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Objective: To estimate inpatient care costs of childhood severe pneumonia and its urban-rural cost variation, and to predict cost drivers., Design: The study was nested within a cluster randomised trial of childhood severe pneumonia management. Cost per episode of severe pneumonia was estimated from a healthcare provider perspective for children who received care from public inpatient facilities. A bottom-up micro-costing approach was applied and data collected using structured questionnaire and review of the patient record. Multivariate regression analysis determined cost predictors and sensitivity analysis explored robustness of cost parameters., Setting: Eight public inpatient care facilities from two districts of Bangladesh covering urban and rural areas., Patients: Children aged 2-59 months with WHO-classified severe pneumonia., Results: Data on 1252 enrolled children were analysed; 795 (64%) were male, 787 (63%) were infants and 59% from urban areas. Average length of stay (LoS) was 4.8 days (SD ±2.5) and mean cost per patient was US$48 (95% CI: US$46, US$49). Mean cost per patient was significantly greater for urban tertiary-level facilities compared with rural primary-secondary facilities (mean difference US$43; 95% CI: US$40, US$45). No cost variation was found relative to age, sex, malnutrition or hypoxaemia. Type of facility was the most important cost predictor. LoS and personnel costs were the most sensitive cost parameters., Conclusion: Healthcare provider cost of childhood severe pneumonia was substantial for urban located public health facilities that provided tertiary-level care. Thus, treatment availability at a lower-level facility at a rural location may help to reduce overall treatment costs., Competing Interests: Competing interests: None declared., (© Author(s) (or their employer(s)) 2024. No commercial re-use. See rights and permissions. Published by BMJ.)