The paper attempts to throw light on the direct (instructional) cost of OU teaching methods as against conventional “live” instruction. The variable cost per student-course is with one exception lower in the OU than elsewhere. This constitutes a strong case for the use of existing OU packages in campus universities, especially as campus universities might feel able to dispense with the costs of the summer schools. It also constitutes a case for expansion of existing courses at the OU. As regards the development of new OU packages, the paper shows the Foundation courses to be much cheaper than equivalent provision de novo at the same scale in campus universities. Measured by the breakeven number of students, second-level courses in a given faculty are cheaper than foundation level courses. But they also have fewer students and some are operating at levels which, if there were no interdependence between courses, might be considered expensive. If however they were used by more students either at the OU or at campus universities they could be economic, even when taken on their own. The paper does not cost student time but, if this is cheaper when OU teaching methods are used, this is a further argument in their favour.