How the calculation works
The cost is the sum of four items. The first two grow with the length of the downtime, the other two are paid once per incident.
- Idle staff. The people unable to work, plus half of those slowed down, multiplied by the hourly cost of one person: the annual total employment cost divided by the hours actually worked. It is work paid for with no output, or to be made up later with overtime.
- Lost margin. Sales for one hour of activity, multiplied by the share that the downtime blocks and that is not recovered in the following days, multiplied by the contribution margin.
- Work to be redone. Only if the downtime causes data loss: what people produced after the last backup has to be redone.
- Extra costs. External technicians, overtime, equipment hire: you enter them and they are added once.
The breakdown with your numbers is in the estimate, under “How it is calculated”.
Why margin and not turnover
If a €10,000 order is lost, the company does not lose €10,000. It loses the margin on that order, because it does not pay for the goods, raw materials and commissions. With a 25% margin the loss is €2,500, whereas counting turnover would give a result four times higher.
For the same reason we ask how many of your sales you recover in the days after the downtime. Businesses with regular customers and framework agreements usually just deliver later; an online shop, on the other hand, loses the order.
The reference values
For the items nobody knows offhand we use default values and set them out here. Hours worked and the coefficient can be changed under “Change the calculation assumptions”, at the bottom of the form; operating days depend on the hours you choose; the other two values are fixed.
| Item | Value | Where it comes from |
|---|
| Gross salary → total employment cost | × 1.38 | Employer social security contributions (about 30%, varying by sector and company size), TFR severance pay 7.41% (the annual accrual is pay divided by 13.5, Article 2120 of the Italian Civil Code), INAIL workplace accident insurance premium (under 1% for office work). |
| Hours worked per year | 1,720 | 2,080 contractual hours (40 hours × 52 weeks) minus annual leave, public holidays and paid time off. |
| Operating days | 250 | The 261 weekdays in the year, Monday to Friday, minus public holidays falling on weekdays. For Monday to Saturday hours: 300. |
| People slowed down | 50% | They carry on at half pace, for example working offline or on paper. |
| Work to be redone | half the interval | On average an incident falls halfway between two backups: with a nightly backup you lose half a day's work on average, and a full day's work in the worst case. |
What is not included
- regulatory penalties (for example under GDPR or NIS2) and contractual penalties owed to customers;
- reputational damage and customers lost in the following months;
- ransoms, and legal, notification and communication costs;
- the way the cost of long outages grows more than proportionally: backlogs piling up, customers going elsewhere.
What to do with this number
The hourly cost of downtime helps you decide how much to invest in business continuity. If an hour costs €1,000, cutting recovery time from three working days to four hours saves about €20,000 per incident. That is the number to compare with the cost of better backups, a recovery environment or continuous monitoring.
The next step is to establish, system by system, how quickly you need to be up and running again and how much data you can afford to lose: these are RTO and RPO, explained in the guide RTO and RPO: how long you can be down, how much you can lose. For backup copies, the starting point is the 3-2-1 backup rule.
