This is an age old debate, whether to change differentials to lower your crawl ratio or change the transfer case gears or change the transmission. Here is my opinion – FWIW – that’s “for what it’s worth” in internet-eze.
The problem: You feel you need lower something to achieve a higher crawl ratio. Crawl ratio is the overall drive ratio usually calculated from 1st gear, transfer case, differential. Let’s say you are (the old) me and your Jeep has a T150 3 speed, Dana 20 transfer case, and 3.54:1 differential gears. If you were (the old) me and you just left a day of wheeling you have felt like you just ran an off-road rally because you just can’t slow down a Jeep equipped in this way! I digress a minute. To figure out crawl ratio using my Jeep (the old way – we will get there) take 1st gear (2.99:1), transfer case (2.03:1), and differential (3.54) and multiply them. You should get 21.48 quite frankly that sucks. I think somewhere between 50:1 and 70:1 makes a good ratio for a non-extreme trail Jeep.
Transfer case (t/c) gears: I usually think this provides the best bang for the buck. The cost is kept down by 1. not having to buy 2 sets of gears 2. not having to buy diff rebuild kits. 3. Labor – The labor can be 
the most costly. Changing differential gears is not for the garage/tool challenged. One may be able to install one of these kits for $600-$1000 depending on the transfer case and ratio option. Another plus to this is your highway ratio would be unaffected since the lower ratio only is effective in low range. The down side. If your highway gears are too high this won’t help and also, the new lower low range will add more effective torque output putting more strain on your driveshaft, differential, and axles. This low ratio t/c to high ratio diff may be too much of a difference and you may have trouble.
the most costly. Changing differential gears is not for the garage/tool challenged. One may be able to install one of these kits for $600-$1000 depending on the transfer case and ratio option. Another plus to this is your highway ratio would be unaffected since the lower ratio only is effective in low range. The down side. If your highway gears are too high this won’t help and also, the new lower low range will add more effective torque output putting more strain on your driveshaft, differential, and axles. This low ratio t/c to high ratio diff may be too much of a difference and you may have trouble.
Differential Gears: This method will definitely cost more. Ring and pinion, rebuild kit, and labor may add up to $1000 per axle. The new ratio will change both your trail gears and highway gears. The change may be good for those tall tires you just fitted up. Changing diff gears relieves the stress on the transmission, transfer case, and driveshafts because the lower differential ratio allows the differential to be turned easier effectively moving the torque onto the axles.Transmission: Changing the 
transmission is only a good option if your current is either to badly geared or unable to handle your engine. In my case a 2.99:1 first gear had to go. Most transmissions are around 4:1 plus. Changing transmissions may require adapters, driveshaft resizing, and alterations to the floor for shifter levers.
transmission is only a good option if your current is either to badly geared or unable to handle your engine. In my case a 2.99:1 first gear had to go. Most transmissions are around 4:1 plus. Changing transmissions may require adapters, driveshaft resizing, and alterations to the floor for shifter levers.Pretend your me again. You need a better crawl ratio and you could use an improvement in highway gears too. You decide on a T-18 as the transmission, 6.32:1 1st gear, factory Jeep offering, and not to mention the thing is almost unbreakable. You also find the need for air lockers, and you think if I am spending money on labor to set up an air locker, why not do gears at the same time.
The result and comparision. The Jeep is now quite comfortable on the trail, controlled and predictable. To compare ratios.
T150 – 2.99 * D20 – 2.03 * 3.54 diffs = 21.48 🙁
T18 – 6.32 * D20 – 2.03 * 4.10 diffs = 52.60 🙂
Those changes yielded more than double the reduction, but there were substantial costs involved.
Conclusion: Inexpensive=Transfercase. Expensive=diff gears. Can be expensive and require more time and possibly fabrication skills=transmission. You will need to be the judge for your own Jeep. There are more variables than I can list here, send me a message if you have a question.
