When IT stops working, the engineer’s invoice is the easy number. The harder one is everything that sits idle until the fix is in. Most businesses don’t put a real number on it.
The formula
Use this calculation:
Downtime cost = (Lost revenue + Lost productivity + Recovery cost + Reputational cost) x Duration
Price each component on its own, then multiply by how long the incident lasted.
Lost revenue
If your firm cannot process orders, serve customers or complete paid work while systems are down, you’re losing revenue immediately.
Example: A 30-person professional services firm that bills £150 per hour per consultant loses £12,000 of billable time if 20 of those consultants cannot work for four hours.
E-commerce and hospitality see the effect in real time. A till system or website that cannot take payment is turnover lost for good.
Lost productivity
You may catch up later and still hit the same monthly revenue. You are still paying salaries for people who could not do their jobs.
Example: On an average salary of £35,000 a year, 30 employees cost roughly £17 per person per hour. Four hours of downtime for the full team is £2,040 in salary paid for no output, before missed deadlines and client commitments are counted.
Recovery cost
This is the direct spend required to restore service: emergency callout fees, replacement hardware, overtime for your IT team or MSP, and any data recovery work.
If you buy IT support only when something fails, emergency callouts typically cost £100 to £200 per hour. A serious server failure often takes 8 to 24 hours to put right, and the labour charge alone can reach thousands.
Reputational cost
This line is the hardest to price and, over time, it’s often the largest. Miss a client deadline because systems were unavailable and that client may not return. If customers cannot reach you, they may buy from someone else.
In a regulated sector, an outage can also create a reporting duty and, in some cases, a fine.
Putting it together
Using the same 30-person firm:
| Component | 4 hours downtime | |---|---| | Lost revenue | £12,000 | | Lost productivity | £2,040 | | Recovery cost | £1,500 | | Reputational | Hard to quantify | | Total | £15,540+ |
That’s the bill for a single event. Repeat the incident a few times in twelve months and the annual loss can easily pass £50,000.
How to reduce downtime
- Proactive monitoring. Watch systems so faults are found while they are still small.
- Redundant connectivity. A second connection means one failed circuit does not take the office offline. A leased line with failover is the usual design.
- Cloud and backup. Cloud-hosted services continue if a local server fails. Reliable backups shorten the time needed to restore what was lost.
- Patch management. A large share of outages start with a patch that was available and never applied.
- Managed IT. Without an internal IT team, a provider that watches systems and responds to a published timescale is the most cost-effective way to cut downtime.
Predictive monitoring
Predictive monitoring tracks performance over time and raises a flag while the fault is still small, so engineers can act before the issue becomes an outage. The capability sits inside the same monthly service as the rest of your IT.
How Wanzo helps
Our managed IT service includes monitoring around the clock and a four-hour response commitment. We can add a backup circuit as part of the same monthly retainer.
What to do next
Run the formula with your own headcount, rates and the length of your last outage. If you want help reducing the total, contact us. We’ll review monitoring, connectivity and recovery and set out what a monthly plan would cover.