The superficial hard cost of downtime is relatively easy to calculate.
It’s the average cost per minute of downtime multiplied by the number of minutes you spend in downtime.
For instance, when Costco’s website went down on Thanksgiving in 2019 for several hours, some experts estimated it cost them $11 million in lost sales.
Now, of course, the cost of downtime averages vary across industries and will be unique for your business. But there are some averages you can use as a guide.
According to Gartner, the average cost of downtime is $5,600 per minute. However, the cost can vary from $140,000 per hour to $540,000 per hour, so there will be variances.
In fact, 98% of organizations report downtime costs over $100,000 per hour, 81% put the cost at over $300,000 per hour, and 33% of those said that one hour of downtime costs $1 million to $5 million.
The quantifiable costs
In the best-case scenario, engineers detect an issue before it affects any customers. In the worst-case scenario, an issue goes undetected for seconds, minutes, or even hours until a customer is negatively impacted and alerts the company to the problem.
Imagine an e-commerce company has an incident that causes the payment gateway to go down for five minutes.
If five engineers work for two hours investigating, troubleshooting, and reporting on the incident, then the cost of getting from downtime to uptime is an engineer’s hourly wage multiplied by 10.
But what about lost sales?
Imagine an e-commerce company making 24,000 sales a minute where the average revenue from sales is $280,000 per minute. Lost revenue from sales during downtime is $280,000 per minute, but there are also the 24,000 dissatisfied customers to consider.
You also need to factor in the cost of acquiring customers in the first place, the negative effects of bad PR or word of mouth from unhappy customers, and the cost of re-acquiring customers who have many options.
The harder costs
Then there is the human cost of outages and downtime. From 3 a.m. alerts to interrupted vacations and even job loss, there’s a massive strain on your team caused by investigating and resolving downtime issues. Whether it’s the distraction of being continually pinged or the frustration associated with troubleshooting, this strain will eventually lead to staff attrition.
And the opportunity cost is even higher. There’s the loss of productivity caused by DevOps and IT personnel being pulled off more strategic projects to investigate, troubleshoot, and report on outages and performance issues. This is, perhaps, the greatest business cost and the most difficult to calculate.
Calculating the cost of lost productivity will depend on your growth strategy, the role of software deployment in this strategy, and the value of infrastructure in your company.
Regardless of the numbers, the price is high, and the indirect effect of lost productivity runs deep. The business loses out to competitors, misses market opportunities, and starts to stagnate.