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.
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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