How Much Does SOC 2 Cost?
We’ve met many business owners who understand the benefits of a SOC 2 audit — increased trust with customers, compliance with data regulations, and protection against breaches, to name a few. But they haven’t started the process out of concern about the cost.
It’s a valid fear. Compliance audits are neither cheap nor straightforward. Whatever your reason for seeking SOC 2 compliance, the cost is probably at the forefront of your mind.
You might be asking yourself: is it worth it investing in a SOC 2 audit to keep these clients? Is it a good idea to invest time, money, labor, and resources to build trust in your business?
This article is your comprehensive guide to the cost of SOC 2, from preliminary counseling to the final audit and report.
How much does SOC 2 cost?
It’s hard to place a conclusive price on a SOC 2 report. SOC 2 auditing is a highly versatile process that never looks exactly the same twice.
Instead of a strict checklist like ISO 27001, SOC 2 uses the trust services criteria, a set of guidelines open to interpretation by each auditor. That flexibility makes each SOC 2 audit unique and variable, along with its price.
Several factors influence the cost of SOC 2 compliance, including:
- Type of SOC 2 audit you’re seeking (SOC 2 Type I or SOC 2 Type II)
- Scope of the audit
- Size of the service organization
- Complexity and maturity of your internal control policies
- Features offered by your CPA or auditing firm
For example, TrustNet, a firm certified by AICPA to perform SOC 2 audits, charges $20,000 for a SOC 2 Type I audit and $30,000 for a SOC 2 Type II. However, most companies only seek Type II after Type I, so they might be out $50,000 for the audit alone.
This isn’t unusual. In 2021, the average quote for the SOC 2 audit tends to run between $10,000 and $60,000, but you’re paying for a lot more than just the auditor.
Returning to TrustNet, we can see that it offers a gap assessment for $15,000. It also offers SOC 2 remediation, working with clients to close holes uncovered in the gap assessment. The price for that remediation varies based on the number of gaps uncovered, but it can easily drive preparation costs toward six figures.
Do the math, and you’ll see that your total overall cost can run as high as $150,000. And that’s before you factor in the revenue you lose from focusing on SOC 2, the cost of maintaining compliance after the audit, or the costs in salary when diverting your employees (or hiring new ones) to manage your compliance process.
SOC 2 isn’t cheap, even if you stick to a SOC 2 Type I audit. Even so, many organizations seek compliance every year based on cost-benefit analysis. A positive SOC 2 report can pay for itself in a few ways:
- More businesses want to work with you, increasing your revenue
- Your positive SOC 2 report serves as a differentiator, helping you attract more customers than your competition
- Your newly secure systems prevent data breaches that can cost millions in fines
The key to making a SOC 2 report work with your budget is to understand what goes into making the audit so expensive. In the rest of this article, we’ll do a deep analysis of why SOC 2 costs as much as it does.
What’s the difference between SOC 2 Type I and Type II?
We’ll start our deep dive by explaining the difference between SOC 2 Type I and SOC 2 Type II. We’ve referenced these types a few times already; they’re one of the biggest factors in determining how much you’ll pay for your SOC 2 report.
SOC 2, which stands for Service Organization Control, is a set of standards that measure the security and effectiveness of any entity that provides third-party services to other organizations. SOC 2 analysts examine their subjects’ “controls” — policies put in place to protect sensitive data.
To write a SOC 2 Type I report, an auditor reviews the subject organization’s documented controls and compares them against the list of trust services criteria (TSC) for a moment in time. In their final opinion, the auditor will assess how well the controls match the TSC.
Since it only looks at what the organization has written down, a SOC 2 Type I audit is over relatively fast, often in less than a month. The typical cost falls between $10,000 and $40,000.
A SOC 2 Type II report is more in-depth, takes longer as it assesses over a period of time between 3 to 12 months, and is consequently more expensive. In addition to the documented controls, the auditor will conduct rigorous tests to determine how well the service organization’s policies stand up to real-world security threats.
A SOC 2 Type II audit can take anywhere from three months to over a year from preparation to the final report. Costs can run from $30,000 to $100,000.
What hidden costs arise during a SOC 2 audit?
By now, you know that the true cost of SOC 2 compliance isn’t completely reflected in the price of hiring the auditing firm. Here are a few of the many factors that can drive your total SOC 2 costs higher.
