Concepts of costs and cost analysis in higher education are examined, along with how to prepare for a cost study. Specific cost analysis techniques are identified, along with types of data generated and potential problems. In preparing for cost studies, it is important to consider: purpose, types of cost analysis, types of cost, common calculations of cost, and cost measurements. The first step is to determine the decisions/policy implications that will be addressed. Any study will consider how much something costs and why it costs that much. Possible kinds of costs that can be calculated are: cost objectives (e.g., input); cost basis (e.g., historical); cost variability (e.g., fixed); cost-activity relationship (e.g., total); cost-determination method (e.g., specific service); and cost-time relationship (e.g., time period). In higher education, the most common costing approaches are the calculation of: historical, full, average cost of outputs; and historical, total, indirect costs of inputs. Formula budgets based on costs studies are widely used by states and systems. Four ways of measuring costs of a program or activity are addressed, along with three stages of a cost-benefit analysis. An extended example of how to think through a proposed study of the costs of enhanced student recruitment is included. (SW)