The black water and grey water source-separation sanitation system aims at efficient use of energy (biogas), water and nutrients but currently lacks evidence of economic viability to be considered a credible alternative to the conventional system. This study intends to demonstrate economic viability, identify main cost contributors and assess critical influencing factors. A technico-economic model was built based on a new neighbourhood in a Canadian context. Three implementation scales of source-separation system are defined: 500, 5,000 and 50,000 inhabitants. The results show that the source-separation system is 33% to 118% more costly than the conventional system, with the larger cost differential obtained by lower source-separation system implementation scales. A sensitivity analysis demonstrates that vacuum toilet flow reduction from 1.0 to 0.25 L/flush decreases source-separation system cost between 23 and 27%. It also shows that high resource costs can be beneficial or unfavourable to the source-separation system depending on whether the vacuum toilet flow is low or normal. Therefore, the future of this configuration of the source-separation system lies mainly in vacuum toilet flow reduction or the introduction of new efficient effluent volume reduction processes (e.g. reverse osmosis).