How do you calculate rework cost?

Convert rework time to hours (units x minutes / 60), multiply by the combined labor and lost-capacity rate, then add extra material. For 80 units at 6 min each with a $38 labor rate, $45 capacity rate and $1.20 material, that is 8 hours x $83 + $96 = $760.

Why include lost capacity in rework cost?

When a machine or operator is reworking bad parts, it cannot make good ones. The lost-capacity rate ($45/hr here) captures that opportunity cost, which is often larger than the labor rate itself and is why rework quietly caps throughput.

What is a good rework cost per unit?

There is no universal target, but the example run costs $9.50 per unit. If the part sells for $15, you are burning most of the margin. Best-in-class shops keep rework under 1-2% of total labor hours.

Rework vs scrap - which is cheaper?

Compare rework cost per unit against the material and value already in the part. If reworking costs $9.50 but scrapping only forfeits $6 of value, scrap is cheaper. Rework wins when the sunk material and machining value exceeds the rework spend.

Does this include inspection or re-inspection time?

No. Add re-inspection minutes into the rework time per unit if your process requires 100% re-check after rework, since that labor is real and often forgotten.

How can I reduce rework cost fastest?

Attack the highest-frequency defect, not the most expensive part. Reducing reworked units from 80 to 40 halves the run cost to $380 with no rate change - volume is the biggest lever.

Quality calculator

Rework Cost Calculator

Rework Cost quantifies what it actually costs to salvage nonconforming parts instead of scrapping or shipping them. Quality engineers, production supervisors and CI teams use it to attach a hard dollar figure to a defect containment before it disappears into general overhead. Because rework consumes both direct labor and machine time that could have made good parts, it is one of the most underestimated line items in the cost of poor quality. Putting a per-run and per-unit number on it makes root-cause projects easy to justify.

What this calculator does

Estimate labor, material, and lost-capacity cost from reworked units.
Use when rework needs to be converted into dollars.
It sums rework labor, extra material and lost capacity to give the total dollar cost of reworking a batch of nonconforming units, plus the cost per unit.

Formula used

Rework hours = units × minutes per unit ÷ 60
Rework cost = hours × rates + extra material

Inputs explained

Reworked units: undefined
Rework time per unit: undefined
Loaded labor rate: undefined
Extra material per unit: undefined
Lost capacity rate: undefined

How to use the result

Use it when you catch a defective lot, are deciding rework vs. scrap, or building a business case for a corrective action that eliminates the defect.
It assumes rework time per unit is uniform; unpredictable, one-off touch-ups and multi-pass rework can vary widely and skew the average.

Current U.S. benchmarks

As of Jun 2026, average hourly earnings in U.S. manufacturing are $30.27 (BLS), up 4.4% from a year earlier. Burdened shop rates typically run 1.3 to 1.8 times earnings once benefits and overhead are loaded.
U.S. manufacturing runs at 75.6% of capacity (Federal Reserve, May 2026). New factory orders are up 2.3% year over year (Census).

Common questions

How do you calculate rework cost? Convert rework time to hours (units x minutes / 60), multiply by the combined labor and lost-capacity rate, then add extra material. For 80 units at 6 min each with a $38 labor rate, $45 capacity rate and $1.20 material, that is 8 hours x $83 + $96 = $760.
Why include lost capacity in rework cost? When a machine or operator is reworking bad parts, it cannot make good ones. The lost-capacity rate ($45/hr here) captures that opportunity cost, which is often larger than the labor rate itself and is why rework quietly caps throughput.
What is a good rework cost per unit? There is no universal target, but the example run costs $9.50 per unit. If the part sells for $15, you are burning most of the margin. Best-in-class shops keep rework under 1-2% of total labor hours.
Rework vs scrap - which is cheaper? Compare rework cost per unit against the material and value already in the part. If reworking costs $9.50 but scrapping only forfeits $6 of value, scrap is cheaper. Rework wins when the sunk material and machining value exceeds the rework spend.
Does this include inspection or re-inspection time? No. Add re-inspection minutes into the rework time per unit if your process requires 100% re-check after rework, since that labor is real and often forgotten.

Last reviewed 2026-05-12.