AIM: This paper describes a cost analysis of a home-based support service for frail older people and their family carers in two municipalities in West Sweden and using information and communication technology. BACKGROUND: A key challenge facing nurse managers across Europe is an increasingly aged population, combined with reduced numbers of young adults of working age. New solutions are needed to provide quality, cost-effective community care services to frail older people and their family carers. METHODS: A case study methodology involving five families was used, and included a detailed cost description of the technology-based service compared with usual services. Cost data were collected in June 2002. This work formed part of a larger project exploring the impact of a technology-based service known as, Assisting Carers using Telematics Interventions to meet Older Persons' Needs (ACTION). In addition to cost data, information was gathered on the quality of life of frail older people and their family carers, and the job satisfaction and work methods of nurses and other practitioners based in the community. The cost analysis comprised a description of the family and their caring situation, the perceived benefits of the telematic based support service and an assessment of its impact on the use of other care services. These analyses were carried out with the help of needs assessors who were known to the families, and nurses working in the ACTION call centre. All results were validated by the five participating families. RESULTS: Cost savings were achieved in all cases, and the benefits to older people and their carers were also considerable. As a result of the cost analysis and overall evaluation data, ACTION has been implemented as a mainstream service in the municipalities involved. CONCLUSION: Researchers, nurses, other practitioners and community care managers can work together with frail older people and their family carers to develop quality, cost-effective support services that reduce demands on staff whilst providing benefits to users.