First Cost vs. Lifetime Cost: There’s Usually No Competition

Consumers shopping for a big-ticket item face a common dilemma – deciding whether to buy an inexpensive model and save money at that moment, or buy a higher-priced model and hope that the superior product will translate into a longer service life, a better experience, and/or greater energy savings. This can apply to anything from a vacuum cleaner to a refrigerator to a car. It definitely applies when you’re shopping for a heating or cooling system for your home.

Are you one of those HVAC consumers who only considers the so-called “first cost,” in other words the purchase and installation price, or do you take the wiser course and also consider the lifetime cost of your new AC, heat pump or furnace?

Let’s look at both:

First Cost of an HVAC System

Whole-house HVAC systems come with a wide variety of choices and costs. Factors that will affect the purchase price may include the brand and model, its efficiency level, and available advanced features, among other factors.

Installation costs are another variable, and can raise the “first cost” if it involves work on the ducts, plumbing or electrical wiring, or heaven forbid, structural work on your home. The installation cost also may vary in terms of who’s doing the job. You can expect some contractors to offer a relatively low price for a quick installation but they might fail to follow industry best practices when it comes to sizing your new cooling or heating system.

A professional HVAC installer should employ the Manual J load calculation software to determine your home’s cooling or heating load, and then use that data to recommend the correctly sized system for your house. A careless installation that results in an AC or furnace that’s too big or too small for your particular home will add costs over the system’s lifetime. You’ll pay more over the years for poor energy efficiency and performance, and likely increase the risk for more frequent breakdowns and a shorter service life.

Lifetime Costs of a New HVAC System

If you look at it one way, a poorly installed and/or cheaply made cooling or heating system has its own lifetime costs in terms of some of the aforementioned negatives. However, this version of lifetime costs refers to the operating and maintenance costs of an AC, furnace or heat pump over its lifetime – which may extend to more than 15 years, especially for the furnace.

So when it comes to energy efficiency, when you choose a certain HVAC system, let’s say a central air conditioner for example, if you select one with a high SEER rating (seasonal energy efficiency ratio), you should expect to enjoy lower energy bills for the life of the system than if you’d bought one with a lower SEER. The same applies to furnaces and their AFUE (annualized fuel utilization efficiency) ratings. (This only applies if the system has been properly installed and maintained.)

The higher the cooling efficiency level with an AC or heat pump, the more cooling output the system will provide for the same amount of electricity. That higher efficiency, however, does carry a price, and you’ll pay more for a high-efficiency AC or furnace than you will for one that’s not. If you add up the savings on operating costs over the life of your new high-efficiency cooling or heating system, in most cases you’ll find that in the long run, the better model ultimately costs a lot less than that cheaper model would have cost.

One factor that’s important to consider, though, when comparing first cost and lifetime cost is what climate the system will be operating in. A high-efficiency cooling system operating during a short summer in Northern Michigan, for example, will take many years longer to pay back the high initial cost than one operating nearly year round in Florida. In the Northern Michigan example, it’s worth considering a cheaper, lower-efficiency model. In southwest Ohio, however, choosing high efficiency is generally a good bet in both summer and winter.

Quality may be another key factor. A well-made HVAC system, both in terms of craftsmanship and durable parts, should last longer than one that’s not made so well. However, it’s important to remember that even the best equipment will malfunction or fail if it’s not properly maintained. Schedule semi-annual preventative maintenance on your home’s cooling and heating system. Also, remember to perform your own maintenance tasks such as changing air filters regularly and keeping registers clear and clean.

Don’t Forget Advanced Features

Lastly, any consideration of the lifetime cost of a new air conditioner, furnace or heat pump should involve energy-saving advanced features. For example in an AC, a two-stage or multi-stage compressor will modulate the amount of cooling output. Joining forces with a variable speed blower motor in the furnace blower or air handler, this will ensure that your AC is only working as hard as necessary at any given time. A forced-air cooling or heating system that’s operating at a lower, more continuous level will save energy, and provide more balanced cooling and heating, than one that only runs at one high speed or level in abbreviated cycles. The underlying technology in variable or multi-stage systems is innately more energy efficient than single-stage operation.

No doubt about it, when comparing first cost to the lifetime costs of a new air conditioner, heat pump or furnace, choosing quality and efficiency is usually the best bet. On the other hand, saving some money at the outset likely will mean higher costs over the life of your system.