Warranty Cost as % of Revenue
Category: Strategic
Measures the proportion of revenue spent on warranty claims and repairs.
What it Measures ?
How much we spend on warranties.
Relevant StakeHolders
Finance, Quality Control
Why it Matters ?
Reduces warranty-related costs and improves efficiency.
In-depth Use Case / Real-world Example
Warranty Cost as % of Revenue calculates the cost of handling warranty claims and repairs as a percentage of service revenue. For example, if a manufacturer spends ₹1 lakh on warranty repairs from ₹10 lakhs in service revenue, the warranty cost as a percentage is 10%. This KPI helps manufacturers identify if warranty costs are growing disproportionately to revenue. A higher percentage may indicate quality issues or inefficient repair processes, which need to be addressed to maintain profitability.
Sample Formula
(Warranty Cost / Total Revenue) * 100