Abstract: Within today’s competitive and cost-driven business environment, Medical Scheme Administrators are under tremendous pressure to ensure their operations are at the pinnacle of financial performance, through stable but profitable business structures, whilst achieving maximum return for member’s contributions. The purpose of the study was to identify the factors that affect the optimal cost management practices is to ensure that organisations have a true understanding of costs, so that it can continuously make the right decisions with regards to product mix, price and market. This research uses a qualitative methodology to uncover how the South African Medical Scheme Administrators currently use costing principles. This is achieved through semi-structured interviews with individuals, who are directly responsible for this function within their respective organisation. The study concluded that a conceptual cost management framework, which is made up of a number of key models to assist an organisation, is more frequently used in more mature organisations.