To assess the economic consequences of labour induction with Foley catheter compared to prostaglandin E2 gel.Economic evaluation alongside a randomised controlled trial.Obstetric departments of one university and 11 teaching hospitals in the Netherlands.Women scheduled for labour induction with a singleton pregnancy in cephalic presentation at term, intact membranes and an unfavourable cervix; and without previous caesarean section.Cost-effectiveness analysis from a hospital perspective.We estimated direct medical costs associated with healthcare utilisation from randomisation to 6 weeks postpartum. For caesarean section rate, and maternal and neonatal morbidity we calculated the incremental cost-effectiveness ratios, which represent the costs to prevent one of these adverse outcomes.Mean costs per woman in the Foley catheter group (n = 411) and in the prostaglandin E₂ gel group (n = 408), were €3297 versus €3075, respectively, with an average difference of €222 (95% confidence interval -€157 to €633). In the Foley catheter group we observed higher costs due to longer labour ward occupation and less cost related to induction material and neonatal admissions. Foley catheter induction showed a comparable caesarean section rate compared with prostaglandin induction, therefore the incremental cost-effectiveness ratio was not informative. Foley induction resulted in fewer neonatal admissions (incremental cost-effectiveness ratio €2708) and asphyxia/postpartum haemorrhage (incremental cost-effectiveness ratios €5257) compared with prostaglandin induction.Foley catheter and prostaglandin E2 labour induction generate comparable costs.