Money2 min read

How to work out what an hour of downtime costs your business

You've probably seen big numbers quoted for what downtime costs. Those are about other people's businesses. You can work out your own with a pen.

Pick the system you'd miss most: your booking page, your online orders, your quoting tool. Now imagine it stopped for an hour, at the worst time of your week.

Line one: sales you lost

How much comes through that system in your busiest hour? Count what you'd keep after the cost of doing the work, not the full price. And don't count all of it, because some people will come back. Be honest about how many would try once and go elsewhere.

Line two: people stuck

Who can't do their job while it's down? Take what those hours cost you in pay, but only for the time they can't do useful work. If the front desk can carry on with paper bookings, count less.

Line three: the cleanup

What has to be fixed afterwards? Double bookings, missed orders, refunds, apologies. Note who does this and how long it takes. It can take longer than the outage.

Line four: the trust

This one is hard to count, so don't pretend. Write down what one lost regular customer is worth to you in a year. Then ask how many might not come back after a bad Saturday.

Add it up

Lines one to three are your cost for one bad hour. Line four is why it might be more.

Then ask two more questions:

  • How long would it really take to fix? If the only person who can is on vacation, an hour may be two days.
  • When does it hurt most? An outage at 3am on a Tuesday isn't the same as one at lunchtime on your busiest day.

What to do with your number

Keep it. Now you can make a plain decision about what it's worth to have someone looking after your software, watching it, and fixing it quickly. This was your worst hour, so most outages will cost less. Guess how many bad hours you'd have in a year, multiply, and compare that with what looking after it would cost for the year. If it comes to almost nothing, a simple setup is fine.

What should exist?

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