DEFINITION of 'Whole-Life Cost'

The total cost of owning an aset over its entire life. Whole life cast includes all costs such as design and building costs, operating costs, associated financing costs, depreciation, and disposal costs. Whole-life cost also takes certain costs that are usually overlooked into account, such as environmental impact and social costs.

Also known as a "life-cycle" cost.

BREAKING DOWN 'Whole-Life Cost'

When comparing investment decisions, an analyst must look at all potential future costs, not just acquisition expenses. While most costs can be readily measured or estimated, costs such as environmental or social impact cannot be easily quantified. Nevertheless, whole-life costing may provide a more accurate picture of the true cost of an asset than most other methods.

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