Many companies have trouble knowing how much SOC 2 compliance will cost. For service companies, SOC 2 is a commonly accepted security benchmark. The costs incurred in reaching SOC 2 compliance are broken out in this paper.
We will guide you in properly controlling these expenses.
Knowledge of SOC 2 Compliance
A tool for service companies proving their data security and privacy policies is SOC 2. It lets businesses demonstrate they can uphold privacy requirements and safeguard consumer data.
Soc 2: What is it?
Designed by the American Institute of CPAs (AICPA), SOC 2 is a compliance tool. It focuses on data security for companies depending on outside providers. Five trust service principles—security, availability, processing integrity, confidentiality, and privacy—formulate the foundation of the framework.
The gold standard for cloud age data security and privacy is SOC 2.
There are two variants of this compliance criteria. Type I evaluates, at one given moment, the fit of a vendor’s systems. Conversely, Type II assesses over a usually six-month period the operational efficacy of these systems.
Companies aiming for SOC 2 accreditation have to go through thorough audits by qualified public accountants to guarantee their methods complement the trust service standards.
The Value of SOC 2
The digital scene of today depends much on SOC 2 compliance. It builds a company’s reputation and protects private information. These audits are carried out by licenced CPA companies, thereby guaranteeing strong security measures.
Given the 68% increase in data breaches this year, SOC 2 Type II reports have become very important. They show that a business values customer data protection.
Companies that reach SOC 2 compliance acquire a competitive advantage. Their commitment to risk management and information security shows Annual audits keep security policies current and assist to sustain this compliance.
Furthermore helping to avoid expensive data breaches is SOC 2 Type II compliance. It builds customer and partner trust as well as brand reputation.
Variations within SOC 1, SOC 2, and SOC 3
Soc reports have many uses and viewers. Let us contrast their main variations:
Aspect SOC 1 Soc2 Soc3
Public-facing SOC 2 overview of operational and compliance controls; internal financial controls
Audience General public; financial auditors; management; business partners; regulators
Content Simplified form of SOC 2 Trust Services Criteria Financial reporting systems
Restricted dissemination limited confidentiality freely released
Knowing these variations enables companies to choose a SOC report best for their requirements. Let us so now investigate the elements influencing SOC 2 compliance’s cost.
Factors Affecting SOC 2 Compliance Cost
Compliance with SOC 2 varies greatly in cost. Many elements affect the ultimate cost tag.
Type 1, Type 2 audit
Two forms of SOC 2 audits exist: Type 1 and Type 2. Type 1 audits evaluate whether a company’s systems satisfy SOC 2 standards on a designated date, therefore concentrating on that one point in time. Usually running between $5,000 and $25,000, these audits cost
Conversely, type 2 audits track systems over a three to twelve month period. Reflecting their more thorough character, they fall between $7,000 and $50,000.
The demands and resources of your business will determine either Type 1 or Type 2 you require. Certain companies provide combined pricing for both kinds, which may help to save money. For a Type 1 audit, an auditor may charge $12,000, for a Type 2 audit $15,000.
Determining expenses in the audit also depends much on its breadth.
Audience of the audit
Determining SOC 2 compliance expenses depends much on the extent of an audit. Businesses have to be very clear about which systems and procedures need assessment. Usually, a larger scope results in greater expenditures as more time and resources are needed.
For thorough audits, big companies with sophisticated systems might have to pay up to $150,000.
Companies might restrict the audit scope to necessary systems to properly control expenditures. While still fulfilling compliance criteria, this concentrated strategy helps lower general expenditures. Businesses should closely coordinate auditors to pinpoint important areas for evaluation.
Businesses that give essential components first priority will be able to get SOC 2 certification without going bankrupt.
Time and tools required
Getting ready for a SOC 2 audit calls for large time and money. On audit preparation and completion, companies can spend between $10,000 and $150,000. This expenses security gear, internal staff hours, and outside consultants.
The audit process itself may last three to twelve months, with Type 2 compliance requiring a three to six month required monitoring term.
Allocation of resources goes beyond only financial ones. Staff development in security awareness, evidence collecting, and audit preparation becomes very vital. Companies have to additionally consider possible audit period productivity losses.
Including outside professionals for penetration testing and gap analysis increases the total time and financial commitment needed. The effect of consultants on SOC 2 compliance expenses is investigated in the next part.
