It’s an unfortunate fact that the heating, ventilation and air conditioning (or HVAC) system in your home is one of the most expensive components in your house. On average, installing a complete home HVAC system can set you back anywhere from $4,000-$12,000. And because this system sees almost constant use year-round (proper cooling and heating tend to be essential when it comes to keeping a comfortable home), it is also one of the most likely components to need repair or replacement. There are many factors that influence the cost of not only the HVAC system, but also the cost of hiring the contractor to install it.

In this guide, we will walk you through the process of getting competitive estimates and choosing the right contractor, and give you a breakdown of the average HVAC replacement cost. This will help you ensure that when the temperature’s not where it’s supposed to be and it comes time to invest in a new furnace and AC, you’re getting the right system for the right price.

Getting a Competitive Estimate For HVAC Replacement Cost

Have you ever noticed that when HVAC repair companies advertise HVAC installations they never really come right out and give you a price? The fact is that there are so many factors that affect the cost of replacing an HVAC system, no contractor can give a set price for every job. Besides, their main goal is to get a salesperson inside your home to sell you a package deal of equipment, accessories and installation.

These kinds of high-pressure sales strategies combined with companies that charge a fee for estimates can make it almost impossible to compare different systems and find a competitive price for your HVAC installation or repair.

5 Factors For HVAC Cost

A typical HVAC contractor will consider 5 factors when determining a cost for your system:

1. Equipment cost

The wholesale cost of the equipment needed for your home’s specific needs.

2. Installation supplies

Includes wiring, ductwork, refrigerant and thermostats.

3. Labor

Estimated hours of labor to do the job. This varies from one company to another.

4. Travel

Travel time and mileage to and from the job.

5. Profit

Obviously the contractor wants to make a profit from every job and will markup the estimate according to their specific policies (typically this can be anywhere from 35-60%).

Other Factors in HVAC Replacement Cost

Keep in mind that the brand of system you choose as well as the size of the necessary equipment, the complexity of the job, any extra requirements like adding new duct work, and even where you live will have an impact on the final estimate. You should always get multiple estimates before choosing your contractor and make sure to check out the company’s customer reviews to ensure you get the best value for your money.

Remember to Do Your Research

Another way you can make sure that you’re getting competitive estimates is to do a little research beforehand to get an idea of what type of equipment you’re going to need and the average cost of the separate components of your HVAC system. Armed with reliable knowledge about heating and air conditioning units pricing, you can avoid falling victim to a dishonest contractor or pushy salesperson, while still making sure you get a quality HVAC system.

In the next section, we will look at the different parts of an HVAC system and what you can expect to pay on average for each part. Being able to recognize a fair price can save you thousands when it becomes time to choose a contractor. Remember, these are only general guidelines. Prices can vary widely depending on the brand of equipment you choose and your location. For example, a high-end furnace will cost more in urban California than it does in rural Iowa – so take local prices into account.

Furnace Installation

There are several options to choose from when it comes to your home’s furnace, including gas, oil, and electric furnaces. Heat pumps are also gaining popularity in some areas because they are more energy efficient than other types of furnaces but they may not be suitable to colder climates. Oil furnaces are the most common type of furnaces used today because they are highly efficient and work well in cold climates, while electric furnaces are mostly used in areas where the need for heating is not very frequent. Oil furnaces are not very common and are used mainly in areas where natural gas or propane is not readily available.

Furnace Installation Cost

The main cost factor affecting the price of a furnace installation is size. It is essential that you have a furnace large enough to heat your entire home, but not so large that it wastes energy. You will also want to consider if the type of furnace you choose will require any additional ductwork or other supplies that may affect the cost.

  • Average price of an installed electric furnace: $2,000-$2,700
  • Average price of an installed oil furnace: $2,000-$5,000
  • Average price of an installed gas furnace: $3,500-$5,400
  • Average price of an installed heat pump: $2,300-$6,300

As you can see, the cost of your furnace installation can vary according to your specific needs. These are only average guidelines for you to remember when choosing your HVAC system to avoid being overcharged for either substandard equipment or equipment that is not sufficient for your needs.

Air Conditioner Installation Cost

Central air conditioning is by far the most cost-effective and energy efficient way to keep your home cool. And while replacing the unit is usually relatively simple, there are several factors that will impact the total HVAC replacement cost.

1. Size

Size does matter! Just like your home’s furnace, the size of the central air unit plays a major role in determining the cost. A little bit of research prior to purchasing will ensure that you get an air conditioner that is an appropriate size.


SEER (Seasonal Energy Efficiency Ratio) is a calculation of a central air conditioner’s energy efficiency. The higher the SEER value, the less it costs to run it. Unless you live in an extremely hot climate, a unit with a SEER value of 16 will give you the most bang for your buck. Units with higher values are more expensive and cost more to maintain and are not necessary in areas where the central air is used for only a few months out of the year.

3. Compressor Performance

Compressor performance is the third major cost factor you need to consider. Closely related to the size of the unit, making sure that your air conditioner’s compressor is neither too big or too small for you home will keep the unit operating at its optimal efficiency, both in terms of energy and cost.

4. Ductwork Installation

One final cost factor in any air conditioner installation is whether or not new ductwork will be installed. The condition of the ductwork will determine how efficiently your HVAC system works. Over the years, the ductwork can lose its insulation or split apart at the joints, which allows cold air to escape before it can be pushed through the vents. You could end up with a nicely air conditioned attic while the rest of the house remains an oven.

Because installing ductwork properly is such a labor intensive job, you could be looking at an extra $2000-$3000 expense on top of what you’re already paying for the unit itself. Make sure that you read your contract carefully and if ductwork needs to be installed, that it is included in the estimate to avoid a nasty surprise later when your HVAC system doesn’t work as it should because you failed to have the ductwork replaced too. Dishonest contractors have been known to skimp on the ductwork because it is seldom seen by the homeowners or inspectors and it is easy to add the cost and avoid actually doing the work.

In the previous two sections, we have given you some basic guidelines to help you judge whether or not you’re getting a fair price for the separate components of your HVAC system. In the next section, we’ll give you a rough estimate of what you can expect to pay to replace your entire HVAC system.

Total HVAC Replacement Cost

While the exact cost of replacing your HVAC system will depend on several factors, including where you live, the brands of equipment you choose, and additional repairs or additions that may be needed, the numbers given here should be close to any estimates you’ve received. If you have an estimate that is significantly higher than the average cost of furnace and air conditioner replacement estimates given here, you might be dealing with a dishonest contractor or an inflated estimate.

Let’s say you are installing a new HVAC system in a 1,000 square foot home that consists of a gas furnace, central air conditioner and the ductwork labor. You could reasonably expect to pay anywhere from $6,000 to $12,000 for a similar installation.

If you are adding additional features like air purifiers, humidifiers, dehumidifiers or air recovery ventilators then the cost is going to be at the high end of this estimate. You can also expect to pay more if you are upgrading wiring or ductwork or if any of the components are a totally new installation.

Replacing your entire HVAC system does not have to be an expensive, frustrating process. Educating yourself about the factors that influence the cost of the equipment and labor and learning how to protect yourself from dishonest contractors will ensure that you get an efficient, cost-effective HVAC system that will keep your home comfortable for years to come.

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