Calculating the return on investment (ROI) when purchasing a new HVAC system will primarily include evaluating the system’s efficiency ratings. However, ROI provides a somewhat limited view of the costs that a heating and/or cooling system will incur over its lifetime. That’s why it’s often helpful to compare the first cost, ROI and lifetime costs of any system that you’re considering.
First cost is simply the purchase price of any system. Looking at first cost only offers an extremely limited view of how much money you’ll have to put into any one system.
A good example of vast first-cost differences is to take a deal that you find on the internet for a new system and then compare that to the price offered by your local contractor. Because the former eliminates the middleman, it might cost less, but that first cost doesn’t factor into the equation sizing or installation factors — and such a purchase often ends up costing a homeowner more in the long run.
Return on investment is a simple calculation that takes into consideration the total savings over the first year, divided by the total cost of the system when installed. The result is a percentage, revealing your return on investment.
The calculation looks like this:
(Savings in year one) divided by (cost of the system) equals (ROI)
Calculating lifetime costs goes a step further, taking into account the costs to maintain, repair and operate the system, and providing a complete “bird’s eye view” of the total costs to own the system. This will include long-term savings on energy if you’re buying high-efficiency equipment. Using your local contractor to help you calculate lifetime costs will help you to select the highest-quality system with the lowest operating costs, maximizing your investment. When purchasing a new HVAC system, prioritize lifetime-cost calculations.
Purchasing a new HVAC system requires a significant investment, and you should maximize that investment in every way possible — including by calculating first cost, ROI and lifetime costs. For help comparing system costs to find one that fits your needs and your budget, contact Detmer & Sons today. We’ve been serving homeowners in the Dayton area since 1978.
Our goal is to help educate our customers about energy and home comfort issues (specific to HVAC systems). For more information about purchasing a new HVAC system and other HVAC topics, download our free Home Comfort Resource guide.
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