Pelleted biomass can help simplify biomass supply systems and reduce downstream processing costs that are vital for the development of commercial biorefineries. This study is based on comparison of process benefits and economic factors of using loose and pelleted biomass over a range of low to high pretreatment severity and hydrolysis enzyme loadings. Use of pelleted biomass provides flexibility either to reduce pretreatment severity, enzyme loadings, hydrolysis time, or combinations of these. Either enzyme loadings can be reduced by 80% or hydrolysis times reduced by 58% with the use of pelleted biomass. A comparative techno-economic analysis using each form of biomass reveals that using pelleted biomass is economically beneficial. The minimum ethanol selling price for loose biomass was found to be $4.41/gal ethanol and $3.83/gal ethanol for pelleted biomass. The economic study suggests that optimizing conversion processes could lower the final ethanol costs even further.