Sooner or later, every continuity budget runs into the same question from finance: what does an hour of downtime actually cost us? This calculator gives a first answer you can defend for a single system, site or business unit. Enter what the business earns, how much of it depends on the system and who stops working when it fails, and you get a cost per hour plus a total for the outage length you choose. It suits continuity managers filling in a business impact analysis, IT leads sizing a recovery investment and owners of smaller firms.
How the calculator works
The result has three parts: revenue you lose for good, staff time you pay for but cannot use, and one-off costs.
Lost revenue per hour = annual revenue ÷ operating hours × share that depends on the system × (1 - share recovered later)
Lost productivity per hour = staff affected × loaded hourly cost × share of productivity lost
Total = (lost revenue per hour + lost productivity per hour) × outage hours + recovery costs + penalties
The inputs, with sensible values:
- Annual revenue. Sales for the business or the unit that uses the system. Finance usually prefers lost margin to lost sales, since the business also saves the cost of goods it did not ship; if yours does, enter annual gross profit instead.
- Share of revenue that depends on the system. An online-only retailer whose store is down may lose 90 to 100 percent. A clinic whose scheduling system fails might lose half. An email outage may stop very little revenue directly.
- Share recovered later. Orders that wait for you rather than going to a competitor. Contract customers tend to come back; walk-in and impulse buyers mostly do not. Ask sales leadership for the split.
- Operating hours a year. The hours you trade: 2,080 for a 40-hour week, 4,380 for 12 hours a day all year, 8,760 for a business that runs 24/7. It divides revenue, so it matters: the same $5 million spread over 8,760 hours puts about $171 an hour at risk instead of about $721 (at the default shares). Count only outage hours that fall inside trading hours, too: a 24-hour outage at a firm open eight hours a day costs about eight hours of sales.
- Staff affected and loaded hourly cost. Loaded cost is pay plus benefits and payroll taxes. The tool's shortcut is salary ÷ 2,080 × 1.3, so a $60,000 salary gives $37.50 an hour. Bureau of Labor Statistics data for June 2026 put private-industry benefits at 30 percent of total compensation, roughly 43 percent on top of wages. Part of that is paid leave, which salary ÷ 2,080 already covers, so 1.3 is a middle value; go higher for generous plans.
- Share of productivity lost. Use 100 percent when people truly cannot work, such as warehouse staff without scanners, and 25 to 50 percent when they can switch to paper or other tasks.
- Recovery costs and penalties. Overtime, contractors, an incident response firm, expedited freight and rented equipment, then SLA credits, contractual penalties and fines that genuinely apply. Both are counted once, whatever the outage length.
Worked example
The tool opens with $5,000,000 annual revenue, 40 percent dependent on the system, 25 percent of that recovered later, 2,080 operating hours, 20 staff at a loaded $45 an hour losing half their productivity, an 8-hour outage, $3,000 in one-off recovery costs and no penalties.
- Revenue per operating hour: $5,000,000 ÷ 2,080 = about $2,404.
- The system carries 40 percent of that, so about $962 an hour is at risk.
- A quarter comes back later, so 75 percent is lost: about $721 an hour.
- Productivity: 20 people × $45 × 50 percent = $450 an hour.
- Together, about $1,171 for every hour the system is down.
- Over 8 hours that is about $9,369 (about $5,769 in revenue and $3,600 in staff time). Add the $3,000 of recovery costs and the outage costs $12,369.
At two hours the total is about $5,342, more than half of it the fixed $3,000. At 24 hours it is about $31,108, almost all of it hourly loss. One-off costs dominate short outages; the hourly rate dominates long ones.
What the number leaves out
Several costs that often turn out larger fall outside the calculator:
- Customer churn and reputation: it counts sales lost during the outage, not the customers who quietly fail to renew next quarter.
- Regulatory and legal costs: breach notification, investigations and legal fees rarely scale by the hour. Our briefing on why ransomware downtime costs more than the ransom shows how quickly they pile up.
- Impacts that accelerate: a flat hourly rate understates day three compared with hour three, when penalties start and even patient customers give up.
- Timing: an outage in the week before a seasonal peak costs far more than the annual average suggests, a point Ready.gov's business impact analysis guidance makes too.
- Salaried time: idle salaries are lost output rather than extra cash out. Label the line so finance can decide how to count it.
To use the result in a business impact analysis people actually finish, run it at each of your time bands (say 1, 4, 24 and 72 hours) and raise the shares as impacts grow. For a budget request, set a low and a high case against the cost of the recovery capability, as in building a resilience budget the CFO will approve. If the outage length depends on a cloud restore, the backup and restore time calculator gives a realistic figure to enter.
Sources
- Ready.gov, Business Impact Analysis: lost and delayed sales, extra expenses, penalties.
- NIST SP 800-34 Rev. 1, Contingency Planning Guide for Federal Information Systems.
- U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation.
- ISO/TS 22317, Guidelines for business impact analysis.
Frequently asked questions
How do I calculate the cost of downtime per hour?
Divide annual revenue by operating hours, then multiply by the share of revenue that depends on the system and by the share that is lost rather than delayed. Add staff affected × loaded hourly cost × the share of productivity lost. With the default inputs, that is about $1,171 an hour.
What loaded hourly cost should I use for staff?
Start with salary ÷ 2,080 × 1.3, which turns a $60,000 salary into $37.50 an hour. Raise the uplift for generous benefits and use actual rates for contractors. If finance has a standard loaded rate, use that.
Should I enter revenue or profit?
Enter annual gross profit if you want lost margin, which is what most CFOs will ask for. Use revenue when the question is cash coming in during the outage.
Does the calculator include reputational damage?
No. It covers revenue lost during the outage, staff time and one-off costs. Churn, regulatory costs and brand damage need separate estimates, in words if you cannot size them honestly.