Cost of Interruption Calculator
This tool helps you quickly estimate the direct financial cost of an interruption or downtime based on a known cost per hour and the duration of the disruption.
Enter the average cost your business or operation incurs for each hour of downtime and the total duration of the interruption.
Enter Interruption Details
Understanding the Cost of Interruption
What is the Cost of Interruption?
The cost of interruption (or cost of downtime) is the financial impact incurred when a system, process, or service is unavailable or not functioning as intended. This simple calculator focuses on the direct cost rate multiplied by duration.
Simple Calculation Formula
This tool uses the most basic formula:
Total Cost = Cost Per Hour * Duration (in Hours)
This provides a fundamental estimate but doesn't account for complex factors like recovery costs, reputational damage, or tiered impacts over time.
Examples of Calculating Interruption Cost
Here are a few scenarios using the calculator:
Example 1: Small Server Outage
Scenario: A small business server goes down, costing them an estimated $1,000 per hour in lost productivity and sales.
Inputs: Cost Per Hour = 1000, Duration = 3 hours.
Calculation: Total Cost = 1000 * 3 = 3000
Result: $3,000.
Conclusion: The 3-hour outage cost the business approximately $3,000.
Example 2: Retail POS System Failure
Scenario: A retail store's point-of-sale system fails during a busy afternoon, estimated cost per hour is $500.
Inputs: Cost Per Hour = 500, Duration = 0.5 hours (30 minutes).
Calculation: Total Cost = 500 * 0.5 = 250
Result: $250.
Conclusion: A 30-minute POS failure cost the store about $250 in lost transactions and idle staff time.
Example 3: Manufacturing Line Stop
Scenario: A critical machine stops on a factory floor. The estimated cost of this line being down is $15,000 per hour.
Inputs: Cost Per Hour = 15000, Duration = 1.75 hours.
Calculation: Total Cost = 15000 * 1.75 = 26250
Result: $26,250.
Conclusion: The factory line interruption cost approximately $26,250.
Example 4: Website Downtime for E-commerce
Scenario: An e-commerce website experiences an outage during peak shopping time, costing $10,000 per hour in lost sales and potential customer lifetime value.
Inputs: Cost Per Hour = 10000, Duration = 0.25 hours (15 minutes).
Calculation: Total Cost = 10000 * 0.25 = 2500
Result: $2,500.
Conclusion: A brief 15-minute website outage can still cost a significant amount, estimated at $2,500.
Example 5: Software-as-a-Service (SaaS) Disruption
Scenario: A SaaS provider has a partial service disruption affecting clients. The internal cost estimation is $20,000 per hour.
Inputs: Cost Per Hour = 20000, Duration = 4 hours.
Calculation: Total Cost = 20000 * 4 = 80000
Result: $80,000.
Conclusion: A 4-hour service disruption costs the SaaS provider an estimated $80,000.
Example 6: Network Failure in an Office
Scenario: The network goes down in an office of 50 employees, each costing the company $50/hour in salary and overhead. Total per hour cost = 50 * 50 = $2,500.
Inputs: Cost Per Hour = 2500, Duration = 1.5 hours.
Calculation: Total Cost = 2500 * 1.5 = 3750
Result: $3,750.
Conclusion: The 1.5-hour network failure cost the company about $3,750 in lost employee productivity.
Example 7: Individual Freelancer Downtime
Scenario: A freelance designer charges $75 per hour but cannot work due to a software issue.
Inputs: Cost Per Hour = 75, Duration = 2 hours.
Calculation: Total Cost = 75 * 2 = 150
Result: $150.
Conclusion: The freelancer lost $150 in potential earnings due to the 2-hour interruption.
Example 8: Critical Application Failure
Scenario: An internal critical application fails, impacting 20 key staff members whose combined cost to the company is $5,000 per hour.
Inputs: Cost Per Hour = 5000, Duration = 6 hours.
Calculation: Total Cost = 5000 * 6 = 30000
Result: $30,000.
Conclusion: The failure of the critical application for 6 hours cost the company an estimated $30,000.
Example 9: Supply Chain Interruption
Scenario: A key part of the automated supply chain fails, costing the company $12,000 per hour due to delays and idle resources.
Inputs: Cost Per Hour = 12000, Duration = 8.5 hours.
Calculation: Total Cost = 12000 * 8.5 = 102000
Result: $102,000.
Conclusion: A prolonged 8.5-hour supply chain interruption resulted in an estimated cost of $102,000.
Example 10: Data Entry System Downtime
Scenario: A data entry system used by 10 employees goes down. Each employee's time plus overhead is $40/hour. Total per hour cost = 10 * 40 = $400.
Inputs: Cost Per Hour = 400, Duration = 0.75 hours (45 minutes).
Calculation: Total Cost = 400 * 0.75 = 300
Result: $300.
Conclusion: The 45-minute data entry system downtime cost approximately $300 in lost productivity.
Frequently Asked Questions about Cost of Interruption
1. What does "Cost Per Hour of Downtime" include?
Ideally, it includes lost revenue, lost productivity of employees, potential recovery costs, and potentially other direct impacts that can be reasonably tied to a unit of time. This calculator uses whatever value you provide as the hourly cost rate.
2. Is this calculator suitable for very complex systems?
This calculator provides a basic linear estimation. For complex systems with varying impacts over time, dependencies, or significant recovery costs, a more sophisticated method for calculating the Cost of Downtime per hour is needed, but this tool still provides a quick estimate once you have that hourly rate.
3. What units should I use for Cost Per Hour?
You can use any currency (e.g., USD, EUR, GBP) or generic unit, as long as you use the same unit consistently for the Cost Per Hour input. The output will be in the same unit.
4. What if the downtime is very short (minutes)?
You can enter the duration as a decimal of an hour. For example, 30 minutes is 0.5 hours, 15 minutes is 0.25 hours, 45 minutes is 0.75 hours.
5. What if I don't know my Cost Per Hour?
Estimating Cost Per Hour can be complex. It often involves analyzing historical data, sales figures, employee productivity, and potentially IT/operational costs during downtime. You might need to conduct a separate business impact analysis to determine this figure accurately.
6. Does this calculation include indirect costs like reputation damage?
No, this basic calculator focuses only on the direct financial impact based on the hourly rate you provide. Indirect costs like reputation damage, loss of customer confidence, or potential fines are not included in this simple formula.
7. Why is it important to calculate the Cost of Interruption?
Calculating this cost helps businesses understand the financial risks associated with downtime, justify investments in reliability and disaster recovery, prioritize IT and operational improvements, and assess the impact of incidents.
8. Can I use this for planned maintenance?
While planned maintenance is less disruptive than unplanned outages, it still has a cost (lost productivity, unavailability). You *can* use the calculator, but the "Cost Per Hour" might be lower than for an unplanned critical system failure.
9. What are the limitations of this simple calculator?
It assumes a constant cost per hour, which may not be true for longer outages or different times of day. It doesn't factor in tiered impacts (e.g., initial outage is cheap, but extended outage costs skyrocket) or recovery costs after the interruption ends.
10. How can I make the Cost Per Hour estimate more accurate?
A detailed Business Impact Analysis (BIA) is usually required to accurately determine the cost of downtime, breaking it down by system, business function, and potentially by time increments (e.g., cost per minute or per hour, and how that cost increases over time). Use the result of that analysis as your input for this calculator.
