Does Heating Or AC Cost More? What You Need To Know

Written by: Aaron Patterson
September 30, 2023
Does Heating Or AC Cost More? What You Need To Know

Heating and air conditioning systems, while essential, come with their own set of costs and considerations. Whether you're a homeowner looking to optimize your energy bills or a business owner aiming for operational efficiency, understanding the nuances of heating and AC costs is crucial. 

This guide will explore the factors that influence these costs. It will also discuss energy efficiency and provide actionable insights to help you make informed HVAC decisions.

Overview Of Heating And AC Costs

Heating and cooling systems are essential components of modern homes and businesses, ensuring comfort throughout the year. However, the costs associated with these systems can vary significantly based on various factors.

The ideal HVAC system can transform your home into a warm winter haven or a breezy summer hideaway with the press of a button. The price of a new HVAC system runs anywhere from $5,000 to $34,000. This wide price range accounts for the many different factors that can affect cost, including the unit’s size, parts, and features. On average, HVAC installations cost around $8,000, which includes both parts and labor.

What Is An HVAC System?

As the acronym implies, an HVAC system covers all of the heating, ventilation, and air conditioning components in your home. You can heat your home with a furnace or boiler and cool it with an air conditioner. Alternatively, depending on the local climate, you can use a heat pump for both heating and cooling. These technologies can even be combined for greater efficiency.

HVAC System Costs By Type

There are various types of HVAC systems. For instance:

  • Furnace And AC Split System: This involves installing a furnace and a separate AC split system. Furnaces generate heat either by combusting fuel sources, such as natural gas or oil, or by using electricity. Split AC systems have two primary components: an outdoor unit and an indoor unit. The outdoor unit comprises a condenser and compressor, while the indoor unit typically holds the air handler and evaporator coils. Ductwork usually adds between $10 and $20 per linear foot for materials and labor.

  • Boiler: Unlike a furnace that uses forced hot air, a boiler sends heated water or steam through radiators, baseboards, or pipes. The size and price of your boiler will depend on how many BTUs (British Thermal Units) you need to heat your home. Boilers can be powered by electricity, gas, oil, or propane.

  • Mini-Split System: Older homes and those without room for ductwork can benefit from a customizable mini-split system. This setup allows homeowners to cool off individual zones.

  • Heat Pump: Quickly growing in popularity for its efficiency, a heat pump transfers warm and cool air in and out of your home to balance your indoor temperature. The Department of Energy notes that an average home will use 50% less energy each year on electricity by using a heat pump.

HVAC Installation Cost By Size

When estimating the cost of a new HVAC system, the size of your home can help determine the proper size, and thus the cost, of your system. As a general rule, you'll need an HVAC system between 20 and 60 BTUs per square foot. For a 2,000 square foot home, you might need a system with around 80,000 BTUs, which could cost between $6,000 to $12,000, including installation.

HVAC Installation Cost Of Parts

The versatility of an HVAC system means that you can tailor a unique system for your space. Some common costs of AC installation, including labor, are:

  • Window AC: $300

  • Wall-mounted AC: $600

  • Mini-split AC: $3,000

  • Central AC: $6,000

For heating:

  • Electric furnace: $4,500

  • Natural gas furnace: $6,900

  • Oil furnace: $8,400

  • Standard boiler: $5,000

  • High-efficiency boiler: $8,000

  • Combination boiler: $9,000

Heat pumps:

  • Standard heat pump: $6,000

  • Dual-fuel heat pump: $8,500

  • Mini-split heat pump: $4,800

  • Geothermal heat pump: $24,000

Ductwork typically costs between $10 and $20 per linear foot, and you'll likely need between 50 and 200 feet. Smart thermostats can cost between $125 and $250. Humidifiers and dehumidifiers can also add to the cost, with humidifiers ranging from $400 to $1,200 and whole-house dehumidifiers ranging from $1,300 to $3,500.

Factors That Impact Heating And AC Costs

While it's clear that heating and AC systems are vital for our comfort, what might not be so apparent are the various elements that can affect their costs. From the region you live in to the type of system you choose, numerous factors play a role in determining your final bill.


The climate of a region plays a significant role in determining the costs of heating and AC. In areas with extreme temperatures, either hot or cold, the demand for heating or cooling is higher. This increased demand can lead to higher energy consumption and, consequently, higher costs.

Size Of Home

The size of a home or commercial property directly impacts the cost of heating and AC. Larger spaces require more energy to heat or cool effectively. Therefore, homes or businesses with more square footage will typically have higher heating and AC costs.

Type Of Furnace Or Air Conditioner System

  • Type Of AC System: Air conditioning systems come in various shapes, sizes, and types, each with its own cost implications. The common types include ducted split systems, ductless air conditioning units, heat pumps, and packaged central air conditioner systems. The choice of system can significantly affect the installation cost, both in terms of the system's price and the professional installation charges.

  • Equipment Size & Cooling Capacity: The size of an HVAC system doesn't just refer to its physical dimensions. It primarily relates to its cooling capacity. An undersized unit may run constantly, leading to ineffective cooling and higher utility bills. Conversely, an oversized unit might cool too quickly, causing irregular functioning and potential future breakdowns.

  • SEER Ratings: The Seasonal Energy Efficiency Ratio (SEER) is a crucial factor in distinguishing HVAC systems. It rates the efficiency of air conditioning systems based on their cooling output relative to their electrical energy input. A higher SEER rating indicates a more energy-efficient unit. While units with higher SEER ratings might be more expensive upfront, they can be less costly to operate in the long run.

