In 2006-2007, more than 54,000 (or one in seven) babies across Canada were born preterm or small for their gestational age (SGA). These babies are often at higher risk for morbidity and mortality than are full-term babies with normal birth weight, and account for a disproportionately high percentage of healthcare costs among newborns. This article highlights key findings from a recent report by the Canadian Institute for Health Information, Too Early, Too Small: A Profile of Small Babies across Canada, and provides information on the hospital costs among low birth weight, preterm and SGA babies. Birth weight and gestational age were found to be important determinants of hospital costs - as birth weight and gestational age decreased, average in-hospital costs increased. Furthermore, multiple-birth babies had higher hospital costs than did singleton babies. As in other areas of the health system, information relating to costs and spending can inform neonatal and obstetrical health planning and decision-making.