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I am not a 100% how this works. The minimum on my battle scribe for demi company is 350pts. So I double that for 700pts minimum. What else do I need? Do I need 2 commanders? Do I have to have company command squads?

Basic plan is

Demi Company 350pts bare minimum no upgrade
Demi Company 350pts also bare minimum no upgrade
sub total 700pts

10 Razor backs no upgrades for 550pts all for free!

Then IK
1 Paladin 375pts
1 Warden 375pts
sub total total 750pts

Total= 2000
free pts -550
actual=1450


spend 50 pts on a few upgrades on marines. However I think there is still a catch and it wont work out like I think it will.

Do you not have the Codex?

To get a legal Lion's Blade (is Battlescribe telling you that the list isn't legal? It should but I haven't tried a Blade in it yet), you need at least one Core (the Demi), and at least one Auxiliary. The cheapest Auxiliary is 55 points.

To get the Battle Company benefit, you cannot use two Company Masters, one Demi must be lead by a Chaplain.

The 350 points it shows you is just for the three tac squads, the assault squad, and the dev squad. You also have to take a Company Master or Chaplain for each Demi-company (one of each to get the full battle company benefit). So, if you keep everything naked (which is a waste), the minimum cost for a full battle company is 880 (700 + 180 for the two naked leaders). Like Quanar said, you also have to take an auxiliary (naked Scout squad is 55 points). To be worth it, you really should take some upgrades on the marines to make them actually useful (otherwise armor-heavy lists will simply wreck you, free transports or no).

Just take one Knight. That way you can afford a few upgrades for your HQs, and some plasma guns or something.

basic list out line

Demi Company+Master
Demi Company +Chaplain
Sub total=880
scout aux @ 55

tacs get some meltas (6x10=60)
devs get some lascannons (4×20pts=80)

Allies
1 Cruzer, rapbattle cannon@430

grand total= 1505

free points of 550!