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What is that recurring problem actually costing you?
Most defect costs never reach a report — especially the firefighting hours. Put real numbers on rework, scrap, customer escapes and lost time, and you have the business case for fixing the root cause.
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What the cost of poor quality actually includes
Cost of poor quality (COPQ) is everything a defect costs you that would vanish if the process ran right the first time. Classic cost-of-quality models split it into four buckets — prevention and appraisal (what you spend to avoid and detect problems), then internal failure and external failure (what the problems cost once they exist). This calculator focuses on the failure side, because that is the money already leaking, plus the bucket most models leave out entirely:
- Internal failure — rework, scrap, re-inspection, downgrade. Visible, usually already tracked.
- External failure — returns, warranty, credits, complaint handling, and the customer relationship. Partly tracked, usually understated.
- Firefighting — the hours your team spends managing the problem instead of fixing it. Almost never tracked, and often the largest line of the three.
That third bucket is the reason so many business cases for a root cause analysis look too thin to fund. A stand-up that spends ten minutes a day on the same recurring defect costs more per year than the scrap it produces — but only one of those appears in a report.
The formula
internal = (defects × rework share × rework cost) + (defects × scrap share × scrap cost)
external = defects × escape share × cost per escape
firefighting = hours × loaded hourly rate
monthly COPQ = internal + external + firefighting · annual = × 12
Deliberately simple, and deliberately conservative: it ignores lost future revenue, expedited freight, inventory buffers held “just in case”, and the opportunity cost of engineering attention. If the number still looks large, that is the point — the real one is bigger.
The 1-10-100 rule, and why escapes dominate
A long-standing rule of thumb says a defect costs roughly 1 to prevent, 10 to fix internally, and 100 once it reaches the customer. The multipliers vary by industry, but the shape is why a 5% escape rate can outweigh 95% of defects caught in-house. If your external-failure line dwarfs your rework line, the calculator is not misbehaving — it is telling you that detection, not just prevention, is where the leverage is. That distinction has a name in formal problem solving: the cause of occurrence versus the cause of escape, and a proper 8D demands both.
Turning the number into a fix
A cost figure is an argument, not a solution. The next step is finding out why the defect happens — and the method depends on what you already know:
- Not sure which method fits? Run the RCA method selector — four questions, one recommendation.
- Have a defect log by category? Start with a Pareto chart to find the vital few, then drill the biggest bar.
- No idea where it comes from? Map breadth with a fishbone diagram, then drill the dominant branch.
- Strong hypothesis already? Go straight to a guided 5 Whys and verify with data before acting.
- Need to document it for a customer or an auditor? Use the free 8D template; for internal use the RCA report template is lighter.
For worked examples of problems like this being traced to a verified root cause — with the actual numbers — see five real-world root cause analyses.
Frequently asked questions
What is the cost of poor quality (COPQ)?
Everything a defect costs that would disappear if the process ran right the first time: internal failure (rework, scrap, re-inspection), external failure (returns, warranty, complaint handling), and the hidden hours consumed by firefighting. In most organisations it runs 5–30% of revenue, and the hidden part is usually biggest.
How do you calculate it?
Volume × defect rate gives defects per period. Split those into reworked and scrapped and multiply by unit costs; add escapes × cost per escape; add firefighting hours × loaded rate. Sum is COPQ per period — multiply by 12 for the year. The formula is shown above.
What is the 1-10-100 rule?
Roughly 1 unit of cost to prevent a defect, 10 to correct it internally, 100 once it reaches the customer. It explains why a small escape rate can dominate the total.
Why include firefighting hours?
Because they are the largest cost nobody books — and exactly the cost that disappears when the root cause is fixed. Leaving them out is the most common reason an RCA business case looks too weak to fund.
Is this calculator free and private?
Yes — free, no signup, no email, and it runs entirely in your browser. None of your numbers are sent anywhere or stored.