High maternal morbidity and mortality in many developing countries are highly associated with poor access to and quality of health care. Here we review the economic feasibility of the WHO's mother-baby package as a means of reducing maternal and neonatal mortality and morbidity in Tanzania. This paper examines the costs of maternal health care in Tanzania, and how much can we expect households to contribute to these expenses, if the MBP were implemented. Using data from the Tanzanian 1993 Living Standard Measurement Survey (LSMS), we analyze responses from 757 women of reproductive age who have had a birth in the 12 months preceding the survey. We estimate current spending on maternal health care by different socio-economic groups and its share in relation to total household expenditures. Using logistic regression analyses, we examine the effect of the prices paid for maternal health care on the likelihood of using antenatal and safe delivery services, controlling for relevant socio-economic and demographic factors. Results show that if the MBP recovered 100% of its costs, most of the households would have to allocate more than half of their annual consumption on maternal health care. Poor socio-economic groups would experience the greatest increase in service utilization if MBP care were subsidized. In the face of scarce resources, subsidies should be targeted according to socio-economic group, in order to attain equitable and sustainable maternal health services.