This paper presents the first R and D price indexes based largely on actual prices and expenditures reported by firms. The results, based on a carefully designed sample of about 100 firms, show that the GNP deflator, which is used in the official government R and D statistics, has tended to underestimate the rate of inflation in R and D. For managerial and economic purposes, such as R and D budgeting and productivity studies, these indexes should be of widespread use.