The Cost of Poor Quality: What Getting It Wrong Costs

Carl Trigg  ·  October 2026  ·  7 min read  ·  Free calculator

The cost of quality is everything a business spends on making things right, plus everything it loses when things go wrong. Joseph Juran wrote about the cost of poor quality in his 1951 Quality Control Handbook. Armand Feigenbaum set out the four categories most widely used today, known as the prevention, appraisal and failure (PAF) model.

The point of measuring it is that failure costs are usually much bigger than they appear, because they are spread across wages, materials, travel and credit notes instead of sitting in one line of the accounts.

PPreventionAAppraisalIFInternal failureEFExternal failure
The four categories of quality cost in the prevention, appraisal and failure (PAF) model.

The four categories

CategoryWhat it coversSmall-business examples
PreventionStopping problems happeningTraining, written procedures, design checks, supplier vetting
AppraisalChecking for problemsInspections, testing, checking invoices, site sign-off
Internal failureProblems found before the customer sees themScrap, rework, re-printing, correcting an invoice before sending
External failureProblems the customer findsCallbacks, refunds, warranty work, complaints, lost customers

Prevention and appraisal are the cost of good quality. Internal and external failure are the cost of poor quality.

Why the balance matters

External failures are usually the most expensive: they add travel, a second visit, admin and lost goodwill. Prevention is usually the cheapest. Spending a little more on prevention often cuts failure costs by much more than it costs. That is the central argument of the PAF model.

Worked example

A joinery firm with £900,000 turnover adds up a year's quality costs:

That is £66,000, or 7.3% of turnover, and 80% of it is failure. Even a modest cut in failures would be worth more than doubling the prevention budget.

Calculate your cost of quality

Use real figures where you can: callbacks from job records, credit notes from the accounts, rework hours from timesheets.

Cost of Quality Calculator

Reducing failure costs

  1. List failures by cause and rank them with a Pareto analysis.
  2. Find the root cause of the biggest with the 5 Whys.
  3. Prevent it, ideally with a mistake-proofing fix rather than more inspection.
  4. Measure again after six months.

Sources

Put This Into Practice

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