Cost of Cybersecurity for Small Businesses: What You Need to Know

In today’s digital economy, cybercriminals are no longer focused only on large enterprises. In fact, cybersecurity for small businesses has become one of the biggest risk areas in modern IT. According to Verizon’s 2024 Data Breach Investigations Report, nearly 3 out of 4 cyber incidents involve small or midsize businesses, largely due to limited security budgets and lack of formal protection plans.

This growing threat has made one question increasingly urgent for business owners: what is the cost of cybersecurity for small business, and how much protection is enough?

The reality is sobering. Verizon’s reports that the average cost of a data breach for small businesses can range from $120,000 to over $1 million, factoring in downtime, legal costs, lost customers, and reputational damage. For many small companies, a single incident can be financially devastating.

As Val Tsanev, CEO of Execweb, explains:

Most small businesses don’t fail because of weak products or services. They fail because one cyber incident exposes gaps they didn’t even know existed. Cybersecurity isn’t an IT expense anymore. It’s a business survival strategy.

In this guide, we break down how much companies spend on cybersecurity, what drives those costs, and how small businesses can build a security-first approach without overspending or overcomplicating their IT stack.

Why Cybersecurity Matters for Small Businesses

Many owners underestimate the importance of cybersecurity for small businesses, assuming attackers only target enterprises with large data volumes and global footprints. Unfortunately, the data says otherwise:

73% of small businesses experienced a cyberattack last year.
The average cost of a data breach for small businesses ranges from $120,000 to $1.24 million, depending on the industry and severity.
Recovery often includes downtime, legal fees, customer churn, and reputational damage.

This poor adoption of cybersecurity measures by small businesses leaves them vulnerable to increasingly sophisticated cybercrime, including:

Social engineering
Distributed Denial of Service (DDOS)
Ransomware

How Much Does Cybersecurity Cost for Small Businesses?

Understanding how much cybersecurity costs can be challenging because expenses vary based on several factors. The cost of cybersecurity for small businesses can range from a few thousand dollars to tens of thousands of dollars annually, depending on:

IT Budget:

Businesses with larger IT budgets generally spend more on cybersecurity.
A common recommendation is to allocate between 7% and 12% of your annual IT budget to cybersecurity.
For example, a business with a $2.5 million IT budget might end up spending around $250,000 on cybersecurity.

Employee Count:

The number of employees affects the need for security measures and training.
On average, the cost per employee for strong cybersecurity coverage ranges between $2,500 and $2,800 per year.

Complexity of Solutions:

More complex, robust solutions such as managed security services and advanced security tools will increase costs.
Basic solutions might involve antivirus software and firewalls, while advanced measures may include endpoint detection and response (EDR) and continuous monitoring.

Cyber Insurance:

As cyber threats increase, understanding cyber security insurance for small business cost has become a critical part of financial and risk planning.
Cyber insurance premiums can range from $1,000 to $10,000 per year, helping cover the costs associated with a breach.

General Cost Ranges

Small Businesses (Fewer Than 50 Employees): Typically spend between $5,000 and $50,000 per year on cybersecurity.
Businesses with $2.5 Million IT Budgets: Often allocate roughly $250,000 annually on cybersecurity initiatives.
Cost Per Employee: Ranges from $2,500 to $2,800 for comprehensive cybersecurity coverage. For many organizations, IT security for small business environments translates into an annual per-employee cost of $2,500–$2,800 when tools, monitoring, insurance, and training are combined.

It’s important to note that while these numbers provide a baseline, every business is unique. Your specific needs may drive your cybersecurity expenses higher or lower.

Breaking down the Cost of Cyber Security Businesses

The cost of cybersecurity for small businesses depends on factors like company size, industry, and IT infrastructure. Below are the primary expenses to consider:

1. Cybersecurity Risk Assessment Cost

A risk assessment identifies vulnerabilities in your systems and provides a roadmap for improvement. This is often the first step in building a cybersecurity strategy.

Cost: $5,000–$15,000 depending on complexity.

