SummaryMobile data volume is growing with an annual compound rate of 61% between 2014 and 2019. To cope with the data volume growth, a more dynamic and flexible network is needed. Caching has been deployed by both mobile network operators and content providers to reduce the load on centralized data centers and gateways. In addition, software‐defined networking (SDN) is a prominent solution to more flexibly and efficiently utilize the available network resources, especially in the mobile backhaul. However, installation of cache servers into the network means additional capital expenditure (CAPEX) and their daily operations incur operational expenses (OPEX). Thus, the change in cost of deploying and operating in‐network caching compared with data center caching is modeled in this paper using a Finnish Long‐Term Evolution reference network. In addition, this paper simulates both the SDN‐optimized in‐network caching system and data center caching, the results of which are utilized in the cost model. The simulation results show that, on average, in‐network caching compared with caching only in data centers reduces traffic load by 45% in the network and 6% in the gateways. The cost modeling indicates that in‐network caching reduces network‐related CAPEX by 1.53% and OPEX by 0.49% compared with caching only in data centers. Copyright © 2015 John Wiley & Sons, Ltd.