A term used by many organizations to quantify the costs associated with producing quality products. Typical factors taken into account are prevention costs (training, work process analyses, design reviews, customer surveys), appraisal costs (inspection and testing), and failure costs (rework, scrap, customer complaints, returns).
Costs that would be eliminated if quality were perfect which often include: incoming raw material inspection, corrective engineering change orders, scrap, in-process control systems, downtime, material and labor rework charges, quality personnel labor costs, field service repair personnel, returned goods processing, customer warranty claims and many others.
The cost of quality may be defined as the additional cost incurred in non-added value activities and events in a business in fully satisfying customers' agreed requirements for products and services delivered. It is the cost both of not doing the right things and not doing things right first time.