when will you need a server backup?

when you have customers

When the cost to backup is less than the cost to recreate all your data.

Preferably just before hardware failure, a system crash, earthquake or flood ;)

When the cost to backup is less than the cost of losing data multiplied by the probability of losing data.

If you have $100 of data and it costs $50/month to backup, it only makes sense to backup your data if you think there is more than a 50% chance of losing your data each month.

Of course you have to count lost customers, bad reputation, etc. as part of the "cost of losing data" so its a bit hard to estimate.

There was a thread not too long ago talking about backups. If your server is your business, you should have insurance. Backups are your insurance, bar none. If your hard drive fails or melts down, or even if you get hacked (god forbid). If you do not have backups, the main person to blame for the loss of data is yourself.