We all know that outages can cost companies thousands to millions of dollars for every minute their website is down. This is of course different on whether you rely on the internet for sales or just have a web presence. For example Amazon is going to lose a lot more money if their website goes down than say a company like Exxon as the internet is Amazon’s primary sales channel.

Not only do outages hurt the sites that go down it can also greatly affect the companies hosting them. One of the things that separates a typical unmanaged host and a managed host is their SLA (Service Level Agreement). This document does what it says and defines the level or service that is expected and credits if those levels aren’t met. With a standard dedicated server you typically get %x off of your bill if you hit x amount of downtime.

However if you are a big enough player (think someone like Pepsi) and go with a managed host you can typically get a custom SLA written that could end costing the host hundreds of thousands or millions if your website goes down to a fault of the hosts. Of course one of the reasons you pay a premium for managed hosting is so you get these types of SLAs that can end up costing the host a lot of money if you go down which gives them a huge incentive to make sure you have great uptime.

This has never been more apparent then with the recent case of Internap who actually had to restate their numbers by $1.8 million because of customer credits from outages. Internap is not alone in this as SAVVIS took deep hits in the last quarter as well due to SLA credits and Rackspace had to issue some credits when it had its’ power outage.

Outages can greatly affect a managed hosting providers numbers and with that erode wall street confidence. Not only does it affect the bottom line numbers but outages can also quickly detroy a providers reputation.