How Much Does Business Backup and Disaster Recovery Cost

Backup and disaster recovery is one of the hardest line items to justify in a small business budget because the value is invisible until something goes wrong. Nobody notices a backup that works. Everybody notices when one does not. The result is that backup spending gets treated as overhead – something to minimize – rather than as insurance against the scenarios that actually threaten the business.

This guide breaks down what backup and disaster recovery actually costs for small businesses, including the hardware, software, services, and hidden costs that most pricing pages do not mention. It also covers the cost of downtime, because the only way to evaluate backup spending is to compare it against what you lose without it.

Cloud backup costs

Cloud backup pricing is typically based on the amount of data you store, the number of devices or servers being backed up, and whether you are using a self-managed tool or a managed service.

Raw cloud storage from providers like AWS S3, Azure Blob Storage, or Backblaze B2 costs between $0.005 and $0.025 per GB per month. For 1 TB of backup data, that is roughly $5 to $25/month for storage alone. But raw storage is just the container. You still need backup software, agents on your systems, scheduling, monitoring, and someone to manage restores. Raw storage is relevant for businesses with IT staff who can build and maintain a backup pipeline. For most small businesses, it is not the right starting point.

Managed cloud backup services bundle the software, agents, cloud storage, monitoring, and support into a per-device or per-server monthly fee. Typical pricing:

Component	Typical cost range
Workstation backup (per device)	$3 – $8/month
Server backup (per server)	$25 – $75/month
Microsoft 365 backup (per user)	$2 – $5/month
Additional storage beyond included amount	$0.10 – $0.30/GB/month

For a 20-person business with two servers, 20 workstations, and Microsoft 365, a managed cloud backup service typically costs $150 to $400/month, or $1,800 to $4,800/year. That covers backup software, cloud storage, daily backup jobs, and basic monitoring.

What it usually does not cover: test restores, incident response during a recovery, or 24/7 monitoring with human response to failures. Those are typically part of a managed backup service, not standalone backup pricing. When backup is included in a broader managed IT engagement, the costs roll into the per-user fee – see how much managed IT services cost for a small business for how that bundled pricing works.

On-premises backup costs

On-premises backup involves buying hardware and software up front, with ongoing maintenance and replacement costs.

Hardware: A NAS device suitable for small business backup (Synology, QNAP) with 4-8 TB of usable storage costs $500 to $2,000. A dedicated backup server with more storage and better performance runs $2,000 to $8,000. Enterprise backup appliances from vendors like Datto or Axcient that include built-in cloud replication cost $2,500 to $10,000+ depending on storage capacity. Hardware needs replacement every 3 to 5 years, so divide the cost across that lifespan for a realistic annual figure.

Software: Backup software licensing ranges from free (Veeam Community Edition for up to 10 workloads) to $500 to $2,000/year for commercial products like Veeam Backup & Replication, Acronis Cyber Protect, or Veritas. Some vendors charge per server or workstation, others per TB of data.

Maintenance: Drives fail, firmware needs updates, and storage fills up. If you have IT staff, this is part of their workload. If you do not, expect to pay your IT provider $100 to $200/hour for backup maintenance and troubleshooting visits. A well-maintained on-premises backup system needs 2 to 4 hours of attention per month for monitoring, testing, and maintenance.

Total on-premises cost for a 20-person business: roughly $2,000 to $5,000 in year one (hardware + software), then $1,000 to $3,000/year ongoing (software renewal + maintenance). For guidance on configuring on-premises backup jobs effectively, see our server backup best practices guide. This total does not include any offsite component, which is required to meet the 3-2-1 backup rule and protect against physical disaster. For a full comparison of how on-premises costs stack up against cloud and hybrid approaches, including the trade-offs in recovery speed and ransomware resilience, see our dedicated comparison guide.

Hybrid backup costs

Hybrid backup – local appliance with automatic cloud replication – provides both fast local recovery and offsite protection. It is also the most expensive option, because you are paying for both components.

