Calculate the true cost of website downtime

We talk a lot about how website availability affects your business in revenue and brand perception. We throw out statistics, and we give dire warnings, but until you’ve taken the time to do the research, you don’t really know how the numbers affect your business. In this article, we step through the issues associated with downtime, and we show you how to quantify the impact of website downtime on your business’s revenue.

How does website downtime affect a business?

If you manage a SaaS (software as a service) or e-commerce site, calculating the cost of website downtime is one of the more straightforward calculations when it comes to quantifying the risk. If your business relies on your website or API to generate income directly or indirectly, downtime is a problem. However, we all know every website experiences some downtime whether planned or unplanned.

Immediate effects of downtime

The impact of downtime is the easiest to calculate and recognize; downtime means a 100% loss for most online businesses during the outage. Downtime means zero: zero sales, zero leads, zero user transactions, zero ad revenue. You can help mitigate some loss by making sure planned outages take place during slow use times. However, with an international business, you may find that you don’t have a “best time” for an outage. You can reduce losses during unexpected outages by having a plan in place and making sure you’re always aware of website downtime as soon as possible.

Potential losses

The immediate impact of downtime is easy to see and measure. The difficulty is determining the future losses outages may cause. Each case is subjective, but the potential losses due to the side effects of an outage can impact future revenue in a few different ways.

Permanent site abandonment
An Akamai study found that nine percent of a site’s visitors never return to a website they find down. Nearly one in ten current and future sales lost. When figuring the actual cost of downtime, you need to consider the permanent abandonment of users and what that means to future revenue.

On the plus side—yes, there actually is a plus side—site visitors forgive the occasional outage and simply return later. However, frequent and lengthy outages still see a loss of nine percent on each occurrence, so minimizing downtime is critical.

Outages can affect page ranking
Search engine bots crawl the web continually checking sites and content. If the bot finds the site down, they simply return later and try again. However, what happens after that is not completely clear. Do extended outages impact page ranking?

How long can a site remain down before affecting page ranking? Google Webmasters’ video with Matt Cutts says a short outage of a day or two—you can’t get much vaguer than that—does not impact your site ranking, but that isn’t entirely true. Matt is talking about indexing. If your site is down for a day or two, Google isn’t going to drop your site from its index permanently, but during the outage, Google may remove your site from the results. If your site doesn’t come back up within those few days, Google drops the site from the index completely, and you start over with your SEO (search engine optimization) efforts.

Shopping Cart Elite reports that an outage of six hours is enough to drop your rankings by 30 percent. The article goes on to say that the damage to rankings may last up to 60 days.

Quantify the impact of website downtime

As you can see above, the availability of your website (and services) may have a significant impact on your business. Before you decide what kind of protection you need, you need to evaluate the risk and cost to your business.

Evaluating downtime losses

If the cost of minimizing the outage risk outweighs the losses, your best bet is probably to accept the risk and move on. However, until you calculate the risk, you just can’t tell.

First, you need to know how much of your business’s income derives from your website. If you’re a SaaS business, an e-retailer, or a content marketer, your percentage is likely going to be 100. If you rely on your website for lead generation, perhaps you get 50 percent of sales that originate from website leads and the other half comes from conventions and cold calling. For our purposes, only include the percentage of your gross income coming from your website.

Using your gross revenue from the previous year, calculate your website’s total revenue based on the percentage attributed to your website to a dollar amount.

Take your dollar amount—or whichever currency you use—and divide it by the number of months, days, hours, minutes, and seconds. Let’s use an easy example and say we have a business that generates 10,000,000 dollars a year from its website. The figures in Table 1 show the breakdown of revenue based on the unit of time. Of course, your revenue probably varies throughout this time, but for simplicity, think of it as a constant revenue stream.

Table 1: Yearly website revenue broken down based on units of time.

Unit of time Revenue generated
Year $10,000,000
Month $833,333
Week $192,308
Day $27,397
Hour $1,142
Minute $19
Second $.32

Start with a downtime benchmark

The next thing you need to know is how much downtime your site experiences. If you monitor your site for availability, you hopefully have the data for an entire year. If not, you can set up an Uptrends trial and establish numbers based on a 30-day free trial.

