BLOG | How to Calculate What an Hour of Downtime Really Costs Your Business

If your computers, internet or business systems stopped working for just one hour tomorrow, what would it cost your organisation?

Most small business owners and not-for-profit leaders pause when asked this question. They usually come up with a number, but it's almost always lower than the real cost.

That's because the true cost of downtime isn't just lost sales. It affects your staff, your customers, your reputation and the time it takes to recover afterwards.

The good news is you don't need complex spreadsheets to get a realistic estimate.

Here's a simple five-minute exercise that can help you understand what downtime could really cost your organisation.

A Simple Downtime Calculator

Grab a pen and paper. There are four things to consider.

1. Lost Income

Start by working out your average income per working hour.

A simple way is to divide your annual turnover by around 2,000 hours (roughly the number of business hours in a working year).

For example:

• If your business generates $1 million a year, that's around $500 per business hour.

• If your systems are down and you can't process sales, send invoices, book appointments or provide your services, that income may be delayed—or lost altogether.

For not-for-profits, think about the services you can't deliver, funding obligations that could be affected, or fundraising opportunities that are missed.

2. Staff Who Can't Work

Now think about how many people rely on your systems to do their jobs.

How many staff members would be unable to work if your internet, server or business software wasn't available?

Multiply the number of affected staff by their approximate hourly employment cost (including wages, superannuation and on-costs).

For example:

• 8 staff

• Around $45 per hour employment cost

• That's $360 every hour you're paying people who simply can't get their work done.

3. Recovery Time

This is the cost most organisations overlook.

When systems come back online, work doesn't magically return to normal.

Staff still need to:

• Catch up on emails

• Re-enter lost information

• Follow up missed enquiries

• Reschedule appointments

• Work through the backlog

A one-hour outage often creates much more than one hour of disruption.

A good rule of thumb is to add 50% to your downtime estimate.

If the direct cost of one hour is $1,000, the real cost is closer to $1,500 once recovery time is included.

4. Customer or Community Impact

This one is harder to measure, but it can be the most significant.

Think about what happens when someone tries to contact you and gets no response.

Perhaps they:

• Choose another supplier

• Cancel an appointment

• Lose confidence in your organisation

• Delay an important decision

• Miss out on accessing your services

For not-for-profits, downtime can also affect volunteers, clients, donors and funding partners.

Ask yourself:

What's one lost customer—or one missed funding opportunity—worth over the next few years?

The answer is often much higher than people expect.

A Real-World Example

Imagine a Tasmanian accounting practice with 15 staff and annual revenue of $2 million.

Their downtime might look something like this:

• Lost income: $1,000 per hour

• Staff costs (12 affected employees): $540 per hour

• Total direct cost: $1,540 per hour

• Add recovery time (50%): around $2,300 for a one-hour outage

And that's before considering missed client calls, delayed lodgements or the potential loss of future work.

Even a relatively short outage can become surprisingly expensive.

Why Most Organisations Underestimate Downtime

Downtime doesn't usually arrive with a neat invoice attached.

You don't receive a bill saying:

"Here's what you would have earned if your systems had stayed online."

Instead, the costs appear in small ways throughout the day.

• A customer who couldn't reach you.

• A volunteer who couldn't access important information.

• A staff member spending hours fixing problems instead of helping clients.

• An invoice that wasn't sent.

• A new enquiry that went to a competitor instead.

Each one seems minor on its own.

Together, they add up quickly.

So... Are You Comfortable With That Risk?

Once you've worked through the numbers, ask yourself one simple question:

How many hours of downtime would it take before the cost exceeded what you'd spend in a year on reliable IT support, backups and cybersecurity?

For many Tasmanian small businesses and not-for-profits, the answer isn't very many.

You can't eliminate every IT problem.

But you can dramatically reduce the likelihood of extended outages—and make sure that if something does go wrong, your organisation recovers quickly.

Understanding the real cost of downtime is the first step towards making informed decisions about protecting your business, your people and the people who rely on you.

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