How Much Does a Heat Pump Cost to Replace?

How Much Does a Heat Pump Cost to Replace?
Arne Jacobsen
Residential Sales Professional

I have been in heating and air conditioning trade for 44 years. In that time, I have installed, serviced, designed ductwork, sold, and sized thousands of residential heating and cooling systems.

About This Article

Knowing the influential factors will help you make a wise decision on a heat pump system that will keep you comfortable, operate properly, and be within your budget.

Quick question: how much does a new heat pump cost? Hundreds of dollars? Thousands?

Maybe you have a general idea of the price of a heat pump, but many homeowners have no idea if they’ll be able to fit one into their budget. What’s worse, finding a straight answer online can be impossible. We’re here to fix that.

If your heat pump has recently broken down or is running inefficiently, you’re losing both money and comfort. A repair may work, but for many systems, it’s only a matter of time before it will need to be replaced. Not all systems are created equal, though, so knowing what costs to expect can better prepare you when contacting HVAC providers.

This article breaks down the costs of a heat pump and explains why each one may be necessary. By the end of the article, you’ll have a range of potential costs and options to begin your budgeting and decision-making process.

 

A Note on HVAC Labor Costs

Every range we list in this article is inclusive of labor. We make a point of saying this because too many online quotes and estimates won’t include this, in order to get their foot in the door before surprising you with a higher price.

Make sure you’re comparing apples to apples.

Ok, with that public service announcement out of the way, let’s get into it.

What Do You Need in a Heat Pump Replacement?

When we think about HVAC equipment, we think about the primary unit. There’s more to it, though, or else they wouldn’t run at all.

Here’s a shortlist of some common items that will come standard with almost any new installation:

  1. Indoor and outdoor units: Ok, so this one should be the most obvious. A heat pump is drawing air from inside or outside and moving it to the opposite location. So coils at both ends need to facilitate this transfer.
  2. Outdoor pad: The pad that your heat pump is on makes a difference. It should be sturdy, level, and weather-resistant. At Fire & Ice, we use plastic pads that do all of this with far less risk than concrete pads.
  3. Electrical components: This includes the electrical disconnect and conduit from the disconnect to the heat pump.
  4. Drain Line: A typical installation comes with 15 feet of drain line. If the positioning of your equipment requires a longer line, there may be a higher charge.
  5. Snow legs: Your equipment needs space to breathe. Snow legs keep the outdoor unit off of the ground and protected from overheating or condensation buildup.
  6. Local permits for the installation: This is required by law! It’s also required by many insurance companies, who want to ensure that your HVAC equipment was installed safely. There is a fee for the permit, and any good HVAC contractor will obtain the permit for this inspection.
  7. Thermostat: Your thermostat may already be compatible with the incoming equipment, though it may still require new wiring to be run to the newly installed unit. Other times, a brand new thermostat will be needed to maintain system compatibility.

Some of these will result in additional costs beyond the base equipment. Others (like the indoor and outdoor units) will come standard. This is then added to labor costs. We’ll review all of this shortly.

First, though, we want to walk through why each of these is needed, and also why some of them could have complicating factors.

Common heat pump items.

Electrical Requirements in Heat Pump Installation

Occasionally, a home’s existing electrical work will not support a modern system. This is sometimes the case when switching from an older thermostat to a modern one that includes more control options. The wiring that facilitates communication between this thermostat and the heat pump may need to be updated.

Additionally, high-voltage wiring or breakers at your electric panel may need to be updated or resized. Occasionally this high voltage work requires a state-licensed electrician. Your HVAC contractor should be able to inform you of this and also coordinate with an electrician to facilitate this work.

While these items are not needed in every job, ask your contractor if your existing electrical work will support the system you have in mind.

Additional costs for these items can range from $100-$600.

Ductwork Modifications in Heat Pump Installation

We’ve done a larger article on the cost of ductwork modification (see below), so we won’t belabor it here except to point out the possibility.

Your ductwork has to be sized correctly for the size and power of your heating and cooling equipment. Period.

To do anything less is to waste efficiency (see also: comfort and money). It also risks wear and tear on your system that could lead to hazards or breakdowns far sooner than a new system should experience.

Improper ductwork size can cause hot /cold spots throughout your home, decrease the longevity of the heating and cooling system, and increase operating costs. Any HVAC sales representative who visits your home should be doing a duct analysis that will determine if the existing ductwork is sized properly for the heating and cooling capacity required.

RELATED: Cost of HVAC Ductwork Modification

For clarity, most homes have adequate ductwork. But we’d be remiss in not mentioning this because we do see it even among modern homes.

Condensate Drainage

One of the functions of a heat pump is to remove moisture during humid months. This moisture is condensed into water and needs to be drained off.

Most times, this moisture is drained into a floor drain or sump pump. Occasionally, though, this isn’t possible due to home construction or obstructions in the way of the draining pipe.

In these cases, a condensate pump is required to circumvent the obstruction and move the moisture to the proper drain.

Condensate pumps cost approximately $370.

Equipment Matching

One of the most overlooked aspects of heating and cooling is equipment matching. This means that your heating and cooling systems must be compatible with one another since they share common elements. This is most common with variable-speed equipment vs. single-stage or two-stage equipment.

For example, a variable-speed heat pump can be an amazing upgrade, but it needs to be paired with a variable-speed blower motor (located in your furnace or air handler). If the two aren’t compatible, you’d either need to look for a different model of heat pump or upgrade your furnace/air handler as well.

