Online, you can find quite a few (high) figures on the financial impact of downtime. All too often assumptions are made based on averages or the costs in specific cases. Because not every company is the same nor does everyone experience the same impact as a result of downtime, Nucleus has developed an online calculator, which allows you to calculate the costs of downtime for your own company. Is this calculator perfect? Of course not. But it does give you a good indication of the effective financial damage incurred by your company, because it takes seven factors into account, which determine the impact of downtime.
1. Duration of the downtime
The duration of the downtime is the crucial factor in the entire calculation. How many minutes was your website, online service or application inaccessible?
2. Loss of income
We determine three important elements in order to calculate the loss of income.
- The average turnover per hour.
- The percentage of the turnover that is dependent on the uptime. For an e-commerce website for example, this is 100 percent. For the website of a pizzeria, this might be only 50 percent, because people can still come to the restaurant. While in the case of a plumber’s website, this will perhaps only be 10%.
- The loss of turnover suffered during the downtime, taking this percentage into account.
3. Loss of productivity
In addition to the loss of income, there is also the loss of productivity. It is possible that a large number of employees will not be able to perform their job or only insufficiently as a result of the downtime. Again, we take three factors into account.
- The average hourly wage of an employee.
- The number of employees that are less productive or unproductive as a result of the downtime.
- The percentage of the productivity that is dependent on the uptime. This can differ between departments. So it may be useful to calculate this cost individually for each department.
4. Recovery costs
When you experience downtime, this also has an impact on your infrastructure. Often, this also involves financial costs.
- Identification of the problem (internally or caused by a third party)
- Solution of the problem (internally or provided by a third party)
- Restarting your system
- Possible maintenance or repair costs
5.Loss of sales opportunities
Your sales team could also be a victim of the downtime. In addition to the costs resulting from their inactivity, there are also the costs for lost sales efforts.
- Number of offers per day
- Average price per offer
6. Lost customers
In the worst case, downtime may also result in the loss of a number of customers. Our calculator also takes this into account in the calculations.
- Total number of customers
- Average turnover per customer
- Number of lost customers as a result of downtime
7. Service Level Agreement
When you have a good contract with your hosting provider, you have some clear Service Level Agreements (SLA’s) concerning uptime. When these SLA’s are not met, you are entitled to financial compensation. That is taken into account as well.
Based on these factors, our Downtime Cost Calculator will calculate the effective financial damage caused to your company by the downtime. Our calculator will not take possible damage to your image or the financial impact on a long-term basis into account. Of course we at Nucleus will do everything to reduce downtime to an absolute minimum. How we do that you can read our blogposts “Is downtime actually that bad?” and “How to improve my uptime: a step-by-step plan”. Have we forgotten to take something into account? Then please let us now in the comments below. This blogpost is part of a free eBook that covers all aspects of uptime.