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Cost of Poor Quality (COPQ) Calculator

Cost of poor quality as a share of revenue: prevention, appraisal, internal failure and external failure costs — the four-category breakdown, benchmarks, and the payoff of shifting spend from failure to prevention.

Annual revenue (or cost of goods)
Prevention costs (training, FMEA, process design, supplier development)
Appraisal costs (inspection, testing, audits, calibration)
Internal failure (scrap, rework, downtime, re-inspection)
External failure (warranty, returns, complaints, penalties, lost customers)
Scenario: extra prevention spend
Scenario: failure cost reduction it achieves
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How it works

Cost of quality = prevention + appraisal + internal failure + external failure; COPQ = internal + external failure; scenario: new total = conformance + extra prevention + failure × (1 − reduction)

The prevention–appraisal–failure model sorts everything a company spends because quality is not perfect into four buckets. Prevention (designing defects out) and appraisal (finding them before shipment) are costs of conformance; internal failure (scrap, rework, downtime) and external failure (warranty, returns, lost customers) are costs of non-conformance. Companies that have never measured this typically find the total at 10–25% of revenue with failure costs dominating, and the classic finding — a dollar of prevention saves several of failure, and an external failure costs ten times an internal one — is why the scenario section models shifting spend upstream. External failure is systematically under-counted because lost customers and reputation rarely hit the ledger; even a conservative estimate usually changes priorities.

Worked example

On $25 M of revenue: $180 k prevention, $420 k appraisal, $900 k internal and $750 k external failure total $2.25 M, or 9.0% of revenue, with failure taking 73%. Spending $150 k more on prevention to cut failures 30% ($495 k) would bring the total down to $1.9 M — a net $345 k saving and 3.3× return.

Frequently asked questions

What goes in prevention vs appraisal?

Prevention happens before production: training, design reviews, FMEA, supplier qualification, poka-yoke. Appraisal checks output: incoming and final inspection, testing, audits, calibration.

Is 1:10:100 real?

It is a rule of thumb — a defect costs roughly 1 to prevent, 10 to catch internally and 100 once it reaches the customer. Actual ratios vary, but the ordering almost always holds.

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