Background: Radiology is rapidly advancing, with a global transition to digital imaging technology to improve productivity and enhance communication. The major challenge confronting radiology practices is to demonstrate cost savings and productivity gains when a picture archiving and communication system (PACS) is established. Aim: To undertake an incremental cost analysis of PACS compared with conventional radiology to determine productivity gains, if any, at two private hospitals in Durban. Method: An incremental cost analysis for chest radiographs, computed tomography and magnetic resonance imaging brain scans with and without contrast were performed. The overall incremental cost for PACS in comparison with a conventional radiology site was determined. The net present value was also determined to evaluate the capital budgeting requirements for both systems. Results: The incremental cost of both capital and the radiology information system for installing PACS shows an expected increase. The incremental PACS image cost shows a reduction. Conclusion: The study provides a benchmark for the cost incurred when implementing PACS. It also provides a decision framework for radiology departments that plan to introduce PACS and helps to determine the feasibility of its introduction.