diff --git a/ui/main_window.py b/ui/main_window.py
index f674fb4..6ddf261 100644
--- a/ui/main_window.py
+++ b/ui/main_window.py
@@ -1187,13 +1187,25 @@ class MainWindow(QMainWindow):
                     logger.debug(f"[HUD] on_damage_taken({damage})")
                     self.hud.on_damage_taken(Decimal(str(damage)))
                     
-                    # Track armor cost per hit
-                    logger.debug(f"[DEBUG] _session_costs={self._session_costs}")
-                    if self._session_costs:
+                    # Calculate armor decay based on actual damage absorbed
+                    # Formula: Decay (PEC) = damage_absorbed * 0.05 * (1 - durability/100000)
+                    # Approximate: ~0.05 PEC per damage point for non-L armor
+                    # For simplicity: 0.0005 PED per damage point (0.05 PEC = 0.0005 PED)
+                    if self._selected_armor_stats and 'decay' in self._selected_armor_stats:
+                        # Use decay per hit from armor stats if available
+                        armor_decay_pec = Decimal(str(self._selected_armor_stats.get('decay', 0)))
+                        # Approximate: decay scales with damage
+                        # Most armor has ~0.05 PEC decay per damage point
+                        decay_per_damage = Decimal('0.0005')  # 0.05 PEC = 0.0005 PED
+                        cost_ped = Decimal(str(damage)) * decay_per_damage
+                        if cost_ped > 0:
+                            logger.debug(f"[HUD] update_armor_cost({cost_ped:.4f}) based on damage {damage}")
+                            self.hud.update_armor_cost(cost_ped)
+                    else:
+                        # Fallback to simple calculation
                         cost_per_hit = self._session_costs.get('cost_per_hit', Decimal('0'))
-                        logger.debug(f"[DEBUG] cost_per_hit={cost_per_hit}")
                         if cost_per_hit > 0:
-                            logger.debug(f"[HUD] update_armor_cost({cost_per_hit})")
+                            logger.debug(f"[HUD] update_armor_cost({cost_per_hit}) [fallback]")
                             self.hud.update_armor_cost(cost_per_hit)
             except Exception as e:
                 logger.error(f"[ERROR] Error in on_damage_taken: {e}")