How to use the cost of poor quality calculator
Quality cost splits four ways. Prevention is what you spend so defects never happen, appraisal is what you spend to find them, internal failure is rework and scrap on defects caught before shipping, and external failure is returns, replacements and support on defects the customer found first. The last two together are what people mean by cost of poor quality.
The math starts from defect count. Units produced times the defect rate gives defective units; the escape rate splits those into defects found after delivery and defects caught internally. Multiplying each group by its own per-unit cost gives internal and external failure cost. The same physical defect costs far more once it has left the building, because freight, replacement and support time all attach to it.
Prevention and appraisal are deliberate investment rather than loss, so the table shows them beside the failure categories instead of buried inside one number. Only the values you enter are counted: indirect damage such as churn or reputation is out of scope. Add revenue for the same period and the total appears as a percentage of sales, a figure that is easier to defend in a budget discussion than an absolute number.
Frequently asked questions
Prevention cost spent to stop defects happening, appraisal cost spent to detect them, internal failure cost for defects caught before shipping, and external failure cost for defects found after delivery. The last two together are what cost of poor quality normally refers to.
Beyond the product itself you pay for return freight, replacement, reshipping and support time. This tool counts only the per-incident cost you enter, so indirect damage such as lost repeat business or reputation is not included.
No, they are deliberate spending intended to reduce failure. The table keeps them separate from failure cost for that reason, while total quality cost is the sum of all four categories.