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The formula to calculate the cost of downtime based on revenue takes into account the total revenue generated over a specific period of time, typically a year, and distributes that revenue across the total hours in a year to establish an hourly revenue amount.

Choosing to divide the annual revenue by 8760, which represents the total number of hours in a year (24 hours per day multiplied by 365 days), provides a precise calculation of how much revenue is generated each hour. This hourly revenue figure can then be used to estimate the financial impact of downtime on the business, as it reflects the loss incurred for every hour that services are unavailable.

Using any other denominator would not accurately reflect the total operational hours and could lead to a miscalculation of revenue lost during downtime. For instance, dividing by 24 would only consider daily revenue without accounting for the entire year's worth of hours, whereas dividing by 360 would not accurately account for leap years or precisely capture the true number of hours. Thus, using 8760 ensures a comprehensive and accurate representation of expected revenue per hour, which is essential for understanding downtime costs.