BACKGROUND: Hospitals increasingly need, besides effectiveness data, accurate and reliable cost data to allocate their resources as efficiently as possible. In this article, a framework to calculate the hospital costs of setting up a new activity is presented and applied to pediatric endoscopy. METHODS: The cost calculations were based on a detailed registration of labor time, materials, space, and equipment needed to perform endoscopy in pediatric patients in a tertiary care hospital, the University Hospital in Leuven, Belgium. RESULTS: The initial investment expenses amount to 70,000 ECU ($91,000 in U.S. money), assuming that the facilities of the adult endoscopy unit can be shared. The additional variable cost for each procedure, including labor time and materials, varies between 100 and about 170 ECU ($130 and $221 U.S.), depending on the type of endoscopy (upper or lower, diagnostic or therapeutic). These basic data can be used to calculate the total costs for pediatric endoscopy under alternative scenarios (e.g., varying total number of procedures). CONCLUSIONS: The costing exercise has given the hospital better insights into the working procedures (and hence costs) of pediatric endoscopy. Other organizations will be able to apply this framework in their setting, since all included cost components, as well as volumes and unit prices, are reported separately.