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Cost of poor quality (COPQ) calculator
The cost of poor quality (COPQ) is what a business spends because products or processes are not done right the first time: internal failures such as scrap and rework, and external failures such as returns and warranty claims. Add them up for a period and divide by revenue to see COPQ as a share of sales.
COPQequalsInternal failure costs + External failure costs
COPQ, % of revenueequalsCOPQ divided by Revenue × 100
Cost of qualityequalsPrevention + Appraisal + Internal failure + External failure
For the same period as the costs, e.g. a year
Training, quality planning, poka-yoke
Inspection, testing, audits
Scrap, rework, re-inspection, downgrades
Returns, warranty, complaints, recalls
Pre-filled with the worked example. Enter each cost for the same period as revenue.
Cost of poor quality
5.0%
$1,000,000 of revenue.
COPQ
$1,000,000
Internal + external failure
Total cost of quality
$1,400,000
7.0% of revenue, all four categories
Share of total cost of quality
Next step
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How to calculate it
Four cost categories, one period
Quality costs are usually sorted into four groups. Prevention and appraisal are what you spend to stop and to catch defects. Internal failure and external failure are what defects cost once they happen, before and after the product reaches the customer.
The cost of poor quality is the failure part. Put a money value on each defect, including the labor, material and overhead it consumed, and the most expensive problems stand out from the most frequent ones. A Pareto chart ranked by cost shows where to start.
Most of the data already exists in non-conformance reports, scrap logs, warranty and returns records, and inspection time.
Worked example
Illustrative numbers, not a benchmarkA plant with annual revenue of $20,000,000 spends $100,000 on prevention and $300,000 on appraisal, and loses $600,000 to internal failures and $400,000 to external failures.
- 1COPQ = $600,000 + $400,000 = $1,000,000.
- 2COPQ as a share of revenue = $1,000,000 ÷ $20,000,000 = 5.0%.
- 3With appraisal counted (the broader definition): $1,300,000 = 6.5% of revenue.
- 4Total cost of quality = $100,000 + $300,000 + $600,000 + $400,000 = $1,400,000 = 7.0% of revenue.
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<iframe src="https://www.theleansuite.com/tools/copq-calculator/embed" title="Cost of poor quality (COPQ) calculator by LeanSuite" width="100%" height="1280" style="border:0;max-width:1000px" loading="lazy" allow="clipboard-write"></iframe>
<p style="font:13px/1.4 sans-serif"><a href="https://www.theleansuite.com/tools/copq-calculator">Cost of poor quality (COPQ) calculator</a> by LeanSuite</p>How LeanSuite helps
LeanSuite's Quality Matrix pulls your defect data together, puts a dollar cost on each defect and shows engineering what to fix first.
See Cost of Poor QualityFAQ
Cost of poor quality (COPQ) calculator: common questions
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