The large scatter in the predictions of wave energy costs, which is caused in part by the simplifications assumed by existing models, is a hindrance for the development of this promising renewable. In this context, the main objective of this paper is to reassess the cost of wave energy taking into account a number of elements that are usually overlooked, or not considered simultaneously. This analysis has been performed in relation to the European context. The direct and indirect costs of a wave farm are examined, and a value for each is presented. The levelized cost (Euro/MWh) of wave energy is then calculated for different scenarios in order to compare the profitability of wave energy with that of other energy sources. After that, a sensitivity analysis is carried out to identify the main parameters affecting the total cost, considering in particular the effect on the levelized cost of considering: (i) the cost reductions arising from economies of scale and technological effects; (ii) an O&M cost variable throughout the useful life of the farm; and (iii) the externalities. In sum, this work sets the basis for a thorough economic comparison of wave energy with other sources of energy.