when should i replace battery

I would say when a charge no longer meets your desired usage. In other words, if you’re finding you have to charge at inconvenient times or at inconvenient frequencies to get through your day, then the battery has degraded to the point you’d benefit from a replacement.

There is no magic number in term of battery health. All chemical batteries degrade with time. As long as they are not swelling, replace it when it simply no longer works for your needs.

Apple considers a decay in capacity to 80% of original capacity at 500 full discharge/charge cycles under normal usage to be within the designed life expectancy of an iPhone battery (iPhone Battery and Performance - Apple Support). For some users of older iPhones, that may not indicate a need for replacement, depending on usage. Individual iPhone owners can decide when to replace the battery.

Once battery health goes to 80% or lower

I’d say replace your phone battery after 3 or more years of use.