Bundled hybrid appliances from vendors like Datto and Axcient charge a monthly fee that includes the hardware, software, local backup, and cloud replication. Typical pricing:

Business size	Typical monthly cost	What is included
1-2 servers, < 1 TB	$200 – $400/month	Appliance, software, cloud storage, basic monitoring
2-5 servers, 1-3 TB	$400 – $800/month	Same, with larger appliance and more cloud storage
5-10 servers, 3-5 TB	$800 – $1,500/month	Same, enterprise appliance, higher storage tier

These figures are for the backup infrastructure only. They do not include the labor to manage it, test restores, or handle recovery incidents.

Build-your-own hybrid using a local NAS or server with separate cloud backup software costs less in monthly fees but more in setup and maintenance labor. A typical configuration – local Veeam backup to a NAS plus cloud replication to Wasabi or Backblaze B2 – costs $200 to $500/month in software and storage, plus the up-front NAS hardware cost. You save on the vendor premium but take on the integration and maintenance work yourself.

Microsoft 365 backup costs

This is a separate line item that many businesses miss entirely. Microsoft’s built-in retention is not backup – it does not provide point-in-time recovery and can be defeated by a compromised admin account.

Third-party Microsoft 365 backup typically costs $2 to $5 per user per month, covering Exchange Online, SharePoint, OneDrive, and Teams. For a 50-person business, that is $100 to $250/month, or $1,200 to $3,000/year.

This is one of the highest-ROI backup investments a business can make. The cost is low, the risk it covers is high, and the data it protects – email, documents, client files – is often the most operationally critical data the business has.

Managed disaster recovery service costs

Managed DR goes beyond backup. It includes planning, testing, and the ability to recover your entire environment – not just individual files – within a defined timeframe. This is where backup transitions from “we can restore files” to “we can get the business running again after a major incident.” For businesses evaluating whether to outsource backup entirely, understanding what Backup as a Service (BaaS) includes is a useful starting point before comparing managed DR tiers.

Managed DR services from MSPs and specialized DR providers typically cost:

Service level	Typical monthly cost (20-50 person business)
Managed backup only	$300 – $800/month
Managed backup + quarterly DR testing	$500 – $1,200/month
Full managed DR with defined RTO/RPO	$1,000 – $3,000/month

The price increases reflect increasing levels of service: monitoring and alerting, regular test restores, documented recovery procedures, defined recovery time objectives, and the ability to spin up your environment in the cloud during a disaster. The tier you need depends on your RTO and RPO requirements – how fast you need to be back up and how much data loss you can tolerate.

For businesses in regulated industries – healthcare with HIPAA requirements, for example – managed DR with documented testing is not optional. Auditors want evidence that backups are tested and recovery procedures are documented, not just that backup software is installed.

The cost of downtime: the number that justifies the spend

Backup and DR spending only makes sense when compared to what it costs when you do not have it. The cost of downtime is the number that turns backup from “overhead” into “investment.”

How to calculate your cost of downtime

The basic formula:

Hourly downtime cost = Annual revenue / Business hours per year

For a business generating $2 million per year with 2,000 business hours:

$2,000,000 / 2,000 = $1,000 per hour of downtime

That is revenue alone. Add to it:

• Employee idle time. If 20 employees at an average cost of $35/hour cannot work, that is $700/hour in labor costs producing nothing.
• Recovery labor. Your IT person or provider working on the recovery at $100 to $200/hour, often with urgency premiums.
• Client impact. Missed deadlines, delayed deliverables, SLA penalties. Hard to quantify but real.
• Reputation damage. Clients and prospects who learn you were down for days recalibrate their trust in your reliability.

A realistic all-in downtime cost for a 20-person business generating $2 million per year is $1,500 to $2,500 per hour. A full day of downtime costs $12,000 to $20,000. A week – which is not unusual for businesses recovering from ransomware without good backups – costs $60,000 to $100,000.