Recruiting a consultant
Many businesses choose to retain a consultant for SOC 2 compliance after determining their time and resource requirements. These professionals provide to the process useful expertise and experience. They offer to simplify the audit preparation and steer companies over difficult criteria.
On internal teams, consultants may greatly lessen the burden. They provide understanding of optimum standards for documentation and security controls. Usually, their knowledge results in less surprises and more seamless audits.
Although consultant costs contribute to the total cost, by avoiding expensive errors and delays, they may ultimately save money. Usually costing $15,000, a professional SOC 2 ready evaluation offers a strong basis for the compliance path.
Employee instruction and security instruments
Two key components of SOC 2 compliance expenses are staff training and security tools. Businesses have to make investments in different software programs to guard their systems and data. These consist of vulnerability screening products ranging from $6,000 to $25,000 and Mobile Device Management (MDM) at $48 per user yearly.
Companies also must spend for antivirus products, backup systems, encryption tools, and background checking software.
One more major outlay in SOC 2 compliance is employee training. Staff awareness training costs around $25 per user, while some courses run as $15,000. Training on annual security awareness may go from $2,000 to $8,000.
These initiatives teach staff members effective practices in data security, password management, and password recognition of possible security concerns. The following part will look at extra expenses SOC 2 compliance calls for.
Testing of penetration
SOC 2 compliance depends much on penetration testing. This approach finds weak points in a company’s security by modeling cyberattacks. A SOC 2 penetration test runs on average between $7,000 and $25,000.
Usually, excellent providers charge between $250 and $300 per hour for their work. Frequent testing improves a company’s cyber security and helps avoid expensive intrusions.
Professionals advise for SOC 2 penetration testing utilizing reputable companies. These tests may find weaknesses in databases, programs, and networks that lie latent. They also assist companies satisfy audit criteria and improve their general security posture.
The following part will go over extra expenses to take into account when aiming for SOC 2 compliance.
Compliance automation program use
Software for compliance automaton reduces costs and simplifies SOC 2 procedures. Platforms include Sprinto and Drata provide packaged security features and ongoing monitoring. These solutions enable many models, therefore facilitating the maintenance of compliance across several SaaS providers.
Automation helps security control monitoring to becoming more effective. This technology reduces human mistake and hand labor. It keeps businesses audit-ready all year long as well. The following part looks at extra expenses SOC 2 compliance has to take into account.
Additional Fees to Think About
Compliance with SOC 2 carries additional expenses beyond the audit itself. Businesses have to consider personnel training costs, legal counsel, lost output throughout the process.
Training of staff
Costs related to SOC 2 compliance heavily rely on staff training. Businesses have to allocate funds for expected $5,000 yearly security awareness initiatives. This training clarifies for staff members their part in preserving data security and privacy.
Training also covers recently developed security instruments like encryption technologies and background checking programs.
One more consideration is productivity loss. A committed project lead might run you $50,000 to $75,000 yearly. Expect key team members to work full-time for around two weeks during the readiness evaluation.
Building a strong security culture and guaranteeing seamless SOC 2 implementation depend on these expenses. We then will discuss other expenses companies should be aware of.
Legal bills
Costs of SOC 2 compliance depend much on legal expenses. Businesses have to budget for attorney visits to examine agreements and data security practices. Usually ranging from $30,000 to $150,000, these costs may greatly affect the whole compliance budget.
Complete preparation for SOC 2 certification calls for considering legal expenses.
Lawyers assist to make that risk assessments, network security systems, and contracts satisfy SOC 2 criteria. They go over internal controls, methods of communication, and supplier agreements.
Legal professionals also help create policies covering threat detection, intrusion monitoring, and multi-factor authentication. Their advice helps businesses avoid possible compliance procedure points of failure and expensive blunders.
Loss in productivity
Although legal expenses are a clear cost, in SOC 2 compliance productivity loss is an often neglected price. Staff time allocated to compliance chores reduces their usual responsibilities.
This affects general production of the business. Over six months, a dedicated project lead for SOC 2 might cost anywhere from $50,000 to $75,000. New tool implementation takes around two months. Just the readiness evaluation calls for a full-time internal staff for around two weeks.
These time commitments soon pile up and influence the bottom line.
Businesses have to strike a balance between ordinary operations and compliance requirements. Good planning may assist to reduce disturbance. Tools for automation help to simplify various tasks. Still, SOC 2 compliance eventually calls for a lot of staff effort and attention.
