In this paper, an approach is presented to estimate the cost incurred by different designs based on Activity-Based Costing (ABC). The suitability of utilizing ABC in design is explored in the context of design for product retirement. A comparison is made with a number of approaches for estimating product life-cycle cost. In comparison to other costing schemes, ABC has the advantages that it can trace both direct and indirect (overhead) costs correctly back to where these costs actually were incurred. This ‘traceability’ facilitates the identification of the most cost inefficient parts of the design, which makes ABC much more suitable for design decision making than other costing schemes. In general, ABC is also more accurate. Although the costs related to any part of a product’s life-cycle can be estimated, an automobile product retirement example is used to illustrate the usage of the approach described. In the example, a decision has to be made whether to pursue a recyclable car or a non-recyclable car. Future work is identified, primarily related to the inclusion of uncertainty in the approach presented.