Costs were compared for two models of maternity care for low‐risk pregnant women: a freestanding birth center (FSBC) and a medical model of care (MC). Sixty‐nine subjects were enrolled in the FSBC group and 77 in the MC. In the FSBC group, prenatal costs were higher (mean difference $751, p ≤ .001) and childbirth care was less expensive ($1472, p ≤ .01). When costs for the entire maternity care episode were summed, there were no differences between groups ($6087 vs. $6803). Sensitivity analysis demonstrated that the FSBC could be more cost‐effective than MC if it increased its volume. © 2000 John Wiley & Sons, Res Nurs Health 23:279–289, 2000.