If you are starting the SOC 2 process, one of the first decisions you will face is whether to get a Type I or go straight to Type II. The short answer: most enterprise buyers require Type II eventually, but Type I has a legitimate use case. Here is exactly what each one is and how to decide which path makes sense for your organization.
A SOC 2 Type I report answers "do the right controls exist?" A SOC 2 Type II report answers "did those controls actually run consistently over time?" Type I is a snapshot. Type II is a movie.
Type I is a building inspector verifying that your smoke detectors are installed. Type II is the inspector coming back six months later and checking that the alarm logs show the detectors actually tested and triggered correctly every month. Same detectors -- very different level of confidence.
This is where it gets practical. When a prospect sends you a security questionnaire with "Do you have a SOC 2 report?" -- what do they mean?
In most cases, they mean Type II. Enterprise security teams and procurement reviewers know the difference between Type I and Type II, and they know Type I is easier to get. A Type I report tells them your controls were designed correctly on one specific day. It does not tell them anything about what happened the other 364 days of the year.
That said, many buyers will accept a Type I as a temporary measure while you are working toward Type II, especially if you can share your Type II timeline and show that your observation period is already underway. This makes Type I genuinely useful as a bridge -- something to show prospects while you are in the middle of your 12-month journey.
Don't use Type I to close enterprise deals long-term. A savvy security reviewer will notice the date on your Type I and ask when your Type II will be ready. If the answer is "we have no plans for Type II," that is often a deal-blocker. Use Type I as a bridge, not a destination.
There are legitimate reasons to get Type I before Type II. It is not always just "we want the cheaper version."
Ask yourself: "Will the enterprise buyers I am trying to close accept Type I long-term, or are they going to ask for Type II in the next renewal cycle?" If the answer is Type II anyway, just build the timeline around Type II from day one and treat Type I as optional.
| Factor | Type I | Type II |
|---|---|---|
| What it proves | Controls are designed correctly | Controls designed AND operating consistently |
| Time to get | 2-4 months after readiness | 12-18 months total (includes obs. period) |
| Observation period | None | 6-12 months (minimum 6) |
| Typical cost | $15,000-$30,000 | $30,000-$80,000 |
| Enterprise acceptance | Interim / bridge only | Required for most enterprise deals |
| Renewal | Annual (optional) | Annual (expected by customers) |
| Value after Type II | Superseded by Type II | The ongoing standard |
The observation period is the stretch of time during which your auditor collects evidence that your controls ran consistently. Typically 6-12 months. During this period, you are not just implementing controls -- you are generating evidence that they operated.
This is why evidence collection matters so much in SOC 2 preparation. Quarterly access reviews need to happen every quarter and be documented. Log reviews need to happen and be recorded. Change approvals need to go through the process and leave a trail. An observation period with no evidence is just a period of time -- it does not give the auditor anything to verify.
The most common mistake during the observation period is implementing controls correctly but not generating records that prove the controls ran. Your auditor cannot attest to controls they cannot see evidence of.
Start your observation period clock intentionally. Pick a date, make sure your controls are in place and your evidence collection is organized, and formally tell your auditor "our observation period starts today." Do not let it happen accidentally -- a 6-month period with messy evidence is harder to audit than a clean 6-month period that started with clear intentions.
Budget ranges for SOC 2 vary significantly based on your organization's size, complexity, number of in-scope systems, and which auditor you choose. Small SaaS companies with simple infrastructure can get audits toward the lower end of these ranges. Larger organizations with complex environments pay more.
Costs to budget for beyond the audit itself: readiness consulting (if you use a consultant), remediation work (closing gaps before the observation period), tool costs for logging and monitoring, and policy documentation. The audit fee is often not the biggest line item for organizations starting from scratch.
Before choosing Type I or Type II, run a gap assessment against the 33 Common Criteria controls. Our SOC 2 Readiness Checklist maps every control to its evidence requirements so you can see exactly what you have and what you still need.
Get the SOC 2 Readiness Checklist → $29All 110 NIST SP 800-171 practices organized by domain. Free PDF, instant access.