The health service cost of paediatric cochlear implantation (CI) varies among hospitals in the UK. The purpose of this study was to determine whether the variation is associated with differences in the scale and scope of activity in CI programmes. The health service cost of CI was estimated for 908 children implanted in 12 hospitals between 1989 and 1998. Annual levels of activity in implanting children and adults were monitored in the same hospitals. Costs of paediatric CI were lower in hospitals implanting larger numbers of children and adults, thereby benefiting from economies of scale and scope, respectively. These economies arose from lower per-child staff costs in larger programmes, and were estimated to be exhausted when a hospital implanted more than nine children and more than 20 adults each year. Accommodating increased numbers of children in an existing programme is predicted to cost less than setting up a new programme.