The economics of incorporating membrane modules in several steps in the conversion of whey permeate to lactic acid was studied. Membrane recycle fermenters operating at a cell concentration of 40 g l(-1) resulted in a productivity of 22.5 g l(-1)h(-1) with a lactate concentration of 89 g l(-1) and a yield of 0.89. The membrane units (reverse osmosis for preconcentrating whey permeate, hollow-fiber ultrafiltration for clarification and for cell recycling) contribute about 28% of the total fixed capital costs and less than 5% of the operating cost. The two largest costs are whey transportation and yeast extract, contributing about 35% and 38% to the total product cost of US $ 0.98/kg 85% lactate. Without these two costs; unpurified lactate could be produced for $ 0.27/kg.