Act on the result
Target the largest controllable failure category and define how the prevention result will be measured.
Educational only: Business decision support, not accounting, tax or legal advice.
Privacy: No account is required. Tool inputs and results stay in this browser. Anonymous categorical usage analytics send only governed page, tool, cluster and action identifiers; tool inputs and results are never sent. Error monitoring is disabled. Optional saved state stays only on this device.
Update policy: Reviewed when formulas or official dependencies change.
Scope: Market-neutral small-business planning using your own assumptions.
What this planner helps you decide
Best for
Businesses reconciling prevention, inspection, rework, scrap, warranty and complaint cost.
Outputs
Cost-of-quality components, total failure cost, scenario savings and prevention payback.
Start here
Enter each quality-cost category once for the same period, then test a separate prevention scenario.
Use a different tool when: Do not use this to test the savings, capacity value and payback of a process improvement; use Process Improvement Payback Planner for that decision. Use this tool to quantify prevention, appraisal, internal failure and external failure economics.
Profit & break-even
Quality Failure Cost: cost-of-quality components
Cost-of-quality components, total failure cost, scenario savings and prevention payback.
Amounts use the same currency as your inputs. No currency conversion is performed.
Quality Failure Cost
Reconcile scrap, rework labour, warranty cost and recovered value before testing the affordable spend and net benefit of a quality-prevention programme.
Your numbers stay in this browser
Enter the whole units produced in the decision period.
Enter the observed share of units that currently fail.
Enter material and disposal cost attributable to one failed unit. Use one consistent ex-tax currency basis.
Enter labour hours required to correct one failed unit.
Include wages and relevant employer on-costs for one rework hour. Use one consistent ex-tax currency basis.
Enter expected fulfilment, replacement or support cost per failed unit. Use one consistent ex-tax currency basis.
Enter salvage or resale value recovered from one failed unit. Use one consistent ex-tax currency basis.
Enter the incremental programme cost for the same decision period. Use one consistent ex-tax currency basis.
Enter the failure-rate scenario after the prevention programme.
Decision result
Review the operating threshold and incremental comparison on the same entered capacity, cost and demand basis.
- Current failed units
- 50 units
- Proposed failed units
- 20 units
- Current quality failure cost
- 3,500.00
- Proposed quality failure cost
- 1,400.00
- Quality programme benefit
- 1,600.00
- Maximum affordable prevention spend
- 2,100.00
Scenario comparison
Each row names the assumption axis changed from the baseline.
ScenarioResultDifference
Entered scenario1,600.00Baseline
Lower Proposed failure rate2,300.00700.00
Higher Proposed failure rate900.00-700.00
Save these results, change an input, then compare the updated figures with this baseline.
The baseline is temporary in this tab and is not added to shared scenario links or generated reports.
Calculation details
View calculation detailsView the formulas and inputs used for these results.
Current failed units
Current failed units
produced units × current failure rate50 unitsResult50 units
Uses the exact shared engine result and only the entered market-neutral operating assumptions. The engine retains raw precision; display formatting does not feed calculation.
Quality Failure Cost Planner formulas →Inputs used by these formula steps
- Current failed unitsProduced Units
- 1,000
- Current failed unitsFailure Rate
- 0.05
- Current failed unitsScrap Cost Per Failure
- 20
- Current failed unitsRework Hours Per Failure
- 1.5
- Current failed unitsLoaded Labour Rate
- 30
- Current failed unitsWarranty Cost Per Failure
- 10
- Current failed unitsRecovered Value Per Failure
- 5
- Current failed unitsPrevention Programme Cost
- 500
- Current failed unitsProposed Failure Rate
- 0.02
Proposed failed units
Proposed failed units
produced units × proposed failure rate20 unitsResult20 units
Uses the exact shared engine result and only the entered market-neutral operating assumptions. The engine retains raw precision; display formatting does not feed calculation.
