This is How Much FedRAMP Authorization Costs in 2025
If you’re considering selling software to federal agencies this year, you need to know How Much FedRAMP Authorization Costs.
FedRAMP has a potentially high ROI, but getting and maintaining FedRAMP is infamously expensive, time consuming, and requires high operational investments. It’s essential you understand the real costs before you get started.
We’ve helped many orgs navigate the FedRAMP process. Here we’ll explore the costs associated with FedRAMP, factors that influence these costs, hidden or surprise expenses along the way, comparisons with other security frameworks, and how tools like Paramify can streamline your process to help you get FedRAMP faster, for less.
Average Price of FedRAMP
FedRAMP compliance costs vary depending on the impact level — Low, Moderate, or High — and the complexity of the system.
Costs are typically divided into initial Authorization to Operate (ATO) expenses and ongoing continuous monitoring costs.
These are estimated ranges for each impact level:
FedRAMP Low (including Low-Impact SaaS):
Initial ATO Costs: $250,000–$500,000
Ongoing Annual Costs: $100,000–$200,000
Details: Low-impact systems, often involving public data or business productivity apps, require fewer controls (125 for Low, ~37–60 for LI-SaaS). Costs are lower due to streamlined documentation and assessment requirements.
Cost of FedRAMP Low + FedRAMP 20X
FedRAMP 20X aims to reduce costs and barriers for SaaS orgs looking to sell to federal agencies. The pilot is accepting submissions now. Being part of it allows you to achieve Low status for a year without a sponsor.
Details: Moderate is the most common level. It covers sensitive but unclassified data and requires 325 controls. Costs reflect increased documentation, remediation, and 3PAO assessment efforts.
FedRAMP High:
Initial ATO Costs: $1,000,000–$3,000,000+
Ongoing Annual Costs: $500,000–$1,000,000
Details: High-impact systems, handling highly sensitive data like health records or law enforcement information, requires 421 controls. Costs escalate due to rigorous security measures, advanced encryption, and extensive assessments.
These ranges account for consulting, engineering, documentation, 3PAO assessments, and continuous monitoring, with variations based on system complexity and organizational readiness.
What Drives the Cost of FedRAMP Up?
Several factors contribute to higher FedRAMP compliance costs:
1- System Complexity
Complex cloud offerings (e.g., IaaS vs. SaaS) require more controls, extensive documentation, and longer assessments, increasing costs. For example, a PaaS with multiple integrations may need significant engineering adjustments.
2- Impact Level
Higher impact levels (Moderate and High) involve more security controls, advanced encryption (e.g., FIPS 140-3 Level 3+ for High), and stricter monitoring, driving up expenses.
3- Lack of Pre-Existing Compliance
Organizations without prior certifications (e.g., SOC 2, ISO 27001) face higher costs due to gaps in policies, procedures, or technical architecture.
4- Manual Gap Assessment Process
Relying on consultant interviews to figure out your data flows, processes, and scope can take weeks and drive up costs. Traditional Gap Assessment costs $10,000 - 50,000+ for CMMC and $30,000 - $150,000+ for FedRAMP (depending on level and complexity of your system). Get our recommendations to lower your gap assessment costs.
5- Remediation Needs
A gap assessment that shows significant deficiencies (e.g., non-FIPS-compliant encryption or inadequate SIEM) can lead to high remediation costs, ranging from $10,000 to hundreds of thousands.
6- External Consulting
Hiring consultants for advisory, documentation, or remediation can add $100,000 – $500,000, depending on the scope and hourly rates ($150–$210/hour).
Keep in mind, while hiring a consultant costs more, it can also save you money. Their experience can streamline your FedRAMP journey. Get more details to decide whether an advisor is the best choice for you.
7- Customizations
Tailored cloud services or unique configurations increase documentation and assessment efforts, inflating costs.
8- Agency-Specific Requirements
Some federal agencies impose additional security overlays (e.g., DoD IL-4/IL-5), requiring further engineering and documentation.
What Drives the Cost of FedRAMP Down?
Organizations can reduce FedRAMP costs through strategic planning and leveraging existing resources:
1- Pre-Existing Compliance
Prior certifications like SOC 2, ISO 27001, or HIPAA can help streamline control implementation, as some controls overlap with FedRAMP’s NIST 800-53 requirements.
2- Early Gap Assessments
Conducting a gap assessment (included with Paramify) early identifies your gaps and helps you tackle them strategically to prevent expensive rework during assessments.
Platforms like Paramify automate documentation (e.g., SSP, POA&M), reducing manual labor and consultant fees. An automated SSP costs $8,000 – $60,000+ compared to $250,000–$1,500,000+ for manual efforts. Learn more about the cost of an automated SSP vs templates.
5- Pre-Built SSP Solutions
Pre-engineered solutions or templates can bring initial ATO expenses to under $750,000.
6- Shared Responsibility Model
Using FedRAMP-compliant cloud providers (e.g., AWS GovCloud, Azure Government) allows CSPs to inherit controls, reducing engineering and monitoring costs.
7- In-House Expertise
Organizations with experienced security teams can handle documentation, remediation, and continuous monitoring internally, minimizing reliance on costly consultants.
Continuous Monitoring Overruns: Underestimating ConMon requirements (e.g., monthly scans, POA&M updates) can lead to $70,000 – $120,000 in unexpected annual expenses.
Manual Documentation Updates: Major system changes (e.g., switching cloud providers) require documentation revisions. These can cost $30,000 – $100,000 with traditional documentation, but are easily done with Paramify and won’t cost extra. You’ll make the changes once and it will apply everywhere — even across frameworks.
