Price vs. Cost of a New AC Unit and Heating System

I know the title of this article, “price vs. cost of a new AC & heating system” is a bit of a conundrum so I’m going to ask you all to bear with me for a moment while I explain. I do however promise to make this worth your time if you are considering purchasing a new central air conditioner and heating system.

If you are not doing your due diligence because you are replacing your homes AC & heating unit, this seems like a strange article for you to be reading, but what the heck…thanks for joining us!

No doubt you have seen, or perhaps already been quoted prices for new HVAC (Heating, Ventilation, & Air Conditioning) ranging anywhere from $5,000 to above $10,000 – for the same home! You want to make sure you are doing the right thing for your home, family, and budget but there’s so much to consider. There are a multitude of brands to choose from, efficiency ratings, single-stage, two-stage, variable speed this and that – and that’s all from one AC Contractor – you planned on getting quotes from several! 

“I just wanted the peace of mind of a new AC unit!”

It can all seem overwhelming, but I promised to make it easy for you and I intend to keep that promise.

Let’s get back to our title; price vs. cost of a new A/C & heating system. First, let’s pretend we are buying a new refrigerator. Unlike a central air conditioning and heating system which requires professional installation and dozens of ancillary items, a refrigerator is literally plug-and-play. If I can buy refrigerator model number 123AB at Joe’s Fridge’s for $1,200 delivered, but can get the exact same one at Jen’s Fridge Emporium for $1,000 delivered, all other things being equal – I’d be a fool to buy it at Joe’s.

Now what if both Joe’s and Jen’s sold that refrigerator for the same $1,000? In that case, it doesn’t matter much who you choose to buy it from,  you come out the same either way and they both provided equal value.

Central air conditioning and heating systems however are far from plug and play, and there can be a dramatic “cost” difference between two contractor’s quotes…even if they are charging the same “price”!

Price is the amount of money you pay at the point of purchase, i.e., the “sticker price”.

Cost is what you stand to lose in terms of; efficiency, comfort, convenience, time, stress, and very possibly…money, if you don’t consider the added “value” of what may (at point of purchase) have a higher price.

In other words, often the item with the lowest price can wind up costing you more. This is very much the case when it comes to a central air and heating system – even with the exact same equipment model, installed in the same house.

“I know where to buy a cheap air conditioning unit!”

In the 20-years I’ve owned Magic Touch Mechanical, and for the 10-years prior to that working for other air conditioning companies, I’ve had many people tell me – “I can get it done cheaper from Jen’s AC Emporium”. My response is usually something like – “You can probably get it done cheaper from a lot of places…and maybe for less money too!”

In simpler terms, if Jen’s AC Emporium cuts a few corners in order to offer the lowest price, you get less value. Maybe it costs you $25 more per month to run your AC because of a cut corner, doesn’t cool little Cindy’s bedroom down quite enough in the summer because of another, has more breakdowns because all the cut corners start adding up, or lasts 5-years less than the one that was installed perfectly, because all the cut corners took their toll on the equipment. How much did the lower sticker price cost you now? In this case, dollar-wise, probably thousands – allow me to explain.

While this may seem pretty cut and dry, I can tell you that after having spent years at the kitchen table with Mr. and/or Mrs. Homeowner selling HVAC systems it’s not obvious to everyone. In fact, when I was in a sales role, my “closing rate” was about 60% (I sold 6 out of every 10 jobs I quoted), which is considered pretty high in my industry. When I followed up as to why I didn’t win a job, the answer was almost always “so and so’s price was lower”. Then the follow-up which still to this day makes my head spin… “for the same thing”.

If I can give you just one take-away in this whole article it’s this:

I can assure you, without a shadow of doubt…it is NOT the same thing!

“This cheap AC unit is costing me a fortune!”

The brand, model, and even some of the ancillary items can be exactly the same, but I assure you, if a company is selling you a new AC unit and heater installation for significantly less than the next company…there’s a reason! It may not be apparent to you now, and frankly it may never be, but let’s consider just two of the factors from the scenario above and play them out.

You bought a new AC system from company A for $6,000. Company B quoted you $6,800 for the same model and efficiency rating. During the installation, Company A didn’t get the refrigerant charge exactly right, overlooked a leaky air duct, and installed a plenum transition that partially blocked proper airflow by 10%. Common mistakes, that may likely go unnoticed by you, the occupants of the home.

As a result, these mistakes reduce efficiency enough that they cost you $25 more per month in reduced efficiency (your bill is still $50 lower a month than your old system so you never even knew it could have been – should have been $75 lower).

$6,800 – $6000 = $800 more has you chosen Contractor B

$800 divided by $25 (per month) = 32 months. In two years, and eight months, the lower priced unit starts costing you $25 month or $300 per year.

The 10-year operational costs alone on the $6,000-unit cost you $3,000. That’s a total additional cost of $2,200 on operational costs alone in the first ten years than had you paid Contractor B to install the job with no corners cut. The $6000 unit now actually cost $9000 in the first ten years.

But, there’s another thing we need to consider. Remember that partially blocked airflow? Over the course of ten years, that slowly caused the metal plates on the sides of the evap. coils to rust and caused a coil leak. It’s beyond repair and needs to be replaced. On average this repair is about $2,500 – $2,800 today (I’m assuming $3,500+ 10-years from now). That coil would have most likely lasted at least another 5-years had it been installed properly ten years ago.

Now the 10-year costs of that $6,000 unit are up to $12,500. The 10-year cost of the $6,800 unit from Company B is still $6,800 because your utility bills were $25 less, and that coil is still in good condition.

$12,500 – $6,800 = $5,700

The system with the $6,000 price tag cost $5,700 more than the system with the $6,800 price tag in the first 10-years – and now it may make more sense to replace it than put $3,500 into a unit that’s been “nothing but problems”.

This article really just scratches the surface of the additional cost of a cheap air conditioning and heating system installation. I’m saving you the pain of tallying the cost of repairs, service calls, sweaty days with no air conditioning, and chilly mornings when the heater isn’t working “again” because I’m sure your gears are turning now. Which leads me to my last order of business…

Armed with this knowledge I’m going to point you to an article that has real dollar amounts for the price you can expect to pay for a new AC unit install in 2018 – I told you I was going to make it worth your while, and I know for sure you will like that article because it is our most read article ever! Here it is: How Much Does a New AC Unit Cost

Magic Touch Mechanical, Mesa, AZ has been providing 5-STAR RATED new AC unit installations in the Greater Phoenix area for over 20-years since founded in 1997. We are proud to say we provide the highest value at the lowest cost we possibly can and would love the opportunity to provide a no-cost, no obligation proposal for you too. Schedule your free estimate now!

Sorry, out-of-stater’s Magic Touch Mechanical only provides service to central Arizona homeowners and businesses.