An exergoeconomic analysis of a small-scale lab demonstration plant PEM fuel cell system was conducted. The system uses a LPG steam reforming process for hydrogen production and full water recovery for an intended use in mobile and stationary off-grid electricity generation. As the exergoeconomic analysis combines thermodynamic and economic analyses, the fuel cell system is analyzed at the component level. Thus, the cost contributions of individual components within the system are quantified and the cost formation process is revealed. By comparing the capital costs and costs of exergy destruction, the analysis shows the sources of the high cost of electricity. High investment costs and not yet optimized balance-of-plant components lead to the system's poor economic performance at the current state of technology. Based on the different analyses, important factors for research and development as well as for an improved design of future systems are identified. Copyright (C) 2015, Hydrogen Energy Publications, LLC. Published by Elsevier Ltd. All rights reserved.