As any developing country, lack of adequate infrastructure provision is an enormous problem in Ethiopia. When we see the case of Addis Ababa, the current coverage of sanitation service is very low. It is this very fact that has made the government of Ethiopia to extend a concerted effort to improve the condition. In doing so, the government has stated that, the policy for increasing the coverage as well as the proper use of any sustainability of the service requires implementation of a cost recovery system. But this requires information on people’s preferences and WTP for the proposed improvement. Therefore, the paper examined the determinants of willingness-to-pay for improved sanitation service and investigates the possibility of cost recovery policy directions using the contingent valuation method.