How do you calculate expected repair-path cost?

Multiply returns reviewed by repair cost per unit by the repairable percentage, then add fixed diagnostic and admin cost. With 420 returns, $115 per repair, 64% repairable and $2,100 fixed, the variable cost is $30,912 and the expected repair-path cost is $33,012.

When is repair cheaper than replacement?

Repair wins when the repair-path cost per return is below the landed cost of a new unit plus its warranty exposure. Here the cost works out to about $78.60 per return reviewed, so if a replacement lands above that, repair is the cheaper path.

What is a good repairability rate?

It varies by product, but consumer electronics often see 50-70% economically repairable returns. The 64% in the example is typical; below about 40% the diagnostic overhead usually tips the economics toward replacement.

Why include non-repairable returns in the cost?

Because you still pay to diagnose and authorize every return before you know it cannot be fixed. The per-return figure of $78.60 spreads the variable repair cost and fixed overhead across all 420 reviewed units, not just the repaired ones.

Repair vs replace: which lowers warranty cost more?

Replacement is faster and predictable but burns new inventory; repair is cheaper per unit when repairability is high but adds cycle time. Run this calculator against your replacement landed cost to see which actually minimizes total warranty spend.

How do I lower expected repair-path cost?

Raise the repairability rate with better fault triage, cut per-unit repair time, or reduce diagnostic overhead. Each lever moves a different term in the formula, so test them separately.

Circular Economy, Recycling & Remanufacturing calculator

Repair vs Replace Cost Calculator

Repair vs Replace Cost estimates what it actually costs to run returned products down the repair path instead of scrapping and replacing them. Reverse-logistics teams, warranty managers and remanufacturing planners use it to decide whether a batch of returns is worth diagnosing and fixing or whether outright replacement is cheaper. The key driver is the repairability rate: only a fraction of returns are economically fixable, and the rest still incur diagnostic and admin cost. This number frames every repair-versus-replace policy decision for a product line.

What this calculator does

Estimate expected repair-program cost for returned products so teams can compare it against replacement or scrap decisions.
a team needs to choose repair, replacement, harvest, or scrap rules for returned products for a return batch, warranty population, or repair policy
It computes the expected cost of the repair path for a batch of returns by costing only the repairable share and adding fixed diagnostic and admin overhead.

Formula used

Variable repair cost for repairable units = returned products reviewed for repair × repair cost per repairable unit × units expected to be repairable
Expected repair path cost = variable repair cost for repairable units + fixed diagnostics, authorization, or replacement-admin cost

Inputs explained

Returned products reviewed for repair:
Repair cost per repairable unit:
Units expected to be repairable:
Fixed diagnostics, authorization, or replacement-admin cost:

How to use the result

Use it when setting warranty repair policy, sizing a refurbishment cell, or comparing repair cost against the landed cost of a new replacement unit.
It assumes a single average repair cost per unit, so a batch with a wide spread of fault severities will be poorly represented by one figure.

Common questions

How do you calculate expected repair-path cost? Multiply returns reviewed by repair cost per unit by the repairable percentage, then add fixed diagnostic and admin cost. With 420 returns, $115 per repair, 64% repairable and $2,100 fixed, the variable cost is $30,912 and the expected repair-path cost is $33,012.
When is repair cheaper than replacement? Repair wins when the repair-path cost per return is below the landed cost of a new unit plus its warranty exposure. Here the cost works out to about $78.60 per return reviewed, so if a replacement lands above that, repair is the cheaper path.
What is a good repairability rate? It varies by product, but consumer electronics often see 50-70% economically repairable returns. The 64% in the example is typical; below about 40% the diagnostic overhead usually tips the economics toward replacement.
Why include non-repairable returns in the cost? Because you still pay to diagnose and authorize every return before you know it cannot be fixed. The per-return figure of $78.60 spreads the variable repair cost and fixed overhead across all 420 reviewed units, not just the repaired ones.
Repair vs replace: which lowers warranty cost more? Replacement is faster and predictable but burns new inventory; repair is cheaper per unit when repairability is high but adds cycle time. Run this calculator against your replacement landed cost to see which actually minimizes total warranty spend.

Last reviewed 2026-05-12.