Leicht H, Heinrich S, Heider D, Bachmann C, Bickel H, van den Bussche H, Fuchs A, Luppa M, Maier W, Mösch E, Pentzek M, Rieder‐Heller SG, Tebarth F, Werle J, Weyerer S, Wiese B, Zimmermann T, König H‐H, for the AgeCoDe study group. Net costs of dementia by disease stage. Objective:  To estimate net costs of dementia by degree of severity from a societal perspective, including a detailed assessment of costs of formal and informal nursing care. Method:  In a cross‐sectional study, costs of illness were analysed in 176 dementia patients and 173 matched non‐demented control subjects. Healthcare resource use and costs were assessed retrospectively by means of a questionnaire. Dementia patients were classified into three disease stages, and linear regression models were applied to estimate net costs of dementia by degree of severity. Results:  Annual net costs of dementia by stage were approximately €15 000 (mild), €32 000 (moderate) and €42 000 (severe), corresponding to US‐$21 450, 45 760 and 60 060 respectively. Across disease stages, nursing care accounted for approximately three‐quarters of total costs, of which half resulted from informal care. In sensitivity analyses using different valuation methods for nursing care, total costs decreased or increased by more than 20%. Conclusion:  Net costs more than double across stages of dementia. Informal care accounts for a considerable share of nursing care costs, and the approach to valuation of informal care has a large impact on cost‐of‐illness estimates.