A new furnace can range approximately between $3300-$7600. This replacement would be needed if you decided on installing a variable-speed or two-stage heat pump without having the matching equipment.

RELATED: How Much Does a Furnace Cost? A Comprehensive Breakdown

The other side of this cost is that variable-speed systems generally have greatly increased efficiency and comfort. Depending on your expected usage of the system, it could be a wise investment.

A diligent HVAC contractor will check your existing systems to make sure anything they recommend is compatible. They’ll also explain the costs and benefits if you upgrade to a variable-speed system and need to match your equipment.

Heat Pump Capacity and Efficiency

The capacity of the air conditioning portion of the heat pump is determined by performing a Manual J load calculation of the home. All this means is that your contractor will calculate the square footage of the home, along with other relevant factors like the number and size of windows and doors, the height of the ceilings, and other construction factors. From this, they can calculate how powerful a system needs to be to properly heat and cool your home. Heat pump systems range in capacity from 2-5 tons.

As the tonnage (power) of the system goes up, so too does the cost.  However, matching the correct capacity to your home is crucial.

If you have a two-ton heat pump in a home that requires three tons, for example, it will be running almost constantly and will result in inefficient system usage and hot or cold spots from insufficient power.

The long-term cost to an incorrect capacity calculation can be more than the system itself.

This also translates to efficiency. Many homeowners have heard about SEER Rating (Seasonal Energy Efficiency Ratio) on the cooling portion of your heat pump. This is an efficiency rating that can be compared to miles per gallon in a car. Heat pumps can have a SEER rating of 14-20+.

Heat pump efficiency savings.

Usually, a higher-efficiency system will increase in cost. However, there are two items to consider:

  • A high-efficiency heat pump can save you hundreds or even thousands per year depending on the situation.
  • The life expectancy for a well-maintained heat pump can be over 20 years, so a higher initial cost is sometimes worthwhile.

Similar to SEER Rating is the HSPF Rating, which stands for Heating Seasonal Performance Factor.  This rating determines the efficiency of the heat pump’s heating capabilities. While it’s on a different scale than SEER, higher HSPF is again better. It will come with extra upfront cost, but also more long-term efficiency.

State-licensed heating contractors like Fire & Ice will always perform a capacity calculation on your home before recommending or selling you a system. Don’t assume a previous calculation was done correctly; make sure your HVAC contractor performs it before any installation.

 

Total Cost of a Heat Pump

Ok, so now you understand what goes into your system, and why, what does the cost come to?

Equipment & Installation Costs:

Entry-Level: $5,500 - $8,000

Mid-Range: $7,500 - $11,000

High-End: $9,000 - $13,000

The biggest factor that separates those tiers is whether the equipment is single-stage, two-stage, or variable-speed. The tonnage (power) of the system is also one of the largest factors that can affect pricing within that range.

This range includes the full range of possibilities and modifications listed above, with the exception of a furnace replacement to match equipment. It also includes labor, as mentioned earlier.

Outside of that, where you fall in those ranges will depend on your comfort goals, how long you plan on being in the home (which might justify a larger investment), and your budget.

As we mentioned in equipment matching, a higher initial cost isn’t necessarily a bad thing, because it usually means your system will run more efficiently. Since heat pumps can last 20-25 years when properly serviced, this savings adds up.

Next, we’ll look at a couple of ways you might be able to lower the costs further.

Rebates and Tax Credits for Heat Pumps

Rebates and tax credits exist for a variety of reasons. You may qualify for one or more based on the system you choose:

  • Manufacturers will often offer incentives to replace your heat pump, which are in the form of rebates that participating HVAC companies can offer.
  • Local utility companies will sometimes offer rebates for multiple types of furnaces, air conditioners, air handlers, and heat pumps.
  • Energy Tax Credits are often available on high-efficiency heating and cooling products.

While it’s best to consult with a tax specialist for full tax benefits, a licensed HVAC provider will have information on each of these as it relates to your project.

At Fire and Ice Heating and Air Conditioning, we maintain contact with local utility companies and manufacturers to make sure we’re offering any available rebates to the customer. While rebates won’t always exist for your purchase, make sure you’re asking your HVAC contractor before signing the dotted line.

Financing Your Heat Pump

A Heat Pump is a significant investment. It’s not always going to be something that you can pay out of pocket.

If you’re interested in extending your payments, there are many financing options available for you with approved credit. This can include no interest if paid in full, 0% APR with equal monthly payments, or special reduced-rate plans.

Partial payment of cash/check and balance with financing can be an option as well. Multiple finance options can help your purchase stay within your budget.

There are even “second look” plans available for many customers with lower credit scores. Don’t assume you won’t be able to finance a new system. Make sure you’re assessing all of your options with a knowledgeable HVAC contractor before making your decision.

 

What a Good Contractor Will Do

A good HVAC contractor will have information on each of the sections detailed above. They will proactively identify potential issues and recommendations that will affect the price of your system.

The other, perhaps most important, area of attention is the installation itself. When choosing a company to replace your existing heating and/or air conditioning system, the installation process is the single most important step for the safety and life expectancy of the system. It’s the difference between a long, efficient life and sub-par performance.

A trustworthy contractor will also know all local codes, be familiar with industry standards, understand the recommended processes as laid out by the manufacturers, and follow each carefully. To do any less is to jeopardize the integrity of your HVAC system.

 
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