Will Replacing Your Air Conditioner Really Pay Off?

It’s no secret that purchasing a new air conditioner is expensive – equipment and installation is going to cost four figures and up. When facing such a significant investment, homeowners want to know this move is going to pay off; the prospect of dropping thousands on a new cooling system can seem painful, especially if your existing unit is still operational.

How do you know if your new air conditioner purchase will really pay off? We’ve put together some smart advice that will guide you through the purchase process and ensure you get the most bang for your cooling bucks.

Payback on replacing air conditioner

When to replace vs. repair

Forking over thousands of dollars to buy a new air conditioner rather than a couple hundred to fix your existing one may seem crazy, but it may actually be the smarter decision. Air conditioners wear out with use, much like a vehicle does over time – when faced with a steep mechanic’s bill, have you found yourself evaluating whether or not it’s time for a trade-in?

Sometimes it is a no-brainer to repair the system, such as when the needed repairs are covered by a warranty, or to replace your air conditioner, such as when the repair quote is more than the cost of a new model. Other times, it’s not so obvious; this is when it can feel like a big risk to buy a new system – will it really pay off?

In these unclear situations, evaluate the following factors which will help you make a more informed decision.

System Age

According to the U.S. Department of Energy, the average service life of an air conditioner is 15 to 20 years. Older models simply aren’t as efficient as new air conditioning systems, and your older unit likely uses R-22 refrigerant, also known as Freon – this coolant is being phased out in favor of environmentally friendly R-401A refrigerant which is used in newer cooling equipment; it will become more difficult to access phased-out coolants to recharge older systems.

With age comes lowered efficiency and increased repair needs, too. If you have an older unit, upgrading to a new model may make financial sense – you’ll access modern technologies and higher efficiencies, while avoiding the expense of end-of-life repairs. Alternatively, if your system is only a few years old, repairing it may be the smarter option.

System Efficiency

Technological advances have made newer air conditioning units much more efficient than older models. Not only did your older cooling unit start out offering lower efficiency levels, but the system’s efficiency levels have decreased over time, especially if the unit has not been properly maintained.

Today’s most efficient air conditioners consume as much as 50 percent less energy than those manufactured in the mid-1970s. Even if your cooling system isn’t quite as ancient, it still isn’t highly efficient – upgrading even a 10-year-old air conditioner with a new high-efficiency model can cut your cooling energy consumption by 20 to 40 percent. Although if your current system is operating at 13 SEER or above, it may be worth hanging on to.

If your current system wasn’t sized properly for your home, it isn’t working efficiently or controlling the indoor environment effectively. When dealing with a system that is too large or too small, replacing it with an appropriately-sized air conditioner will improve operating efficiency as well as indoor comfort, and lower your energy costs.

Current Repair Issues

If you’re operating an older system at home, you’re likely to experience more issues requiring repair; you must decide whether to patch the problem or purchase a new air conditioner. If your cooling repairs are no longer covered by the system’s warranty, the cost will be coming out of your pocket – do you put that money back into your system or invest in a new one?

If the cost of the repairs you face equals 50 percent or more of a new air conditioner, it’s generally a better move to invest in a new model. Costly repairs are typically extensive, involving the replacement of major components such as condenser coils, the compressor, or blower motor.

Money-saving features to look for

When shopping for a new air conditioner, you want to get the most for your money, no matter the size of your budget – the key to maximizing value over the service life of your new system is to choose air conditioning equipment with features which will lower overall operating costs.

System Warranty

When purchasing a new air conditioner, the warranty term really matters. Any time your system requires repairs which are covered under warranty, it’s money saved. Look for air conditioner models which offer longer warranty terms and comprehensive coverage. Be careful and study your warranty terms so you’ll know exactly what it includes – too often, homeowners don’t realize certain components aren’t covered or that their warranty could be voided if they fail to properly maintain the system.

Increased Efficiency

The efficiency of your new air conditioning system will directly affect your cooling costs for the duration of the unit’s service life. While higher efficiency units do cost more, the investment can pay you back in reduced operating costs, and may be the smarter financial move. Depending on where you live, 13 SEER or 14 SEER is the minimum efficiency rating for new air conditioners.

Quality Installation

The quality of installation will also greatly affect your overall system costs. Air conditioners which aren’t installed correctly may not operate at the superior efficiency ratings homeowners expect. Selecting the right HVAC installer is just as important as selecting the right air conditioning system – look for an HVAC company who employs NATE-certified technicians and offers a warranty on their work – the HVAC.com directory can help you find a trustworthy HVAC contractor.

Determining the payback period

Before investing in a new air conditioning system, performing a payback analysis can provide you with an estimate of the savings a new system will generate versus your current air conditioner, and can tell you how many years of use it will take before the unit pays for itself in reduced operating costs.

To find the annual cost of operating your current air conditioner, total your electricity bills associated with your cooling use last year. The Energy Guide for any new system will tell you the estimated amount of energy the unit will use each year; multiply this by your local utility rate to determine the annual cost of operating the new unit.

Annual cost to operate existing unit – Annual cost to operate new unit = Annual Energy Savings

Now that you have determined the annual savings a new air conditioner will provide you as compared to the cost of running your old model, you can see how many years it will take for the generated savings to pay for the unit.

Initial system cost / Annual energy savings = System Payback Period

You can also determine the additional payback period needed to purchase a highly efficient, more expensive model versus a system with a lower price tag. Find the difference between the cost of the two units by subtracting the cost of the lower priced unit from the higher priced unit. This is the incremental cost of purchasing a more efficient unit versus a more cost-effective system.

Incremental cost / Annual Savings = Payback period for this unit

HVAC.com is here to help make the air conditioner replacement process as easy and painless as possible for all homeowners. With our hassle-free System Quote tool, our team of cooling system experts will get you competitive quotes on a new air conditioning system customized for your needs from leading local contractors in your area, and confirm a quality installation.

A new air conditioning system from HVAC.com is sure to pay off, delivering years of efficient comfort control for your family.