What is the Cost of Password Lockouts?

The problem of password lockouts and resets is one of the root causes and outcomes. 

What is the root cause of password resets? 

Why are employees resetting their passwords so much? 

Here’s the problem: password lockouts and resets seem like minor interruptions, but they carry significant hidden costs that often go unaddressed in many organizations. 

At what frequency are password resets happening in your organization? Do you even know the answer to that question? What’s the total cost to your organization per year? 

In this blog, we’ll uncover the common cause of password lockouts and why your organization should address this issue to save money. 

What is a Password Lockout? 

Let’s start with the basics: what is a password lockout, and why do they happen? 

No matter your industry, scope, or size, every employee in your organization uses passwords. 

A password lockout is a security feature that temporarily or permanently restricts access to a user account after a set number of incorrect login attempts. This mechanism is commonly used in systems and applications to prevent unauthorized access, particularly from brute-force attacks where attackers repeatedly try different password combinations to gain entry. Once the threshold of failed attempts is reached (usually between 3 to 10 tries), the account is either locked for a specified period (e.g., 15 minutes) or until a system administrator manually resets it.

What Are the Costs of a Password Lockout? 

Costs are both physical and intangible. This means there is a dollar cost, an adverse productivity effect, a customer impact, and potential cybersecurity challenges with password lockouts. 

Per-Dollar Costs of Password Lockouts

Let’s first talk about direct IT expenses. When a password lockout occurs, it requires a human (e.g., a system administrator) to reset it. Until that happens, the employee's productivity is at a standstill.  

Because of these two factors, labor is one of the most tangible costs of password lockouts. 50% of all help desk calls relate to password resets, and each incident can cost a company up to $70. These aren’t pocket-change issues; the annual IT burden becomes substantial when scaled across dozens or hundreds of employees. 

Productivity Costs of Password Lockouts

Beyond IT labor, there’s a bigger, more invisible cost: employee productivity loss. The time spent resetting passwords includes:

• Navigating project delays
• Waiting on hold for help desk support
• Resetting credentials and logging back in

Employees lose roughly 11 hours per year to password lockout scenarios. In a business with 1,000 staff, that’s 11,000 lost hours. This is time that could otherwise fuel innovation, customer service, or revenue generation.

Customer Impact of Password Lockouts

For organizations involved in e-commerce, password hiccups have immediate financial impact. Friction at critical moments, like when a prospective customer is creating or resetting a password during checkout, can lead customers to abandon high-value carts. The result? Direct loss of sales and harm to brand reputation. 

Cybersecurity Issues with Password Lockouts

Although less obvious, password lockout procedures can become security vulnerabilities:

• Social engineering exposure: Reset workflows often rely on security questions or alternate methods that can be manipulated during a lockout.
• Credential fatigue: Constant password resets may encourage users to adopt weaker, repetitive passwords, which makes breaches more likely. According to Verizon’s 2022 DBIR report, compromised credentials contribute to nearly 90% of data breaches. 

Reducing Password Lockout Costs

Attention to cost reduction is a benefit to any organization. When it comes to reducing password lockouts, organizations will see a direct IT spend reduction by lowering password lockout occurrences. 

As a strategic IT partner, here are our key recommendations:

1. Follow NIST password guidance: remove forced periodic resets to reduce frustration.
2. Scan for breaches: stop compromised credentials before they prompt resets.
3. Enforce MFA: cuts reliance on passwords and reduces lockout risk.
4. Simplify complexity rules: less error-prone password creation equals fewer lockouts.
5. Deploy self-service resets: enables verified users to reset without help desk assistance.
6. Use password managers: helps employees maintain unique strong credentials across platforms. 

Overcoming the Challenge of Password Lockouts

While password lockouts enhance security, they can also lead to productivity issues and user frustration, not to mention cost your organization unnecessary IT spend. Employees who get locked out of critical systems may experience downtime, and IT teams must spend time resolving access issues.

In managed IT environments, balancing the strictness of lockout policies with user convenience is the name of the game. When you achieve this, you maintain both security and operational efficiency.

As a managed IT provider, we help businesses solve challenges like password lockouts (and much more) by combining more innovative password policies, automation, and rethinking authentication strategies.

The result? A more efficient, secure, and user-friendly environment for everyone. Ready to chat with PK Tech? Schedule a time here.