This paper addresses the issue of biases in cost measures which used in economic evaluation studies. The basic measure of hospital costs which is used by most investigators is unit cost. Focusing on this measure, a set of criteria which the basic measures must fulfil in order to approximate the marginal cost (MC) of a service for the relevant product, in the representative site, was identified. Then four distinct biases--a scale bias, a case mix bias, a methods bias and a site selection bias--each of which reflects the divergence of the unit cost measure from the desired MC measure, were identified. Measures are proposed for several of these biases and it is suggested how they can be corrected.