Editor's note: This post was originally published on September 15, 2022 and has been revised for clarity and comprehensiveness.
Are you about to level up your company’s cybersecurity but aren’t sure how much you need to prepare?
This article is for you. In this article, we’ll answer the following key questions:
- How much does cybersecurity cost?
- What factors affect your cybersecurity budget?
At Intelligent Technical Solutions (ITS), we have helped clients in the Chicago, Detroit, Las Vegas, Los Angeles, Olympia, Phoenix, Portland, Reno, Sacramento, and San Francisco areas understand their technology and help them make the right cybersecurity decisions for their business.
We contacted Sean Harris, our Senior VP for Cybersecurity at ITS, to share his expertise on the subject matter.
How much does cybersecurity cost?
You can’t predict the exact amount of money you need to spend. It will always differ depending on your industry, the data your business holds, and other factors (further discussed in this article).
You can get a reasonable percentage estimate instead.
“Businesses typically spend between 0.5% to 4% of their annual gross revenue on cybersecurity, with exact amounts influenced by their industry and regulatory environment,” Harris said.
Sources such as Flexera’s State of Tech Spend Report (2023), say that the tech industry is the highest IT spender, followed closely by the financial sector (15% revenue allocation), telecom (14% revenue allocation), and healthcare (13% revenue allocation).
If you want a ballpark, look at several factors affecting your cybersecurity budget. The more you stack these factors, the more you need to invest in cybersecurity.
READ: What Businesses Need to Know About Managed Cybersecurity Services
What factors affect your cybersecurity budget?
Planning your cybersecurity budget isn’t a one-and-done process. You need to consider a couple of factors before you have an accurate estimate for your IT security costs.
1. Type of data you keep
Cybersecurity is all about data: protecting it and recovering it. The cost of your cybersecurity hinges on the type of data you (or your business partners & clients) keep.
You may not be subject to a regulatory compliance framework, but you might have clients who are.
If your clients hold intellectual property or confidential information that needs maximum protection. For example, if you accidentally leak this data because of an unsecured network, it could cause legal problems with clients, which further results in financial and reputational damage.
Situations with cyber breaches create a ripple effect, and it won’t end well. To avoid these events, you need to tighten your cybersecurity not just for yourself but for your clients as well.
2. Current IT environment
What important cybersecurity standards do you have? What don’t you have? The condition of your environment now will determine what you need to do.
READ: The Cost of Old Tech (& Do You Really Need an Upgrade?)
3. Regulatory compliance requirements
Is the data you’re protecting subject to specific regulatory compliance frameworks, such as HIPAA (Health Insurance Portability and Accountability Act) for healthcare-facing firms and CMMC (Cybersecurity Maturity Model Certification) for government contractors?
If it is, you must allot a slightly higher budget according to your industry’s guidelines and requirements.
Compliance requirements are constantly updated to guarantee businesses remain in line with tech advancements. Therefore, you need to ensure your cybersecurity keeps up with the changes.
4. Cyber liability insurance
Scammers target everyone – from small businesses to large businesses. Unless you are 100% certain your cybersecurity is invincible, you need cyber liability insurance.
Cyber insurance policies help cover financial losses due to cybersecurity incidents. Your cybersecurity insurance premium will depend on how well you can answer various security questionnaires your insurance provider gives.
READ: 7 Tips Cyber Insurance Buyers Should Know (& What It Really Covers)
BONUS: Unseen costs
There are unseen costs worth knowing when fixing your company’s cyber security budget.
Reputational damage is one of the most lasting effects. A PwC study found that 87% of consumers will take their business elsewhere if they don’t trust how a company handles data. That loss of trust can translate into lost deals and future revenue.
Internally, security incidents often cause employee burnout, high turnover, and project delays. While your IT and leadership teams are focused on crisis response, growth initiatives and strategic projects often fall by the wayside.
Even the act of cleaning up a cyber breach is resource intensive. Incident response experts, legal counsel, and forensics services can cost thousands — and sometimes aren’t fully covered by insurance.
Need help planning your cybersecurity budget?
One of the most common questions ITS has received as an MSP is, can businesses do their cybersecurity budgeting independently?
Certainly, you can. It's just a lengthy and complex process, making it challenging to do so. That’s part of why business owners sign up for an MSP – to lift the burden off their backs. MSPs like ITS give advice about what cybersecurity solutions make sense and what doesn’t when budgeting and planning.
If you want a better network perspective and help optimize your systems to align with industry standards, get a free network assessment with us today.
If you want more information about cybersecurity costs, here are some more free resources:
- A Complete Guide for Planning Your Managed IT Budget [EBOOK]
- Best Cybersecurity Practices for 2025: Expert Tips
- How much does ITS Cybersecurity Cost? [VIDEO]
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