We consider the problem of designing schemas for deductive databases. The design problem is to construct a database schema that supports, at minimal expected cost, a given set of database transactions. Our results include a formal definition of both a deductive database schema and a schema transformation. A schema transformation is used in the design process to transform one schema into another, with the goal of reducing the expected database costs. Our design methodology defines the concept of a schema transformation within the context of the clause-based deductive database model. The IDB of the schema that results from the design process includes clauses sufficient for a theorem prover to map queries stated against the original schema into queries against the (more cost effective) resulting schema. This allows users to interact exclusively with the initial schema, while the schema that results from the design process specifies the actual structure of the implemented database. In other words, the initial schema serves as the logical schema for the database, and the result of the design process serves as its physical schema.