The simple calculation
Start with staff cost. Take the number of people who can't work properly when systems are down, multiply by their hourly cost (wages plus on-costs — roughly 1.3× their hourly rate), and you have the direct labour cost of every hour of downtime. For a ten-person office averaging $45/hour loaded, that's $450 an hour before anything else.
Then add lost revenue
If you bill by the hour, every hour down is billable time gone. If you take orders or bookings, every hour down is orders you didn't take — and some of those customers went elsewhere and won't come back. A café with a dead POS at lunch, a real estate agency that can't access its CRM on a Saturday, a medical practice that can't see patient records: the revenue hit is immediate and often larger than the labour cost.
Then the recovery
Downtime doesn't end when the system comes back. There's the technician's time, the catch-up work, the re-entry of anything lost, the apology calls to clients, and — if data was lost — the reconstruction. A four-hour outage routinely costs a day and a half of total disruption.
Then the things you can't put on an invoice
A client who experienced your outage and quietly decided you're not reliable. A staff member's afternoon of frustration. Your own stress and the meeting you missed. The regulatory exposure if the outage involved client data. These are real costs; they just don't show up on a spreadsheet.
A worked example
Ten-person professional services firm. Server dies at 9am Tuesday; no tested backup; recovered from an old copy by Wednesday lunchtime. Labour: 10 staff × $45 × 12 working hours ≈ $5,400. Lost billable time: maybe $6,000. Data re-entry: $1,500. Technician: $1,200. Client impact: unknowable but non-zero. Conservatively, $14,000 — for one incident that a monitored, tested backup would have made a two-hour inconvenience.
What this means for your IT decisions
When you know an hour of downtime costs you $500–$2,000, the question of whether proactive monitoring, tested backups and enforced security are 'worth it' answers itself. The comparison was never managed IT versus nothing. It was managed IT versus the incident you haven't had yet.
Calculate yours
Staff who'd be affected × loaded hourly cost + hourly revenue at risk = your hourly downtime cost. Multiply by a realistic incident length (half a day is common for anything involving hardware or data). If that number makes you uncomfortable, a free IT health check is a good place to start.
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Frequently asked questions
What's the most common cause of downtime in small businesses?
Hardware failure without a tested backup, followed by ransomware, followed by a botched update or configuration change. All three are largely preventable with proactive management.
How long does a typical outage last?
With a break-fix arrangement and no monitoring: half a day to two days, depending on what failed and whether there's a backup. With managed IT and tested backups: often minutes, occasionally hours.
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