How to Calculate the Cost of Downtime for the Business


The important thing to consider in the tech business is how to maintain a stable and efficient technical environment and to give the staff as well as the client the solid evidence on the real cost of the system downtime. There are many definitions of defining the real cost of the system downtime. The simple definition is the unavailability of the system. Even though there are many situations that the system is up and running, it is down to any user if the application or the system cannot be used no matter what the reason makes it not to work.


Many solutions are surrounding theĀ disaster recovery, and it’s difficult for any company or the contact to do it on their own. What they need is hiring experienced personnel to calculate the data outage and loss. Many businesses claim that they can continue in running the activities during its downtime without negatively impacting its economy. However, this assumption will lead to IT crisis in the long run. The best way to convince the business that the activities are not doing well is through calculations and numbers.


The best way to put in numbers the skepticism of the disaster recovery is calculating the cost of downtime. Many elements are used in the calculation of the of downtime costs. The general formula is the Cost of Downtime (per hour) = Lost Productivity Lost Revenue + Cost of intangible cost + Cost to Recover.


The formula is very straightforward if the company is down and cannot generate enough revenue. There are many ways to calculate the revenue lost by the business downtime. The first way is identifying areas of the business that generate revenue to the business. The second way is calculating how much such business generates revenue per hour. The third step is to calculate the percentage of the revenue during the downtime. The last step is to calculate the percentage of the revenue lost during the downtime depending on the business area.


The loss of productivity is the costs of salaries of the employees who are not related to the activities that generate revenue. The salaries of this kind of the employees are very fixed regardless whether it is uptime or downtime. The way to calculate the lost productivity is the same as a step to calculate theĀ lost revenue. The cost to recover the activities into routine operations is difficult to determine because it solely depends on the period of the outage or data loss. The services that are needed to recover data are both physical tools and the ongoing costs which result because of the data loss.
The intangible cost is also hard to determine, but they are important for the business to realize. The intangible costs are things that negatively impact the sound reputation of the company. Downtime creates an overall negative impact on the business when handled poorly. After calculating all the above elements, the last thing is to equate all of them. There are many online calculators and experienced personnel that are available in assisting the company to calculate the total cost of the downtime.