A preliminary readiness assessment isn’t a mandatory part of the SOC 2 audit process. You could just hire a CPA, turn them loose on your documentation, and hope for the best.
We don’t recommend this, though — unless you want to spend even more money doing the audit all over again.
With SOC 2, jumping straight to the audit phase is like trying to stage a play without rehearsing. If you don’t lay the groundwork for success, you run the risk of being blindsided when the auditor dings you on controls you didn’t even know you needed. So while a readiness assessment is technically an optional part of SOC 2, it’s not really optional at all.
Remember that a SOC 2 report doesn’t involve running down a checklist of controls. The auditor determines which Trust Services Criteria are relevant while they look at your documentation. The readiness assessment helps you determine which TSC might be relevant to your organization.
It also leads directly to the next important step: the gap analysis. That’s where you compare your controls to the relevant TSC and determine what you need to do to match each trust services criterion.
A professional SOC 2 readiness assessment will run you about $15,000.
With your gap analysis complete, you’ll know what holes in your data management system might cost you a favorable opinion on your SOC 2 report. Now comes the hard part: fixing them.
If your preliminary review discovers any major gaps, you’ll need to spend money to close them. These costs can include new security tools, team training, or hiring all-new employees.
Some companies choose to retain the firm that conducted its readiness assessment, getting assistance with mitigation. If you get expert help to close your gaps before the audit, expect to pay an additional $25,000 to $85,000, depending on the scope of your information management system.
Every business owner knows that time is money. Unfortunately, meeting the SOC 2 requirements demands a lot of both.
The trust services criteria, on which the auditor will base your SOC 2 report, are divided into five categories:
- Processing integrity
Not every category will be relevant to every business, but you can still expect to devote attention to a wide range of controls.
You might need to pull a software developer, a data scientist, a legal expert, and a technical writer from their respective teams. IT security is the core of SOC 2, so you should hire a whole new employee just to cover that angle.
Say you’re paying each of those people $80,000 per year, and the SOC 2 process takes six months from start to finish. 5 x ($80,000 / 2) = $200,000 in lost productivity from those five employees, none of which is directly reflected in the audit price.
There’s another even more insidious hidden price of SOC 2: opportunity cost.
In economics, opportunity cost is the amount of revenue you sacrifice by not pursuing a course of action.
When you’re devoting resources to SOC 2 compliance, you can’t devote them toward growing your business in more direct ways. Those five employees from the previous section could have been working on projects that would have brought in more revenue over time. Instead, they’re focused on SOC 2.
If you project that your SOC report will bring more revenue in the form of new customers, these costs might be mitigated. But it’s hard to know what your team members could have done if compliance tasks hadn’t constrained them.
A SOC report is only valid for 12 months after it’s first published. In the span of a year, the data security landscape can change so much that formerly compliant controls risk becoming dangerously outdated.
To maintain SOC compliance, a service provider needs to conduct another SOC audit each year. Some choose to keep a dedicated SOC 2 team full-time. Those costs quickly add up.
SOC compliance is an investment in your company’s future, but it also locks you into budget items for the foreseeable future. It’ll be most expensive the first time since you likely won’t have a documented system of controls in place yet, but most of the costs we’ve covered so far will recur each year.
What’s the ultimate cost of a SOC 2 audit?
Putting it all together, what does it cost to get a SOC 2 report the traditional way?
Say you opt to save time and money by selecting a SOC 2 Type I audit. Bringing in the auditor costs $30,000, but you also drop $15,000 on a readiness assessment.
You save money by handling remedial control updates yourself, but it still takes four of your employees one month at the cost of $28,000 in salary. One of those employees was working on a new feature that would have brought in $10,000 per month in revenue.
Adding it all together, we’ve got a cost of $83,000 — and that’s after taking several measures to save money. You’ll have to cover that every year.
Notice, though, that these prices apply to traditional SOC audit prep. There is a way you can save on time and opportunity costs: compliance automation.
How can Secureframe help you save money on SOC 2 compliance?
SOC 2 audits are worthwhile, but the costs can break you if you don’t budget for them in full. The highest variable costs come from labor — both from employee salaries and lost productivity.
Using Secureframe, you can automate the SOC 2 compliance process, freeing your employees to work on the projects you hired them for.
Talk to Secureframe today to learn how much we can save you on SOC 2 costs.