2. Software and Tools

Basic tools form the foundation of any cybersecurity program:

Antivirus Software: $50–$100 per device annually.
Firewalls: $500–$2,500 for hardware or software solutions.
Encryption Tools: $100–$1,000 depending on scope.

3. Managed Security Services

Many organizations now rely on small business cybersecurity services or a cyber security monthly service model to gain enterprise-level protection without hiring full-time security staff. Outsourcing to a Managed Security Service Provider (MSSP) offers ongoing monitoring and protection without needing an in-house team.

4. Compliance Costs

Certain industries, like healthcare or finance, require compliance with regulations such as HIPAA or PCI-DSS. Meeting these standards often involves additional assessments and certifications, which can add several thousand dollars to your cybersecurity budget.

The Hidden Costs of Cybersecurity Businesses

The average cost of data breach for small business often extends far beyond immediate recovery, impacting long-term customer trust, renewal rates, and revenue stability. Failing to invest in cybersecurity can lead to devastating consequences:

1. Average Cost of Data Breach for Small Businesses

According to Verizon's 2024 Data Breach Investigations Report, the average cost of a breach for a small business ranges from $120,000 to $1.24 million

2. Downtime and Productivity Loss

Recovering from a cyberattack takes time, on average it takes 287 days to detect and contain a breach. This downtime can cause disturbance in your operations.

3. Reputational Damage

Losing customer trust after a breach can result in long-term revenue losses and can damage your reputation.

The Best Practices to Prepare a Budget For Your Cybersecurity Business

While cybersecurity can seem expensive, there are ways to manage costs effectively without compromising protection:

1. Prioritize Essential Investments

Focus on high-impact solutions such as:

Antivirus software
Firewalls
Employee training programs
Regular data backups

These foundational measures address common vulnerabilities at a relatively low cost.

2. Consider Managed Security Services

Outsourcing your cybersecurity needs to a managed service provider (MSP) can save money compared to hiring an in-house team. MSPs offer continuous monitoring and threat detection at monthly rates starting around $500.

3. Conduct Regular Risk Assessments

Periodic risk assessments help identify gaps in your defenses before they become costly problems. These assessments also ensure that your cybersecurity strategy evolves with emerging threats.

4. Leverage Cyber Insurance

Cyber insurance policies help cover costs associated with data breaches or ransomware attacks. While premiums vary, they provide critical financial protection against worst-case scenarios.

Pro tip: Businesses with a security-first approach typically allocate 7-12% of their IT budget to cybersecurity.

Final Thoughts

The cost of cybersecurity for small businesses is no longer optional spending. It is a strategic investment that directly impacts operational continuity, customer trust, and long-term growth. If you're unsure how to approach cybersecurity, Execweb works directly with CISOs and trusted cybersecurity vendors to help you find the best solutions for your business needs.

FAQs

1. How much does cybersecurity cost small businesses?

The cost of cybersecurity businesses typically ranges from $5,000 to $50,000 per year, depending on factors like the number of employees, complex systems, and the level of protection required.

2. How much should a business spend on cybersecurity?

When business owners ask how much do companies spend on cybersecurity, the answer depends heavily on employee size, infrastructure complexity, compliance requirements, and risk tolerance.. Experts recommend allocating 7% to 12% of your overall IT budget to cybersecurity. If your IT budget is $250,000, that would translate to a cybersecurity spend of around $17,500 to $30,000 annually.

3. How much does IT cost to do cyber security?

IT costs for cybersecurity vary based on whether you're managing security in-house or outsourcing it. In-house teams require salaries, tools, and training—costing tens of thousands annually. Managed services can range from $500 to $2,000 per month, making them a more cost-effective option for many small businesses.

4. What is the average budget for cyber security businesses?

The average small business spends $2,500 to $2,800 per employee per year on cybersecurity. This includes software licenses, monitoring services, insurance, training, and more. However, this can vary depending on the industry and regulatory requirements.

5. Do small businesses need cyber security?

Absolutely. Small businesses are often targeted by cybercriminals because they typically have weaker defenses. A successful cyberattack can lead to data loss, legal liabilities, and major financial damages.