The formula on a napkin
When your website, your internet, or your systems go down, the cost has three parts.
- Lost revenue: sales that would have happened during the outage and go elsewhere instead.
- Idle payroll: you pay staff whether or not the systems work.
- Recovery and reputation: the emergency fix, plus customers who hit a dead site or an unanswered phone and quietly do not come back.
As a formula: hourly revenue plus hourly payroll plus a recovery estimate. It is rough, and rough is fine. The point of the number is not precision; it is deciding how much prevention is worth paying for, and most owners have never run it.
A worked example
Take an eight-person service business doing 600,000 dollars a year. The business is open about 2,000 hours a year, so revenue runs about 300 dollars per open hour. Payroll for eight people at a loaded cost around 25 to 35 dollars per hour is roughly 200 to 280 dollars per hour. Before touching reputation, an outage during business hours costs this business around 500 to 580 dollars per hour.
Now the multipliers. If the outage hits your busiest window, revenue per hour is far above the average. If your leads arrive through your website or phone, each lost inquiry can be worth hundreds or thousands in lifetime value, and unlike a delayed sale, a missed first contact usually goes to a competitor. A full business day offline for this example business plausibly costs 4,000 to 6,000 dollars. Run your own numbers: annual revenue divided by open hours, plus loaded payroll per hour. It takes five minutes.
Where outages actually come from
Owners picture hackers. In my experience the causes are usually mundane.
- An expired domain name or security certificate, often because the renewal card on file expired.
- A failed hard drive or a dead office computer holding something critical.
- A botched update or plugin conflict taking the website down.
- The internet connection going out, taking the phones and card readers with it.
- An unpaid or forgotten hosting bill for a service nobody owned.
- One employee deleting or overwriting the wrong file.
Notice the pattern: almost none of these requires an attacker, and almost all are cheap to prevent. Security matters, but the boring failures come first because they are far more frequent.
Cheap redundancy that pays for itself
Against the numbers above, prevention is almost embarrassingly cheap.
- Auto-renew with a current card on your domain, hosting, and certificates: free, and it eliminates a whole category of outage.
- Uptime monitoring that pings your site every minute and alerts you when it is down: free to about 20 dollars a month. You want to learn about an outage from a text, not from a customer.
- Cloud backup for every important machine: a few dollars per computer per month.
- A battery backup unit for your network gear and key computers: 100 to 200 dollars once, and it rides through the short power blips that corrupt files.
- Cellular internet failover, a device that switches you to the mobile network when your main line dies: 30 to 70 dollars a month, and for a business that takes cards or calls all day it can pay for itself in one avoided afternoon.
Against a 500-dollar hour, the whole list is a rounding error.
What to do next
Three steps this week.
- Calculate your hourly number: annual revenue divided by open hours, plus loaded hourly payroll. Write it down where budget decisions happen.
- List your single points of failure: the one internet line, the one computer with the accounting file, the one person who knows the passwords, the domain renewing on a card that expires next year.
- Fix the top three, starting with the free items: auto-renew, uptime monitoring, verified backups.
If nobody in the business can tell you within an hour who your registrar and host are and when everything renews, that is finding number one. This inventory is also the first thing we build for HashWhales support clients, because you cannot protect a business from an outage you have not mapped.