Work out the service credit an SLA breach earns and compare it against what the downtime actually cost the business.
An SLA converts a percentage into an error budget of minutes, and the credit is a step function of where measured uptime lands rather than a proportional refund. Because the credit is a percentage of the affected service charge, it is bounded by what you spend, while the loss is bounded by what your business earns. Service credits are a pricing mechanism, not insurance: a 25% credit on a $40,000 service is trivial next to a day of lost revenue, which is why resilience engineering is worth more than SLA negotiation. Credit tiers and claim windows differ by provider and contract, so read your own agreement rather than relying on these defaults.
Cloud SLA
allowed downtime = (1 − target) × period minutes; credit rate is the tier the measured uptime falls into; credit = affected spend × credit rate; loss = downtime hours × loss per hour.
allowed downtime = (1 − target) × period minutes; credit rate is the tier the measured uptime falls into; credit = affected spend × credit rate; loss = downtime hours × loss per hour. An SLA converts a percentage into an error budget of minutes, and the credit is a step function of where measured uptime lands rather than a proportional refund. Because the credit is a percentage of the affected service charge, it is bounded by what you spend, while the loss is bounded by what your business earns.
Service credits are a pricing mechanism, not insurance: a 25% credit on a $40,000 service is trivial next to a day of lost revenue, which is why resilience engineering is worth more than SLA negotiation. Credit tiers and claim windows differ by provider and contract, so read your own agreement rather than relying on these defaults.
This calculator takes 10 inputs: Contracted SLA target, Measured uptime in the period, Days in the billing period, Spend on the affected service, Credit below the SLA target, Second credit threshold, Credit below the second threshold, Third credit threshold, Credit below the third threshold, Business loss per hour of downtime. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.
Usually not. Most providers require you to file a claim within a fixed window, often 30 to 60 days after the incident, with your own evidence of the impact. Credits that nobody claims are simply never paid, so the FinOps team normally owns the process.