Budget estimates fail because they ignore the Total Cost of Authorization (TCA) beyond basic audit fees. You often focus only on the visible price of consultants and auditors. This calculation misses the massive expense of internal remediation and lost product velocity. Ignoring TCA often results in overruns that double your original estimated budget.
The blind spot
You cannot efficiently cap variable costs of engineering hours without a strict plan. The biggest budget leaks happen when teams discover architectural dependencies that block compliance. You might need to rewrite code for multi-tenancy isolation or replace cryptographic libraries. These tasks stall product roadmaps and drain your runway for months.
Total Cost of Authorization
You need to calculate the full cost including lost product velocity and internal labor. The TCA aggregates hard vendor costs, internal labor, and lost opportunity costs. Upfront vendor fees often range from $500,000 to $1 million for Moderate baselines. However, the full TCA for High-impact systems can easily exceed $2 million.
Role of Mycroft
You can identify hidden dependencies early to prevent expensive mid-project stalls. Use Mycroft’s automated gap assessments to find architectural blockers before signing contracts. You fix issues on your own timeline rather than paying premium rates. This approach prevents the panic of discovering major gaps during a live audit.
Hard costs are the non-negotiable fees paid to external vendors for advisory services and mandatory audits. You must distinguish between optional preparation help and the required assessment fees. These fees are mandated by the Federal Risk and Authorization Management Program (FedRAMP). Note that auditors are strictly prohibited from consulting on the systems they assess.
The real price tag
You will likely spend between $500,000 and $1 million on external vendors for a Moderate authorization. This variance depends on your system boundary and completed remediation work. Complex systems requiring High baseline controls will always hit the top of that range.
Gap analysis ($20k–$50k)
Use this lightweight health check to identify major blockers before committing to a full program. A gap analysis is a low-stakes review of your architecture against controls. You ensure you are not paying high audit rates to discover basic failures.
Readiness assessment ($100k+)
You require this formal analysis by an auditor to achieve the "FedRAMP Ready" designation. A Readiness Assessment Report is a formal deliverable submitted to the Program Management Office. It proves your system can meet requirements and helps secure agency sponsorship.
3PAO audit fees ($150k–$300k)
You pay this non-negotiable fee to an accredited Third-Party Assessment Organization (3PAO). A 3PAO verifies your security posture through rigorous interviews and penetration testing. Fees vary significantly based on your control baseline and environment complexity.
Consultant fees ($50k–$200k+)
You might pay advisors to guide architecture, but quality varies significantly in this market. Some consultants provide deep engineering value while others merely write static policies. Affordable consultants with cloud-native expertise are incredibly hard to find in 2026.
The engineering tax is the financial impact of diverting developers from roadmap features to remediation tasks. You cannot achieve authorization without making deep technical changes to your product architecture. Your best developers effectively stop working on your product to focus on compliance. This trade-off is painful but unavoidable for companies entering the federal market.
Remediation reality
You must upgrade encryption to Federal Information Processing Standards (FIPS) 140-3 and enforce access controls. This involves replacing core libraries and reconfiguring load balancers across your stack. You need strict multifactor authentication which introduces regression risks and requires testing.
Opportunity cost
Every hour engineers spend generating evidence is lost time they are not shipping features. Your lead architect might spend months writing a System Security Plan (SSP). This slows your commercial product velocity and results in lost market share.
Documentation drowning
You need dedicated staff to maintain SSPs unless you automate the entire process. The SSP for a Moderate baseline exceeds 700 pages of technical detail. See FedRAMP Templates for the extensive documentation requirements you must fulfill. Without automation, you need a technical writer to keep documents synchronized.
Cash flow impact
An 18-month timeline delays federal revenue which strains your available cash flow. You might expect federal checks in six months but face a liquidity crisis. You must ensure you have sufficient runway to support the burn rate.
Continuous monitoring is the recurring annual expense required to prevent revocation of your authority to operate. This typically costs 50-70% of your initial upfront vendor fees every single year. You must treat compliance as a permanent subscription rather than a one-time achievement. Failing to maintain security leads to revocation which renders your investment worthless.
