Tradeoff between capital cost and the operating cost can be seen in the design of proton exchange membrane fuel cell systems. The polarization curve indicates that operating in the region of lower current densities implies less operating cost (hydrogen fuel) and higher capital cost (larger membrane electrode assembly area). The opposite effects are observed when one operates in the region of higher current densities. Therefore, an appropriate design should take both factors into account and the optimality depends on the corresponding costs of hydrogen and membrane area. An analytical cost model is constructed to describe such an economic balance in a proton exchange membrane fuel cell system. The objective function of the optimization is the total annual cost. Six scenarios are used to illustrate the optimal design based on the total annual cost as cost and materials factors fluctuate. (C) 2008 American Institute of Chemical Engineers.