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Will A New Furnace Save Me Money?

Will a new electric, oil, propane or gas furnace save you money? And what factors go into the answer? We walk through each in this article.

Will A New Furnace Save Me Money?

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Mark Wilson


October 19th, 2020

What goes into the cost of something? We’re used to thinking of cost as a one-time thing. You buy it, you own it, and that’s it.

Furnaces are an exception. It’s not that they don’t have an initial price tag. In fact, your upfront investment will be substantial. Rather, it’s that cost is something that needs to be continually calculated.

It’s also important to factor in things like the comfort and health of your home and family.

We’re going to be honest about cost in this article, but we’re also going to ask you to think about cost in a few different ways. We think this is a more complete picture, and will allow you to make a better decision for your next HVAC project.

Car mechanics

Reconceptualizing Cost - A Comparison to Cars

We don’t think about our furnace that often. But I’m guessing you think about your car a lot more. So let’s talk about cars for a second.

You buy a car, and let’s say it’s a $30,000 initial investment. This is the “big” cost, but it’s far from the only one.

Other costs will then include the cost of gasoline, regular tune-ups and maintenance, filter changes, tire rotations, and things like car washes.

Further down the line, you’re probably going to have to make repairs to the vehicle.

So what goes into the true cost of a car?

  1. Initial cost
  2. Miles per gallon (mpg)
  3. Reliability of parts
  4. Cost of labor for maintenance
  5. Expertise of mechanics who perform repairs

So maybe you’re 10 years into ownership and have to buy new tires. Do you spend $200 on a set, or $500 on a set that may last you twice as long? The math still favors the $200 set in that scenario. But what if I told you that the $500 set is safer? What price is that worth?

The same goes for the car itself. Take these two:

  1. Vehicle One: $25,000, 18 mpg, extremely quiet interior, leather seats
  2. Vehicle Two: $29,000, 22 mpg, moderately quiet interior, no leather seats

Is there a clear “best” option there? Probably not. Or rather, there may be a best answer for you, but it will be different for someone else.

Alright, enough car talk. It’s time to get into your new furnace. But hopefully this exercise was able to show you that the concept of cost isn’t always obvious.

Napkin Math For a Home Furnace

We’re going to do some math, and will assume a $5,000 furnace (including labor and permit fees). There are cheaper furnaces and there are more expensive ones, but this will give us a good baseline.

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

For the sake of easy math, let’s also say you’re paying an average of $200 in monthly heating costs, and use your heater for five months of the year. That’s $1,000 per year. This isn’t unreasonable for many homes with older, inefficient furnaces.

Assuming that your current system is older and not terribly efficient, your new $5,000 furnace is almost certainly going to be a big upgrade in efficiency.

The average heating bill for Columbus, OH is a little bit above $100, so with a brand new furnace, hopefully you can get it to that range. If your savings is $100 per month, that’s a $500 savings per year.

In this scenario, you’d expect to “make your money back” in 10 years of use, which any good furnace system should be able to give you.

But we’re not done.

One, those 10 years are also providing you with much greater comfort. Much like a quieter car or leather seats, it’s harder to put a price on these things. Most Americans spend a lot more time in their homes than they do in their car, so you can be guaranteed of enjoying this comfort for at least 10-12 hours every day.

Two, we haven’t yet considered the costs of waiting. Let’s say you push off purchasing the $5,000 furnace for a year. This might be the right decision for you for budgetary reasons. But it’s also costing you money.

That extra year is an additional $500 in heating costs, and a year from now, there’s a good chance the $5,000 system will now be $5,500 (or something similar). Prolonging the decision by a year is costing you $1,000.

These are hypothetical numbers in this article, but they reflect the realities of many homeowners.

There are times when it’s the right financial decision to wait to purchase a new furnace. We’ll talk about those below. But if you know that the decision is inevitable, you’re saving money by making the choice sooner rather than later.

