While health care costs rise at nearly twice the rate of inflation, intensive care unit (ICU) costs are rising even faster. Hospital costs may range from 30% to 45% of hospital charges; however, this ratio varies greatly for individual services. Either fixed versus variable costs or direct versus indirect costs is the typical way that ICU costs are categorized. The term “cost analysis” refers to a variety of different economic analyses. The sum of all direct costs associated with providing a service is best termed a cost minimization analysis (CMA) not cost analysis. Preferable is a cost-effective analysis (CEA), which allows comparison between different therapies designed to affect the same outcome. Cost-effectiveness ratios (CERs) allow the determination of the relative advantage of one therapy over another. The most useful types of analysis are the cost benefit analysis (CBA) and cost utility analysis (CUA). Using a CBA, different therapies for different disease states can be directly compared provided a dollar value can be assigned to every outcome. A CUA is the cost of the service divided by the societal benefit usually using quality-adjusted life-years (QALYs). Strategies to reduce ICU costs are also reviewed in this article. These strategies include reducing labor costs, altering disease-specific therapies, and changing health care delivery. The advantages, disadvantages, return on investment, and feasibility of implementing these strategies are discussed.