC 2 Type 1 audit
Cost: $12,000 – $27,000
This is the first, one-time audit involved in SOC 2 compliance. Auditors will examine a snapshot of your SOC 2 controls at a single point in time to determine the design is correct.
SOC 2 Type 2 audit
Cost: $15,000 – $100,000
These audits need to be performed annually. Depending on the scope of your SOC 2 and the size of your organization, this audit could take up to 9 months to complete.
SOC 2 isn’t just a one-and-done task. Many of the costs listed below are recurring or constant tasks that will need to be performed as part of your new security posture.
Consultants: Control implementation, a risk assessment, and managing an audit requires at least foundational knowledge of SOC 2 compliance. If you opt for a software-only solution to assist on your SOC 2 journey, it’s likely you’ll need to hire a compliance expert consultant to help the process along.
CISO Cost: $550/hr
CISA Cost: $200/hr
Depending on the complexity of your controls and the necessary experience level of your consultant, the cost will vary.
Policy Templates and Writing: If you don’t have in-house counsel or compliance experts, you’ll need to outsource some paperwork to a legal firm. This includes any new policies you’ll need to author, like risk mitigation, privacy policies, formal business continuity plans, etc.
Cost: $5,000-$10,000 | Time: 2 weeks
Depending on which external party handles your audit, you may be able to outsource review of the documents to them as well.
Internal Training: A requirement for SOC 2 is security awareness training for employees. You’ll need to develop the training yourself or outsource; either way, it’ll likely cost time and money to create and execute the training.
Cost: $1,000/50 employees |Time: 2 weeks
The average associated cost depends on the size and maturity of your business, as well as the type of data you handle.
On-going SOC 2 Requirements
A major component for SOC 2 compliance is choosing your vendors, executing due diligence to ensure they are also SOC 2 compliant, or building your own solution to be compliant as needed.
Some of these vendors include endpoint security, logging and monitoring tools, password management, hiring and termination tools and processes, and security awareness training. The cost below is broken down into estimates for each vendor:
Cost: $190 for 5 licenses
Employee background checks
Cost: $20-$100/per hire
SOC 2 compliance can quickly get very expensive. And it can be difficult to calculate your budget when considering multiple factors, from internal productivity loss to audit firms and vendors. However, SOC 2 is only becoming more imperative to do business.