Companies should include this declining productivity into their budgets and plans. Effective teams depend on proper preparation to minimize the total influence on daily operations and enable their efficiency.
Lowering SOC 2 Compliance Fees
Smart plans allow SOC 2 compliance to be cost-effective. By means of deliberate preparation, use of preparedness measures, and selection of an audit company, companies may save money.
intelligent budgeting and planning
Reducing SOC 2 compliance expenses depends much on smart planning and budgeting. By developing a thorough road plan and carefully distributing funds, businesses may save money. Before the audit, a gap analysis guides efforts by pointing out areas of compliance breakdowns.
By addressing problems early on this proactive strategy helps companies to save expensive last-minute repairs.
Good budgeting is knowing the whole extent of SOC 2 needs and related costs. Organizations should consider audit costs, personnel development, security tools, and possible loss of production.
Ahead of time planning allows businesses to distribute expenses over time and prevent unanticipated financial load. Additionally part of smart budgeting is investigating low-cost alternatives like automation systems to simplify compliance procedures.
Using readiness evaluations
SOC 2 compliance depends much on readiness evaluations. Though they go from $10,000 to $15,000, these assessments have great worth. They increase the likelihood of an audit unqualified opinion.
Important phases of the process include documentation collecting and audit scope review.
Tools for automation improve the preparation for preparedness. Their simplification of data collecting and processing saves time and lowers mistakes. These solutions let businesses monitor development, organize work, and guarantee all required proof is in place.
This strategy facilitates companies’ more effective preparation for their SOC 2 audit.
Instruments for automation
Tools for automating SOC 2 compliance simplify procedures. These instruments automatically gather audit data and track security measures. Leading supplier Drata provides continuous control monitoring among other things.
Time is saved, auditor relationships are strengthened, and the need for consultants is lessened by this system.
Compliance automation tools help businesses increase productivity and minimize expenses. It supports year-round, not only audit-based maintenance of SOC 2 criteria. The following part looks at alternative approaches to cut SOC 2 compliance costs.
Strong security policies
The foundation of SOC 2 compliance is effective security measures. To guard their systems, companies have to make investments in strong anti-virus software and vulnerability detection instruments. These instruments may cost you anywhere from $6,000 to $25,000 a year.
Mobile device management solutions—which cost, on average $48 per user annually—also must be implemented by companies. These security expenditures lower risk of breaches and help protect private information.
Employees need constant security training. It facilitates staff members’ identification and reaction to any risks. Companies should also do penetration testing to find system weaknesses.
Time and money may be saved by automated compliance technologies streamlining these procedures. These steps help companies to streamline their SOC 2 audit process and improve their security posture.
Selecting the appropriate audit company
Good security practices help to build a strong SOC 2 audit. A seamless compliance procedure depends on the appropriate audit company being chosen. The SOC 2 audit has to be done by a licenced CPA company recognized by the AICPA.
Businesses should probe the company’s experience with like businesses. This guarantees the auditors grasp industry-specific difficulties.
Small audit companies might have advantages like stronger customer connections and less expenses. Key are a rigorous quoting procedure and a well defined topic of inquiry. These actions assist to prevent surprises and maintain the audit on schedule.
Businesses should evaluate many companies to choose the greatest match for their requirements and financial capacity. The compliance road might be simpler and more affordable if the correct auditor handles things.
Always keeping compliance
Compliance with SOC 2 is not a one-off event. It calls constant attention and work. Businesses have to routinely go over and change their security policies and practices. This guarantees their remaining current with changing industry norms and laws.
Constant staff security practice training is quite vital. It helps to preserve a compliance culture all over the company.
Constant compliance depends much on automation technologies. They cut personal mistake and simplify procedures. These instruments can track changes, keep an eye on systems, and provide automatically produced reports.
While increasing accuracy, this saves time and money. Businesses have to also do regular internal audits. These audits find and fix any problems before outside auditors show up.
Maintaining compliance all year long helps businesses to lower yearly audit-related expenses and stress.
To sum up
Costs of SOC 2 compliance vary greatly. Businesses have to balance the expenditure with possible expansion of their operations. Ongoing maintenance, smart planning, and automation techniques assist to save costs.
Managing expenses depends mostly on selecting the correct auditor and concentrating on important Trust Service Criteria. In the end, SOC 2 compliance is a wise long-term investment as it improves security procedures and increases client confidence.