Whether it’s a fiber cut on the Ship Channel, a ransomware attack, or a Gulf storm that knocks out power, downtime compounds fast- lost sales, idle teams, SLA penalties, recovery labor, and customer churn. The good news? When you measure the cost clearly, you can prioritize fixes that pay for themselves.
What “IT downtime” really costs
Downtime isn’t just the clock. It’s lost revenue + idle payroll + recovery labor + penalties + churn. Independent benchmarks show the price tag keeps climbing: Uptime Institute’s latest global survey found 54% of organizations said their most recent significant outage cost over $100,000, and about 20% topped $1 million.
Older, but still instructive, benchmarks place average downtime at $5,600–$9,000 per minute depending on environment and scale. Use them cautiously for directional modeling, then replace with your own numbers.
Key takeaway: Treat downtime as a portfolio of costs. If you only count lost sales, you’ll underinvest in the fixes that matter.
Houston realities: storms, grid, and telecom
Hurricane Beryl (July 2024) briefly darkened much of Greater Houston- 2.26 million CenterPoint customers without power; restoration took days, with long tails in certain areas. Beyond electricity, cellular and internet services lagged power restoration for some corridors, lengthening business interruptions.
Uptime’s research shows outages are less frequent but more expensive when they do land—especially where power distribution is the trigger. Houston’s storm profile makes that risk concrete for any business with on-prem systems or single-threaded connectivity.
Our key takeaways: Plan for multi-day utility impact, not just an hour. Your costs expand non-linearly after Day 1. Think perishable inventory, service backlogs, and reputational erosion.
A simple downtime cost formula (with example)
Start with this baseline model and swap in your own figures:
Downtime Cost = (Revenue/hr × % impacted × hours)
+ (Fully-loaded payroll/hr × # impacted staff × % idled × hours)
+ (Recovery & overtime labor)
+ (SLA/contract penalties)
+ (Churn × Customer LTV) + (Compliance/regulatory costs)
Example (conservative, 4-hour outage):
- Revenue/hr: $50,000; 70% impacted → $140,000
- 60 staff × $55/hr fully-loaded × 60% idle × 4 hr → $7,920
- Recovery/overtime: $6,000
- Penalties: $10,000
- Churn (50 customers × $400 LTV × 5% at-risk) → $10,000
Estimated total: $173,920
Our key takeaways: The “soft” numbers (penalties/churn) become very hard on Day 2+. Track them.
RTO/RPO: the two numbers every leader should know
- RTO (Recovery Time Objective): Max acceptable time to restore service.
- RPO (Recovery Point Objective): Max acceptable data loss (how far back you can recover).
The NIST contingency planning guide remains a solid playbook: set RTO/RPO from a business impact analysis, then engineer people, processes, and tech to hit those numbers and test.
Our key takeaways: Budget follows RTO/RPO. If an application’s real RTO is two hours, your backup, failover, and staffing plan must prove it.
How managed IT reduces real dollars at risk
Where managed IT pays for itself:
- Connectivity & power resilience: dual-ISP SD-WAN, LTE/5G failover, UPS + generator planning, network path diversity (avoid shared poles/conduits).
- Rapid recovery: immutable/offline backups, documented runbooks, quarterly witnessed restores that prove your RTO.
- Threat reduction: MFA/SSO, EDR with 24×7 SOC, email security, and DMARC—fewer incidents means fewer outages to price.
- Monitoring & change control: SIEM/logs + alerting to catch degradations before they cascade.
- Incident communications: status page + prewritten customer messages reduce churn and penalty exposure.
- Tabletop exercises: rehearse power/telecom loss + cyber scenarios, including vendor and facilities dependencies.
Our key takeaways: Ask vendors to show evidence, not just logos: last restore report, last failover test, last patch compliance run.
Segmented snapshots: impact by industry
These aren’t exact prices, just common costs we see in Houston. Use them in the formula above.
- Healthcare & clinics: appointment backlogs, EHR downtime, eRx delays, extended hours to catch up; potential regulatory notification if downtime ties to security incidents.
- Legal & professional services: trust-account and filing deadlines, matter delivery delays, expert/mediator rescheduling fees, client churn in high-stakes cases.
- Energy & industrial: SCADA/OT data staleness, ticketing and logistics delays, demurrage on shipments, supplier chargebacks; higher sensitivity to power quality events.
- Retail/e-commerce: cart drop-off, POS failure, reconciliation rework, ad spend waste during outages; churn and negative reviews amplify costs post-event.
Our key takeaways: The same hour of downtime can be 10× more expensive in one industry vs. another. Don’t copy generic benchmarks blindly.
Common questions & myths
- “We moved to the cloud; we’re resilient.” Cloud reduces some risks, but single-region designs, identity outages, and last-mile internet still take you down (and cloud SLAs rarely cover lost revenue).
- “Outages are rarer now.” True in aggregate, but more expensive when they occur. Power distribution issues remain a leading cause.
- “Backups = recovery.” Not if they’re mutable, untested, or don’t meet your RTO/RPO. Run a witnessed restore each quarter.
- “We can estimate downtime later.” Estimating after an incident leads to underreported costs and underinvestment that repeats the pain.
IT downtime cost FAQs
1) What’s a realistic cost per minute?
Benchmarks range from $5,600–$9,000 per minute, but your mix (B2B/B2C, margins, staffing) matters more. Build a model with your own revenue and payroll inputs.
2) Are outages actually getting worse?
Frequency has declined modestly, but the share of six-figure events is stubbornly high; ~54% report $100k+ and about 20% cross $1M.
3) What Houston-specific risks should we model?
Multi-day power/telecom disruption during storm season and heat events; assume uneven restoration across corridors. Build ISP diversity and offline operations plans.
4) What’s the fastest way to cut downtime costs?
Dual-ISP SD-WAN, tested restores, MFA/EDR to reduce incidents, and incident comms that retain customers.
5) How do RTO and RPO influence budget?
They dictate the speed and data loss you design for—faster/stricter targets require more redundancy and testing.
6) Should we buy cyber insurance instead?
Insurance helps with financial recovery, not customer trust or same-day operations. Most policies require controls (MFA, backups) anyway.
7) How often should we test failover and restores?
Quarterly for critical apps; at least annually for full environment failover, with documented results.
8) Do we need a formal Business Impact Analysis (BIA)?
Yes—use it to set RTO/RPO per system, identify single points of failure, and prioritize spend.
Free IT review for Houston business.
Stephen Sweeney, CEO of of Uprite.com, with 20+ years of experience brings tech and creativity together to make cybersecurity simple and IT support seamless. He’s on a mission to help businesses stay secure and ahead of the game!