There is paucity of unit cost data from low- and middle-income countries, although recent initiatives have emerged to help rectify this. The limited budgets assigned to health care facilities mean that health planners and managers must be able to account for the resources used in health facilities as well as use them efficiently. Step-down cost accounting (SDCA) offers a relatively simple method for generating cost and unit cost data at the facility level. However, to the best of our knowledge, there is a lack of clear and concise guidance on how to undertake SDCA. Therefore, this paper, using a worked example, illustrates the different steps involved to generate cost and unit costs for a small hospital.