External failure cost is a cost of quality related to acknowledging and remedying the defects a consumer detects post product usage. In other words, the costs associated with warranty and repair, customer support, returned products, penalties for poor product quality, etc. are external failure costs. The costs also account certain other costs such as loss of goodwill and market share, loss of customer loyalty, impending lawsuits, hampered relationships with distributors or dealers, etc. From a company’s perspective, internal failures are far less hurting than external failures as the latter causes both tangible and intangible damage. In fact, external failure cost is the most expensive and damaging of all quality costs.