Monthly reporting
Your security lead must submit Plan of Action and Milestones reports to your sponsor monthly. You must fix critical vulnerabilities within 30-day Service Level Agreements (SLAs). The pressure to meet these deadlines is intense and emotionally draining. Missing them triggers difficult conversations with stakeholders and risks your authorization status.
Annual assessments
You must pay a 3PAO for a partial reassessment every year to validate controls. This creates a multi-year investment profile that CFOs often overlook during planning. The cost of authorization is a permanent increase in your operating expenses.
Device security
You must monitor workstations continuously alongside your cloud infrastructure to meet strict federal standards. Controls extend to the laptops your engineers use to access the environment. This requires robust mobile device management and endpoint detection and response tools.
Operational overhead
Mycroft’s Risk Operations Center automates this monitoring to reduce the burden on your team. You avoid hiring a full-time compliance manager to chase evidence and reports. Managed services and AI agents handle evidence so you can focus elsewhere.
Make the investment only when federal contracts exceed the compliance tax and justify the Total Addressable Market (TAM). You risk destroying your margins if the cost exceeds the lifetime value. Treat this as a business decision based on unit economics and demand.
Contract value thresholds
You generally need $1M+ in Annual Recurring Revenue potential to justify a Moderate authorization. Below this threshold, the fees consume too much of your profit margin. Ideally, have a sponsored path or clear pipeline before committing capital.
TAM evaluation
You should review federal spending data to ensure your niche has sufficient demand. Not every software category has high demand in the federal government space. Verify agencies are buying software like yours and have budget authority.
Strategic moat
You can use authorization as a competitive advantage that bars non-compliant competitors. You sit in a marketplace with high barriers to entry and less pressure. This often allows for higher contract values compared to the commercial sector.
Start small
You might pursue StateRAMP first to enable revenue before the full federal push. StateRAMP validates compliance for state-level contracts and often has lower initial friction. This allows you to build your public sector revenue base incrementally.
Automation reduces your bill by replacing expensive billable consulting hours with evergreen software control mapping. You replace expensive advisors with tools that handle control mapping and evidence. This lowers upfront costs and makes ongoing maintenance significantly more manageable. Augmenting a small expert team with software creates a viable growth path.
Consultants vs. software
You avoid paying hourly rates for static documents that go stale immediately. Consultants charge for every hour spent interviewing your team and writing policies. Automation provides live compliance data that updates automatically as infrastructure changes.
Consolidated mapping
Map controls across commercial frameworks like SOC 2 to avoid duplicating work. A robust platform allows you to satisfy federal and commercial requirements simultaneously. This efficiency protects your engineering team from proving the same outcome twice.
AI agents
You can use intelligent agents to handle repetitive tasks like vulnerability scanning. Agents monitor cloud configuration 24/7 and flag non-compliant resources instantly. This reduces manual labor and ensures you stay compliant between assessment periods.
Disclaimer
Mycroft streamlines audit readiness through continuous monitoring and automated evidence collection. Our platform supports your preparation but does not replace the independent assessment. You still need an accredited auditor to sign off on your authorization. Mycroft ensures you approach that audit with high confidence and minimal gaps.
Authorization costs typically range from $500,000 to $1 million upfront for vendor fees. Ongoing maintenance often adds $200,000 to $500,000 annually depending on complexity. Total Cost of Authorization, including internal labor, is significantly higher than vendor fees.
Q: What is the average cost of FedRAMP authorization?
A: For a Moderate authorization, expect $500,000 to $1 million in upfront vendor fees. Annual maintenance ranges from $200,000 to $500,000. Costs vary based on environment complexity.
Q: What is the difference between a gap analysis and a readiness assessment?
A: A gap analysis is an informal internal review ($20k–$50k). A readiness assessment is a formal audit by a 3PAO ($100k+). The latter is required for the "FedRAMP Ready" designation.
Q: Can we avoid hiring a consultant?
A: You can avoid paying technical consultants to manually write static policies. However, strategic advisors remain valuable for navigating agency relationships and securing sponsorship.
Q: How long does the process take?
A: The process typically takes 18–24 months for manual approaches. You can reduce this to 6–12 months with automation. Government review timelines remain outside your control.
To get a precise estimate on your compliance roadmap, you can talk to a FedRAMP strategist today.
