A/C Replacement: Consider Initial Cost Versus Lifetime Cost

A/C Replacement: Consider Initial Cost Versus Lifetime Cost

Posted by
Ed Miller on Fri, May 08, 2015



Selecting a heating and cooling system for your home is one of the most important investments you can make. There is the advantage of choosing a higher quality system to create a more comfortable home, but on the flip side expect to pay a higher initial cost. It is important to determine your need, know which system is best for you before purchasing an A/C replacement and know where to find your savings. Most importantly, it is critical to compare the initial cost vs. lifetime cost when purchasing your system.

Determine Your Need

Conducting a routine system inspection and thorough maintenance on your system will improve its function and keep it running longer and more efficiently. However, before you spend money on maintenance or repairs, ask yourself these few questions:

  • How old is your system? The life expectancy of most systems is about 10 years. If your system is older than that, it might benefit you to replace it with a new system.
  • Is your electric bill constantly increasing? Your system may be working harder and less efficiently.
  • How often does your system require repairs, and how much are you spending on those repairs?

Know What You Need

Be sure to get estimates and explore your options. There are central cooling systems, multi-zone systems, pumps, forced air, and more. A qualified professional can help you determine what the best option is for you and help you evaluate the initial cost versus lifetime cost. When thinking through your options, consider:

  • Pricing. Certainly you have a budget, but think through of all of the aspects of your investment.
    • A brand new system may require changes in ductwork or ventilation.
    • Is your electrical sufficient for a new system?
    • Are there rebates available? Homeowners can expect to find rewards for choosing energy efficient systems. Check with your power and light company and see if rebates will help you save on the initial cost of your new system.
  • The size of your system. A heat load calculator will help you determine the right unit for your home. Smaller units cost less up front, but work harder to cool your home, costing your more in utility bills. The correctly sized system will also save you over the long term in repairs and maintenance.
  • Energy efficiency. The yellow tag on your unit will tell you the rating of energy efficiency of the unit.

Know Where to Find Your Savings

The initial cost versus lifetime cost can be relatively easy to figure out. The initial cost will include the unit you purchase, installation (including any ductwork or ventilation, and electrical), and your warranty or service agreement. The complete cost will be relatively easy for you to figure. To save on the initial investment:

  • Consult with a professional about a system that can use existing vents, ducts, and electrical.
  • Check into rebates.
  • Get several quotes, and ask about all of the options available to you. There may be special prices or incentives on systems that you’re not aware of.

The lifetime cost will be a bit more involved. Florida Power and Light offers a comparison worksheet on their website to help you figure out what long term expenses will be involved. This will allow you to compare two units at the same time, and come out with an operating cost you can compare.

The first step is to figure out the initial cost of the units you are comparing. Don’t forget to deduct rebates that may be available.

Next, project the operating cost. The seasonal energy efficiency rating (SEER) measures the ratio between the cooling output of a unit, and the energy input. In other words, how much energy does the unit use to cool your space? The higher the SEER is, the more efficient the unit is.

  • You will notice that units with a higher SEER will have a higher price tag, so here is where you need to do some calculations to know the initial cost versus lifetime cost. In most cases the cost of operation is worth the investment.
  • Just as an example, a 3-ton unit installed in the 1990’s with a SEER of 10 will cost just over $1,000 annually to operate. Replacing that unit with one that has a SEER of 15 will save over $300 per year over the lifetime of the unit. Increasing the SEER to 20 will cut the annual cost of operation in half.
  • Don’t forget to calculate what you spend on maintenance and repairs each year. A newer unit will require less maintenance.

The Payback

Divide the price of your unit by the savings in annual operating costs to determine how many years it will take to recover to initial cost of an energy efficient system. The higher the SEER on your unit, the greater the return will be on the initial cost versus lifetime cost.

In the end, the saying is true: you get what you pay for. Going cheap and fast may cost you more in the long term.

Repair or Replace Quiz



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