Types of FedRAMP and Their Costs
FedRAMP categorizes cloud systems into four impact levels — Li-Saas, Low, Moderate, High. Each has different requirements and costs:
FedRAMP Costs Compare to SOC 2, ISO 27001, or CMMC
FedRAMP, SOC 2, ISO 27001, and CMMC share the goal of ensuring security but differ in scope, cost, and applicability:
FedRAMP vs. SOC 2:
Purpose: FedRAMP is tailored for federal cloud services, while SOC 2 focuses on service organizations’ data security and privacy for commercial clients.
Controls: FedRAMP (125 – 421 controls) is more prescriptive than SOC 2 (based on Trust Services Criteria, ~100 controls).
Cost: SOC 2 costs $50,000 – $150,000 initially and $20,000 – $50,000 annually, significantly lower than FedRAMP’s $250,000 – $3,000,000.
Market: FedRAMP is mandatory for federal contracts, while SOC 2 is preferred in private sectors (e.g., tech, finance).
Overlap: SOC 2 compliance can reduce FedRAMP implementation costs by 20–30% due to shared controls (e.g., access management, incident response).
FedRAMP vs. ISO 27001:
Purpose: ISO 27001 is a global standard for information security management systems, applicable across industries, while FedRAMP is U.S. federal-specific.
Controls: ISO 27001 has 114 controls, fewer than FedRAMP’s Moderate/High baselines but broader in scope.
Cost: ISO 27001 costs $50,000 – $200,000 initially and $10,000 – $50,000 annually, making it more affordable.
Market: ISO 27001 is recognized internationally, while FedRAMP targets U.S. federal agencies.
Overlap: ISO 27001’s policies and procedures can streamline FedRAMP documentation, saving 15–25% on costs.
FedRAMP vs. CMMC:
Purpose: CMMC ensures cybersecurity for DoD contractors, while FedRAMP applies to federal cloud services.
Controls: CMMC Level 2 (~110 controls) aligns with FedRAMP Low, but higher levels approach Moderate/High.
Cost: CMMC costs $8,000–$70,000 for Levels 1–3, far less than FedRAMP’s $250,000 – $3,000,000.
Market: CMMC is DoD-specific, while FedRAMP serves all federal agencies.
Overlap: CMMC compliance can reduce FedRAMP engineering costs for DoD-focused CSPs.
Key Advantage of FedRAMP:
The “do once, use many times” framework allows a single ATO to be reused across agencies, unlike SOC 2 or ISO 27001, which require agency-specific validations. But, FedRAMP’s higher costs and complexity make it less suitable for non-federal markets.
Is FedRAMP a Good Fit for Your Organization?
Deciding whether to pursue FedRAMP depends on your organization’s goals, resources, and market focus. Consider the following:
When FedRAMP Is a Good Fit:
Seeking Federal Market Access: FedRAMP is essential if federal contracts — valued at $19 billion annually for cloud services — are a priority.
High Security Standards: If your organization wants to demonstrate high security standards (e.g., for healthcare or financial data) you could benefit from FedRAMP’s credibility.
Scalable Solutions: CSPs offering IaaS, PaaS, or SaaS with reusable ATOs across agencies maximize ROI.
Existing Compliance: Prior SOC 2, ISO 27001, or CMMC certifications reduce costs and effort.
When Not To Do FedRAMP:
Limited Budget: Small businesses with constrained resources may struggle with FedRAMP’s $250,000–$3,000,000 price tag.
Non-Federal Focus: If federal agencies aren’t your target market, SOC 2 or ISO 27001 cost less and still allow you commercial opportunities.
Complex Systems: Highly customized or legacy systems may require extensive remediation, inflating costs.
Short-Term Goals: The 6–18-month timeline may not align with immediate revenue needs.
Automated POA&M management reduces ConMon costs by 30–50%, saving $30,000–$60,000 annually. POA&Ms can be done in ½ the time without opening spreadsheets and vuln scans.
Easy, Inexpensive Documentation Updates
Updates to SSPs are easy to make and included in the annual subscription, eliminating surprise documentation costs.
Less Effort
Streamlined Workflows: Paramify’s platform centralizes documentation, reducing manual coordination and dependence on consultants.
Rapid Documentation: Automated SSPs cut preparation time from months to days. You can update Paramify as you implement controls. Your ATO is ready to generate on demand as soon as your implementation is complete.
Real-Time Updates: Paramify enables quick revisions for system changes or Rev 5 upgrades (e.g., 4-hour transition for one client).
There you have it. Yes, FedRAMP compliance is a significant investment, but with proper planning and the right tools, it can also open doors to the federal marketplace.
Automating with Paramify can cut costs dramatically, speed up implementation and documentation by 90%, improve accuracy, and simplify ConMon to make compliance more attainable.
Check out Paramify pricing, reach out with any questions, or request a live demo below to find out if Paramify is the right solution for your FedRAMP journey.
Government tech adoption is slowed by old systems, bureaucracy, and a lengthy ATO process. FedRAMP 20x aims to speed things up while maintaining security and fairness.
A gap assessment identifies security gaps between your current state and compliance goals like FedRAMP or CMMC. Paramify’s 45-60 minute process delivers a dashboard to guide implementation, track progress, and automate documentation.
FedRAMP opens doors for cloud service providers to secure federal and enterprise deals. You can use tools like Paramify to simplify the process and boost your growth.
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