A whitepaper has indicated that 59 percent of Fortune 500 companies experience a minimum of 1.6 hours of downtime per week. Based purely on this estimate, how much money was lost in this time. If you say that each company has 10,000 employees who are paid approximately $56 per hour including benefits, then just the cost associated with the loss of revenue through salary pay would amount to almost $896,000 per company each week. That adds up to over $46 million per year!
However, that estimate only accounts for wages paid during periods of downtime. There are many other costs associated with downtime other than just salary pay. We have identified a list of tangible costs of downtime: lost transaction revenue, lost wages, lost inventory, remedial labor costs, marketing costs, bank fees and legal penalties from not delivering on service level agreements. Of course, there are other potential areas of lost revenue that can affect companies when they have to shut down production. For instance, brand names could be compromised with bad publicity, and employee morale can suffer.
When critical assets breakdown, production comes to a complete halt. Even if it only takes an hour to repair essential equipment, the costs add up significantly over time. If you’re really curious to find out exactly how much money downtime can cost you, we have provided the following formulas for you to figure it out.