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.
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:
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.
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.
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.
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:
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.
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.
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.
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.
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.
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