Average cost

An average cost is a cost reported per unit. Health economists frequently use various average cost estimates, for example, the cost of treatment per patient, the cost of treatment per day or the cost of a drug per millilitre (mL). The average cost by mL can be calculated for a drug delivered as an oral solution. If a bottle contains 200 mL and costs £400, the average cost per mL is the total cost of the bottle divided by the number of mL, which in this example would equal £2/mL.

 

Although the average cost is a useful estimate of the value of inputs, health economists prefer to use the incremental cost as a standardised measure to compare cost-effectiveness of one treatment against another.

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