Important: Your web hosting provider gave you a service level agreement (SLA), and for most shared hosted sites, the uptime guarantee is 99.9 percent. It is important to remember two things about this number; the guarantee doesn’t include planned maintenance, and the guarantee is for the uptime percentage of the server and not your website. Website outages specific to your configuration and code will also come into play. Gathering your own uptime data is critical for an accurate measurement.

Calculating the cost of website downtime based on a benchmark

In our example, our fictional website averaged 95.66 uptime for the last 12 months for a total downtime of 1,322,270 seconds. Based on 32 cents a second, total lost revenue for the previous 12 months due to downtime is $419,281.00.

Calculating the cost based on uptime percentages

Companies typically aim for high availability. High availability is frequently called five nines or 99.999 percent. Five nines is a lofty goal achieved by few. Let’s use some of the common uptime goal percentages and see how these numbers translate to cash for our fictional business. In Table 2, you can see what the financial loss is for the varying uptime percentages.

Table 2. Losses based on common uptime goals

Uptime Percentage Time in Seconds Lost Revenue
90 31,56,192 (876.72 hours) $1,009,981.44
95 1,577,664 (438.24 hours) $504,852.48
98 631,584 (175.44 hours) $202,106.88
99 315,360 (87.6 hours) $100,915.20
99.5 158,112 (43.92 h) $50,595.84
99.9 31,572 (8.77 hours) $10,103.04
99.95 15,768 (4.38 hours) $5,045.76
99.99 3,156 (53 minutes) $1,009.92
99.999 315 (5.26 minutes) $100.80

Based on the losses realized by our fictional business, you can easily see why high availability (99.999 percent) is so attractive to companies. However, most companies never achieve the goal.

Downtime revenue losses basic formula

To determine your losses, you need your

  • Gross Revenue (GR) We used a year.
  • Monitoring time period (T) Stay consistent with units. In our calculations, we use seconds.
  • Percentage website revenue (PW) Our example is 100 percent, so this calculation can be left out since you multiply by one.
  • Total Downtime (TD) Use the same unit of time as above.
  • Losses

(GR/T) x PW x TD = Losses

($10,000,000 / 31,536,000 seconds) x 100% x 1,322,270 seconds down = $419,289

Reducing website downtime

Downtime is going to happen. Eventually, every site experiences an outage, and some quite famously. This AWS outage of 2017 caused by a typo, took down services for several hours and cost hundreds of millions in losses. An outage at Google took out YouTube, Gmail, and Snapchat for over four hours. This outage took down Facebook and its products for 14 hours. As you absorb the magnitude of these outages, you might think that high availability is a pipe dream, but it doesn’t have to be.

Improving your site’s uptime takes planning. For example, use the best hosting service you can afford, employ CDNs to host your static content, have a plan in place to address outages, and pay attention. No matter how great a plan you have, if it takes you an hour to notice you have an outage, you’ve already dropped below 99.99 percent uptime for the year. If it takes you three hours to fix the problem, you’re down close to a 99.95 uptime percentage, and if these outages happen frequently enough, you may be looking at 90 percent or worse.

Uptime monitoring is one of the least expensive types of monitoring available. Depending on your goals, plans start at about 12 dollars a month. You get ten uptime monitors, email and SMS alerting, and monitoring from a predetermined global collection of checkpoints.

For advanced availability monitoring, the Business plan lets you monitor servers, websites, APIs, and transactions. You can test entire API or web application interactions, monitor SSL certificates, and DNS records. You go beyond uptime and monitor for performance and function. And in case you’re not aware, poor performance carries a cost higher than outages because permanent abandonment rates jump from nine to 28 percent.

Don’t let your downtime affect your users and revenue

Hopefully, you’ve had the chance to calculate your downtime risk. Understanding your risk and minimizing it with monitoring and having a plan in place for outage remediation is essential to your business’s reputation and revenue. If you haven’t already done so, give Uptrends Business plan a try. You get access to Uptrends’ full suite of external monitoring products. Not only will you see how Uptrends can help you reduce downtime for your websites and web services, but you can also monitor all your web assets for uptime, performance, and function. If you would like to know more, our monitoring consultants will gladly answer any questions and give you a one-on-one demo of the benefits Uptrends can bring your business.