Squirrel-cage induction motors are increasingly displaying a broken rotor bar fault, which represents both a technical problem and an economic problem. After confirming that the broken rotor bars do not affect the normal start-up and basic working performance of the squirrel-cage induction motor, this paper focuses on the loss and efficiency changes of the motor brought about by the broken rotor bar fault. Using finite element simulation and experimentation, various losses like stator copper loss, iron loss, rotor copper loss, mechanical loss and additional losses, total loss and efficiency are obtained. By combining price and cost factors, the cost-effective measures that can be taken after the occurrence of different degrees of broken bars are evaluated here to provide guidance for correctly handling this problem.