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Spend & Cost Management

Life-Cycle Costing

Also known as: LCC, Whole-Life Costing

Life-cycle costing is a method that totals all the costs of an asset or purchase across its whole life, from acquisition through operation to disposal.

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Rather than judging a purchase on its purchase price, life-cycle costing adds up acquisition, installation, energy, consumables, maintenance, downtime and end-of-life disposal or resale. The result often overturns a purchase decision: a cheaper item can cost far more over its life if it consumes more energy or fails frequently, while a pricier, efficient option proves cheaper overall.

Life-cycle costing is especially valuable for equipment, vehicles, IT and other assets with long service lives and significant running costs. It is closely related to total cost of ownership and supports sustainable procurement, since energy use and disposal costs surface explicitly. The main challenge is estimating future costs reliably, so assumptions should be documented and reviewed.

Frequently asked questions

What is life-cycle costing?
Life-cycle costing totals all the costs of an asset or purchase across its whole life — acquisition, operation, maintenance and disposal — rather than looking at purchase price alone.
How does life-cycle costing differ from total cost of ownership?
The two overlap heavily; life-cycle costing emphasises costs across an asset's full lifespan including disposal, while total cost of ownership is the broader term for all direct and indirect ownership costs.

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