What this calculation does and does not include
The figure above is direct lost revenue: the sales that would have happened during the hours you were unavailable, assuming revenue is spread evenly across the month. It is deliberately simple, which makes it useful as a floor rather than a forecast.
The real cost is higher, and the parts it omits are often the larger ones.
- Engineering timeSeveral people pulled off planned work for the incident, plus the follow-up and postmortem.
- Support loadA ticket spike that continues for days after the outage itself is resolved.
- Churn and trustCustomers who do not complain and do not come back. The most expensive category and the hardest to measure.
- SLA creditsContractual refunds owed to enterprise customers, which can dwarf the direct revenue loss.
This model assumes revenue is uniform across the month. For most businesses it is not — an outage during a Friday-evening peak or a sale event can cost several times the average-hour figure. If you know your peak multiplier, apply it.
Using the number
The practical purpose of this calculation is comparison. Once you know that an hour of downtime costs a specific amount, questions about whether to invest in redundancy, faster detection, or better on-call coverage stop being matters of opinion.
Detection speed is usually the cheapest lever. Cutting your average detection time from five minutes to one removes four minutes from every incident for the entire year, at a fraction of the cost of infrastructure redundancy.