No, the average cost of downtime is not $5600 per minute
Max Rozen / June 14, 2023
A fairly common claim among website uptime monitoring services is that downtime costs $5600 per minute. Chances are, you'll have one of two reactions to this claim:
- "Argh, that's a lot! We should use uptime monitoring!"
- "That's completely made up, no one running a business my size would tell you a number anywhere near this high"
The reality of what downtime costs your business lies somewhere in between.
As a company that runs 3.6 million uptime checks per week, we have a bit of insight into the cost of downtime, so if you're curious - read on.
Let's start with the obvious calculation: take your annual revenue, divide it by the number of minutes in a year, and there's your cost per minute of downtime.
The formula for calculating your downtime cost per minute:
(annual revenue) / 60 * 24 * 365
This assumes 100% of your revenue comes from your website and your website being offline drops your revenue to 0, which are fairly strong assumptions to make.
For downtime to cost $5600 per minute by this measure, your business would need to be making $2.9 billion per year. That's almost enough to make it into the Fortune 500.
Let's say your business makes $1 million per year, and 100% of revenue comes from your website and web app, and for each minute your website is down, you're unable to generate revenue:
1000000 / 60 * 24 * 365 = 1.902
At this level of revenue, downtime costs you $1.90 per minute. If your website is offline for a couple of hours without you noticing, that's a couple hundred dollars in lost revenue.
Unfortunately, things aren't this simple in the real world. Downtime also costs your business reputational damage from both prospective customers unable to pay you, and existing customers unable to use your service. For e-commerce businesses, the above calculation is a rough estimate at best.
For Software as a Service (SaaS) businesses, the above calculation doesn't make sense, as SaaS businesses often run their marketing websites separate to the systems that their customers pay them for (and will often have significantly more advanced monitoring to ensure everything is still running). So their marketing websites going offline might be a little embarrassing, but not the business-ending event some folks make it out to be.