Cost is a factor in the choice of prosthetic components in joint replacement. For a given performance, the least expensive components are the most cost-effective. When evaluating a new prosthesis with an unknown outcome, the use of an economic model allows estimation of potential cost-effectiveness. We used published data for the survival of cemented total hip replacements from Sweden, and cost and demographic information from New South Wales, Australia, in such a model. In young active total hip recipients a new prosthetic design which offered a 90% improvement in survivorship over 15 years and a 15% reduction in the cost of revision surgery, could be sold at a price of 2 to 2.5 times that of conventional cemented components such as the Charnley Low Friction Arthroplasty and still be cost-effective. Using more likely estimates of the improved performance of new technology, however, the upper limit of cost-effectiveness is an increase of 1.5 to 1. Only a very small increase in the cost of a prosthesis could ever be justified for older patients of either sex. Most of the potential benefits of a better level of survivorship appear towards the end of the 15-year period. The results of modelling may be incorporated in clinical trial design. Given the known performance of some well-established and relatively inexpensive designs of prostheses, very large randomised studies would be required to prove an improvement in performance.