The full cost of a data breach goes far beyond downtime, including forensics, legal, notification, and reputational damage. But downtime alone is enough to justify most backup investments.

The comparison that matters

Put the numbers side by side:

Scenario	Annual cost
Managed hybrid backup with M365 backup and quarterly DR testing	$8,000 – $18,000/year
One week of downtime from ransomware	$60,000 – $100,000+
One day of downtime from server failure	$12,000 – $20,000
Permanent loss of client data with no backup	Unquantifiable

A business spending $12,000/year on backup and DR is paying $1,000/month to protect against losses that start at tens of thousands and can reach six figures. The backup does not need to prevent a disaster every year to justify its cost. It needs to prevent one disaster ever.

Where businesses overspend on backup

Not all backup spending is well-allocated. Common areas where businesses pay more than they should:

Backing up everything at the same priority. Not all data needs the same backup frequency or retention. A file server with client contracts needs daily backup with long retention. A development server with test data might need weekly backup with short retention. Tiering your backup based on data criticality reduces costs without reducing protection where it matters.

Paying for unused cloud storage. Cloud backup storage grows over time as backup history accumulates. If your retention policy keeps 365 days of daily backups for every server, you are storing a lot of data you will probably never need. Review retention policies annually. Most businesses need 30 to 90 days of daily granularity and monthly snapshots beyond that.

Duplicate backup coverage. Some businesses end up with overlapping backup systems – the old NAS that was never decommissioned, the cloud backup trial that became permanent alongside the managed backup, the Windows Server Backup that IT set up before the managed provider deployed Veeam. Audit your backup tools and eliminate redundancy.

Over-provisioned hardware. A 32 TB NAS for a business with 2 TB of backup data is wasted capital. Size your on-premises hardware for 18 to 24 months of growth, not five years.

Where businesses underspend on backup

More commonly, businesses underspend in areas that create real risk:

No Microsoft 365 backup. At $2 to $5 per user per month, this is one of the cheapest and most impactful backup investments. Skipping it exposes your email, documents, and collaboration data to permanent loss from accidental deletion, ransomware, or a compromised admin account.

No offsite copy. A local-only backup is better than no backup, but it does not protect against physical disaster or network-wide ransomware that specifically targets backup systems. Adding a cloud replication component to an existing local backup typically costs $50 to $200/month and closes the single biggest gap in most SMB backup strategies. If your Microsoft 365 tenant security is not hardened either, you are compounding the risk – a compromised tenant can wipe cloud data that you assumed was safe.

No backup testing. A backup that has never been tested is a liability disguised as a line item. If you are paying for backup but nobody has ever restored from it to verify it works, you do not actually know if you have backup. You have software that runs and reports green.

No recovery planning. Backup without a documented disaster recovery plan means that when something goes wrong, you are figuring out the recovery process under pressure while the business is down. A documented plan – even a simple one – reduces recovery time and prevents mistakes that extend outages. Businesses that have been through a ransomware incident learn this lesson the hard way – recovery without a plan takes two to three times longer than recovery with one.

How Sequentur prices backup and DR

Our backup and disaster recovery services are scoped to each client’s environment. The variables that drive cost are the number of servers and workstations, total data volume, retention requirements, recovery time objectives, and whether the client has compliance obligations that mandate specific backup configurations.

For most clients, backup and DR is part of a broader managed services agreement rather than a standalone line item. This means backup monitoring, test restores, recovery support, and ongoing optimization are included in the management fee rather than billed separately when something goes wrong.

During onboarding, we audit the existing backup configuration, identify gaps against the 3-2-1 rule, and recommend an architecture that meets the client’s recovery and compliance requirements. We then deploy and manage the backup infrastructure, monitor it daily, and run periodic test restores to verify recoverability.

If you want to understand what backup and DR would cost for your specific environment, or if you suspect your current setup has gaps that are creating risk, reach out through our contact page. We can audit your current backup and give you a clear picture of where you stand and what it would take to close the gaps.