Quality Failure Cost Planner formulas →Inputs used by these formula steps
- Proposed failed unitsProduced Units
- 1,000
- Proposed failed unitsFailure Rate
- 0.05
- Proposed failed unitsScrap Cost Per Failure
- 20
- Proposed failed unitsRework Hours Per Failure
- 1.5
- Proposed failed unitsLoaded Labour Rate
- 30
- Proposed failed unitsWarranty Cost Per Failure
- 10
- Proposed failed unitsRecovered Value Per Failure
- 5
- Proposed failed unitsPrevention Programme Cost
- 500
- Proposed failed unitsProposed Failure Rate
- 0.02
Current quality failure cost
Current quality failure cost
current failed units × (scrap cost + rework hours × loaded labour rate + warranty cost − recovered value)3,500.00Result3,500.00
Uses the exact shared engine result and only the entered market-neutral operating assumptions. The engine retains raw precision; display formatting does not feed calculation.
Quality Failure Cost Planner formulas →Inputs used by these formula steps
- Current quality failure costProduced Units
- 1,000
- Current quality failure costFailure Rate
- 0.05
- Current quality failure costScrap Cost Per Failure
- 20
- Current quality failure costRework Hours Per Failure
- 1.5
- Current quality failure costLoaded Labour Rate
- 30
- Current quality failure costWarranty Cost Per Failure
- 10
- Current quality failure costRecovered Value Per Failure
- 5
- Current quality failure costPrevention Programme Cost
- 500
- Current quality failure costProposed Failure Rate
- 0.02
Proposed quality failure cost
Proposed quality failure cost
proposed failed units × (scrap cost + rework hours × loaded labour rate + warranty cost − recovered value)1,400.00Result1,400.00
Uses the exact shared engine result and only the entered market-neutral operating assumptions. The engine retains raw precision; display formatting does not feed calculation.
Quality Failure Cost Planner formulas →Inputs used by these formula steps
- Proposed quality failure costProduced Units
- 1,000
- Proposed quality failure costFailure Rate
- 0.05
- Proposed quality failure costScrap Cost Per Failure
- 20
- Proposed quality failure costRework Hours Per Failure
- 1.5
- Proposed quality failure costLoaded Labour Rate
- 30
- Proposed quality failure costWarranty Cost Per Failure
- 10
- Proposed quality failure costRecovered Value Per Failure
- 5
- Proposed quality failure costPrevention Programme Cost
- 500
- Proposed quality failure costProposed Failure Rate
- 0.02
Quality programme benefit
Quality programme benefit
maximum prevention spend − prevention programme cost1,600.00Result1,600.00
Uses the exact shared engine result and only the entered market-neutral operating assumptions. The engine retains raw precision; display formatting does not feed calculation.
Quality Failure Cost Planner formulas →Inputs used by these formula steps
- Quality programme benefitProduced Units
- 1,000
- Quality programme benefitFailure Rate
- 0.05
- Quality programme benefitScrap Cost Per Failure
- 20
- Quality programme benefitRework Hours Per Failure
- 1.5
- Quality programme benefitLoaded Labour Rate
- 30
- Quality programme benefitWarranty Cost Per Failure
- 10
- Quality programme benefitRecovered Value Per Failure
- 5
- Quality programme benefitPrevention Programme Cost
- 500
- Quality programme benefitProposed Failure Rate
- 0.02
Maximum affordable prevention spend
Maximum affordable prevention spend
current quality failure cost − proposed quality failure cost2,100.00Result2,100.00
Uses the exact shared engine result and only the entered market-neutral operating assumptions. The engine retains raw precision; display formatting does not feed calculation.
