The storage of information in present day computer systems is shared between high‐speed, high‐cost memories and low‐speed, low‐cost mechanical storage devices. With the advent of cheap bulk memory technology one can envision a storage hierarchy with three levels of storage: buffer, memory, and a mechanical backing store. The individual cost and performance characteristics of the three technologies involved affect the overall computer system cost‐performance. In fact, it is the judicious selection of technologies and system configurations which leads to a well designed storage system. This paper first describes the automatic management of information in a three level storage system where the objective is to keep current information in the fastest device and the rest of the information in the slower devices. Then the evaluation of the storage systems is described for a multiprogramming environment where total system dollars per instruction executed is the criterion for system cost‐performance. Finally, two examples are given, one to illustrate how to select the best technology for use at any level of a storage hierarchy and another to determine the cost‐performance goals which must be met by a new technology in order to be competitive with existing products in the storage system.