Objective Colchicine prophylaxis to prevent gout flares when commencing urate‐lowering therapy is recommended by international rheumatology society guidelines. Whether this is a cost‐effective intervention is currently unknown. Our objective was to perform a cost‐effectiveness analysis using both a US cost input model and an Australian cost input model. Methods This cost‐effectiveness analysis was completed from the point of view of the third‐party payer. We used a 2‐arm decision tree with 1 arm commencing allopurinol with no colchicine prophylaxis and the other with colchicine prophylaxis. Model inputs were drawn from published literature where available. We completed a univariate and probabilistic sensitivity analysis to confirm the robust nature of the modeling. The time frame for the model was 6 months. Results The colchicine prophylaxis arm resulted in a cost of $1,276 and 0.49 quality‐adjusted life‐years (QALYs), while in the placebo arm the cost was $516 and 0.47 QALYs, with an incremental cost‐effectiveness ratio of $34,004 per QALY gained. In Australia, where cost of colchicine was much lower, the colchicine arm dominated the placebo ($208 [Australian] in the colchicine arm versus $415 [Australian] in the placebo). Univariate and probability sensitivity analysis demonstrated that results were robust to changes in input parameters. In the probabilistic sensitivity analysis, the probability of colchicine prophylaxis being the most cost‐effective option was 93% in the US and 100% in the Australian setting. Conclusion Colchicine prophylaxis to prevent gout flares while commencing allopurinol in gout is very cost‐effective.