Quality Failure Cost Planner formulas →Inputs used by these formula steps
- Maximum affordable prevention spendProduced Units
- 1,000
- Maximum affordable prevention spendFailure Rate
- 0.05
- Maximum affordable prevention spendScrap Cost Per Failure
- 20
- Maximum affordable prevention spendRework Hours Per Failure
- 1.5
- Maximum affordable prevention spendLoaded Labour Rate
- 30
- Maximum affordable prevention spendWarranty Cost Per Failure
- 10
- Maximum affordable prevention spendRecovered Value Per Failure
- 5
- Maximum affordable prevention spendPrevention Programme Cost
- 500
- Maximum affordable prevention spendProposed Failure Rate
- 0.02
Inputs used
- Produced units
- 1,000
- Current failure rate
- 0.05
- Scrap cost per failure
- 20
- Rework hours per failure
- 1.5
- Loaded labour cost per hour
- 30
- Warranty cost per failure
- 10
- Recovered value per failure
- 5
- Prevention programme cost
- 500
- Proposed failure rate
- 0.02
Open this calculator with preset values
This calculator supports documented, shareable scenario URLs. Compatible assistants and applications can construct links using the parameters below.
Scenario links contain only allowlisted numeric and closed-choice inputs shown in the URL; Margin101 excludes free text and identifying fields. Anyone you share the URL with can read those numbers, so do not include private or identifying data.
| Parameter | Meaning | Unit | Allowed values | Presence | Default |
|---|---|---|---|---|---|
| failureRate | Enter the observed share of units that currently fail. | decimal fraction of produced units (1 = 100%) | 0 to 1 | Required | 0.05 |
| loadedLabourRate | Include wages and relevant employer on-costs for one rework hour. Use one consistent ex-tax currency basis. | currency units/rework hour, ex tax | 0 to 10000000 | Required | 30 |
| preventionProgrammeCost | Enter the incremental programme cost for the same decision period. Use one consistent ex-tax currency basis. | currency units/decision period, ex tax | 0 to 10000000 | Required | 500 |
| producedUnits | Enter the whole units produced in the decision period. | units/period | 0 to 100000000 | Required | 1000 |
| proposedFailureRate | Enter the failure-rate scenario after the prevention programme. | decimal fraction of produced units (1 = 100%) | 0 to 1 | Required | 0.02 |
| recoveredValuePerFailure | Enter salvage or resale value recovered from one failed unit. Use one consistent ex-tax currency basis. | currency units/failed unit, ex tax | 0 to 10000000 | Required | 5 |
| reworkHoursPerFailure | Enter labour hours required to correct one failed unit. | hours/failure | 0 to 100000000 | Required | 1.5 |
| scrapCostPerFailure | Enter material and disposal cost attributable to one failed unit. Use one consistent ex-tax currency basis. | currency units/failed unit, ex tax | 0 to 10000000 | Required | 20 |
| warrantyCostPerFailure | Enter expected fulfilment, replacement or support cost per failed unit. Use one consistent ex-tax currency basis. | currency units/failed unit, ex tax | 0 to 10000000 | Required | 10 |
Quality Failure Cost: cost-of-quality components
Keep prevention and appraisal separate from internal and external failure so the cost-of-quality reconciliation stays auditable.
Formula summary
- Primary formula
- maximum prevention spend − prevention programme cost.
Data used here
- The estimate uses your inputs and the general business formula documented in the methodology.
Decision checks
Stress-test the decision
Retest lower prevention effectiveness, higher external failure cost and delayed savings.
When this estimate can be misleading
- Volumes, rates, capacity, time, costs and contribution are your records or scenarios; no benchmark or demand forecast is embedded.
- Keep all money and operating records on one consistent ex-tax basis and decision period.
- Incremental comparisons exclude disclosed sunk cost and do not guarantee demand, delivery capacity or a commercial outcome.
- This is educational business decision support, not accounting, tax, legal or financial advice.
- Keep prevention and appraisal separate from internal and external failure so the cost-of-quality reconciliation stays auditable.
Educational estimate, not advice. See all assumptions & limitations →
Related reading
Guides to interpret the decision and its assumptions.
- Scrap, Yield and Rework: The True Unit-Cost Bridge
Bridge input cost to accepted output by separating scrap, yield loss and rework without double-counting failure cost.
Read guide
Frequently asked questions
How do I quantify prevention, appraisal, internal failure and external failure economics?
Target the largest controllable failure category and define how the prevention result will be measured.
Which planning assumptions should I stress-test?
Compare a plausible alternative scenario and verify the decision-critical assumption that changes the plan most.