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It is very important to quantify errors of precipitation estimation products. However, the existing methods do not describe all error components and are therefore not comprehensive enough. In this study, we propose a four-component error decomposition method (4CED) that decomposes the total errors of precipitation products into four independent parts: hit positive bias, hit negative bias, false bias, and missed bias. And we use it to evaluate the performance of the three latest satellite precipitation products in the eastern monsoon region of China. Our study reveals 4CED has apparent improvements compared with the previous method. Results also provide new insights for tracking error sources and quantifying the error magnitudes of precipitation products. Moreover, the proposed 4CED can be extended to different spatial and temporal scales. Our new method will not only contribute to product upgrades, but also provide guidance for potential applications.