High-Efficiency Furnaces

If you hear about a furnace that is an “80% furnace,” it refers to the fuel efficiency. Basically, it’s like miles per gallon. In an 80% furnace, 80 cents of every dollar you spend is directly heating your home.

High-efficiency furnaces can be well over 90% efficiency. The best ones approach 98%. Of course, these are more expensive initially.

RELATED: Trane XC95M Furnace Review: Technology & Benefits

This is where our napkin math will break down a little bit, because there are too many variables to consider. This is also where talking with a trusted HVAC partner can help, because they can look at your current furnace (which will likely be far less efficient than modern options) and help you to estimate yearly savings accurately.

Regardless, these high-efficiency options present another short-term vs. long-term equation to take into consideration.

Variable speed technology in furnaces

Questions to Ask Yourself

So when is the right time to buy, and why? To answer that, you’re going to have to reflect on your current situation. We can’t provide a single answer that will work for everyone, but we can give you some questions that will help guide you to the best answer.

  1. How long do I expect to live in this home? If the answer is 1-5 years, you won’t see the long-term cost benefits of a new furnace. If it’s 5-20+ years, though, you can be assured of more comprehensive savings.
  2. How much do I run my furnace? If you’re only running the system for a couple months out of the year, the math we did above will look very different for you. Conversely, if you’re in a cold climate and are using it for 7-8 months of the year, a good furnace is an even bigger necessity.
  3. What are my energy bills like compared to the average? Some searching should reveal what you can expect to pay in utilities and you can work backward from there to calculate your personal savings. As a start, the average home in Columbus uses 1500 ccf annually, and 66% of Ohio homes use natural gas as a heating source.
  4. How efficient (or inefficient) is my current furnace? The difference between modern and older equipment can’t be overstated. In some cases, you can be looking at savings well above 50%, which means the math above would look even better for a new system.
  5. What is my current budget for home improvements? Will it be any easier next year if it costs me $1,000 more to wait? The exact amount likely isn’t $1,000 for you. It may be more, it may be less. But knowing your current financial situation, and knowing the extra burden that waiting can cause, is important to assessing an investment.

RELATED: The Cost of Waiting to Replace Your Air Conditioner or Furnace

There are undoubtedly other questions, but these can get you started. Importantly, a trusted HVAC partner can help you with any of them. We guide thousands of homeowners through this process, so we can let you know what to expect in terms of costs, both short-term and long-term.

The Hidden Costs and Benefits

The only hidden costs to a furnace installation are if your installer does a poor job. You might not be able to tell at first, but it can cause efficiency problems down the line, and shorten the lifespan of your system.

RELATED: The HVAC Contractor Checklist

Assuming your installation is handled properly, though, the only other “hidden” elements are benefits to you.

We talked about a few of them earlier. Like leather seats and built-in seat warmers in your car, the bells & whistles on a new HVAC system can bring things like smart-home technology, new options on your thermostat that give you more control over temperature and humidity, and quieter operation.

Another benefit is to your health. Rusted parts, bad filtration, and other small problems can add up, and the end result is less breathable air.

The other potential benefit is to your air conditioning. No, really, we mean it! A new furnace means a new blower motor, which also moves the air through your home on the air conditioning side. If the blower motor is more powerful or has more settings, it generally means good things for airflow on the cooling side as well.

Homeowners with HVAC salesman

Making the Right Decision

There aren’t many investments you’ll make in your life that will be more expensive than new HVAC equipment. A home, a car, maybe things like a new roof or windows, or a particularly lavish vacation are the only items that will routinely come in higher.

So it’s important to make a choice that you feel good about. Waiting can be the right choice for many homeowners, just as purchasing now can be the right choice for many. The important part is that it’s a fully informed decision.

That’s our job, both with articles like these and when we’re in homes across Central Ohio, helping customers like you make the right call for their heating and cooling needs.

RELATED: The Complete Guide to Home Furnaces

When you’re ready to have that conversation and make a decision, check to make sure you’re in our service area below and schedule an estimate, or give us a call. We’re ready to help make your day better.

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