If your furnace is showing signs of age like frequent repairs, and higher than normal energy bills, it’s time to consider replacing it. The good news is that today’s furnaces generally have a life expectancy of around 25 years.
However, homeowners often have a more pressing concern in mind when investing in a new furnace, namely when will they recoup their investment? With the following instructions from Schneller & Knochelmann Plumbing, Heating & Air, you’ll learn how to calculate your furnace payoff easily, so you can make smart decisions about your home.
Current Energy Usage
First, gather your utility bills from the previous year. Next, determine the amount that you spent on energy to fuel your furnace. For example, if you have a gas furnace, and you used $100 per month, your total would be $1,200 (12 x $100). Even better, if you can get find your total utility payments for the year, your numbers for this exercise will reflect seasonal changes and give you a more accurate result.
It’s important to note that this is an estimate of the total amount it takes to heat your home. If you want a more accurate figure, speak to your utility company. Most will send someone out to evaluate your furnace and give you a good idea of the percentage of energy it’s using each month.
Related Read: Should I Wait for My Furnace to Break Down?
Calculate the Cost of Replacement
Let’s assume that you are purchasing a new furnace that is priced at around $3,500 including complete installation. Now, deduct any rebates that you are eligible for from your utility company or the manufacturer.
For our example, we’ll say that the rebate from the utility company will be around $450, and the manufacturer’s rebate will be $500, totaling $950 in rebates. Then subtract this figure from the initial purchase price, $3,500 – $950 = $2,550, which calculates the actual cost of your new furnace.
Calculate the New Energy Usage
New furnaces come with yellow stickers, or tags, that detail the expected energy use for a year. So, for example, a new unit may use around 400 units of energy every year. Next, find out what the unit cost of energy in your area is. You can generally locate this information on your current utility bill. Let’s assume that your rate is $1.25 per unit. Therefore, 400 x $1.25 = $500 of energy costs per year.
Next, subtract the energy usage from a new furnace from the amount currently being used. For our example, the current annual energy cost is $1,200, less $500 of energy costs for a new unit is a savings of $700.
Related Read: Are Savings from High Efficiency Systems Worth the Cost?
Now it’s time to calculate the amount of time it’ll take to get your investment back. For this step, take the total cost of a new furnace, and divide it by the energy savings you expect. So, for our purposes, the equation would look like this: $2,550/$700 = 3.64 years.
Of course, this is only an example and your figures will be different. Don’t forget that, in this example, you’ll have your investment back in less than 4 years and your furnace will serve you well for another 20 years or more.