  • Additional Installations: Costs can also be influenced by add-ons to the system or concurrent heating system upgrades. Some homeowners might opt for additional features like ultraviolet air purifiers, humidification systems, or dehumidification systems. While these can enhance indoor air quality, they also add to the installation cost.

  • Ductwork, Vents & Returns: The presence and condition of existing ductwork can influence the cost of a new HVAC system. If a home requires new ductwork or duct replacement, the installation cost will likely increase. The number of vents and return vents also plays a role in the overall cost.

  • Zones & Controls: Modern HVAC systems offer zoning capabilities, allowing different rooms to be cooled or heated to varying degrees. While this provides enhanced comfort, it can also increase the installation cost, especially if multiple zones and advanced controls are required.

Seasonal Energy Efficiency Ratio (Seer) Rating

The Seasonal Energy Efficiency Ratio (SEER) is a metric used to measure the efficiency of air conditioners. It represents the cooling output of an air conditioner over a typical cooling season divided by the energy it consumes in Watt-Hours. In simpler terms, the SEER rating indicates how much cooling a system provides for each unit of energy it consumes.

In the United States, the efficiency of air conditioners is often rated by the SEER, which is defined by the Air Conditioning, Heating, and Refrigeration Institute. A similar standard in Europe is the European seasonal energy efficiency ratio (ESEER). The higher the SEER rating of a unit, the more energy efficient it is. For instance, in the U.S., the SEER is the ratio of cooling in British thermal units (BTUs) to the energy consumed in watt-hours.

To provide a practical example, consider a 5000 BTU/h air-conditioning unit with a SEER of 10 BTU/(W·h), operating for a total of 1000 hours during an annual cooling season. The annual total cooling output would be 5,000,000 BTU/year. With a SEER of 10 BTU/(W·h), the annual electrical energy usage would be about 500,000 W·h/year.

The SEER rating is not constant and can vary based on various factors, including the type of equipment and the climatic conditions. For instance, the SEER rating is calculated over a range of outside temperatures from 65°F (18°C) to 104°F (40°C). This rating is intended to provide an indication of how the EER (Energy Efficiency Ratio) is affected by a range of outside temperatures over a cooling season.

It's worth noting that as of 2023, cooling products will be subject to regional minimum efficiencies, according to Seasonal Energy Efficiency Ratio 2 (SEER2). This new measure is designed to better reflect current field conditions. The U.S. government has set SEER standards over the years, with the most recent being a requirement for a minimum SEER rating of 13 for residential systems manufactured after 2005. However, ENERGY STAR qualified Central Air Conditioners must have a SEER of at least 14.5.

Installation Cost

The cost of installing heating and AC systems can vary widely based on several factors. These include the type of system being installed, the complexity of the installation, whether old equipment needs to be removed, and the region or city where you live. Labor costs can also fluctuate based on the experience and reputation of the installer. It's essential to get multiple quotes from different service providers to ensure you're getting a fair price. Additionally, some energy-efficient systems may have a higher upfront cost but can lead to savings in the long run due to reduced energy bills.

Electric Heat Sources Vs. Gas Furnaces

When it comes to heating your home, the two primary options are electric heat sources and gas furnaces. Each has its own set of advantages and disadvantages:

  • Electric Heat Sources: These are typically easier and cheaper to install than gas furnaces. They don't require a flue, so there's no need for a chimney. Electric heaters are also generally safer as there's no risk of gas leaks. However, they can be more expensive to run, especially in areas where electricity prices are high.

  • Gas Furnaces: Gas furnaces often have a lower operational cost compared to electric heaters, especially in regions where natural gas is cheap. They can heat a home quickly and are considered more efficient than electric heating. However, they require regular maintenance to ensure safety, and there's always a risk of gas leaks if not properly maintained.

Indoor Air Quality Issues

Both heating and AC systems can impact indoor air quality. A well-maintained system can improve air quality by filtering out pollutants and maintaining optimal humidity levels. However, a neglected system can have the opposite effect. Dirty filters can allow pollutants to circulate throughout the home. 

Additionally, systems that aren't functioning correctly can lead to moisture problems, promoting mold growth. It's essential to regularly maintain and clean your heating and AC systems to ensure they contribute positively to your home's indoor air quality.

Ways To Reduce Heating And AC Costs

Reducing heating and AC costs is not only beneficial for your wallet but also for the environment. By implementing some changes and upgrades, you can significantly lower your energy consumption and bills. Here are some effective ways to achieve this:

Upgrade Your Furnace Or Air Conditioner System To Save Money On Energy Bills

Upgrading your heating or cooling system can lead to substantial savings in the long run. Modern systems are designed to be more energy-efficient, meaning they can provide the same level of comfort while consuming less energy. When considering an upgrade, look for systems with higher SEER ratings or those that have been certified as energy-efficient.

Utilize Energy Efficient Appliances Or Systems

Energy-efficient appliances and systems are designed to operate using the least amount of energy possible without compromising on performance. By investing in such appliances, you can significantly reduce your energy consumption. Look for the ENERGY STAR label when purchasing new appliances or systems, as this indicates that the product meets strict energy efficiency guidelines set by the U.S. Environmental Protection Agency.

Install A Programmable Thermostat

A programmable thermostat allows you to set specific temperatures for different times of the day. For instance, you can set the thermostat to a higher temperature when you're not home and lower it just before you return. This ensures that you're not wasting energy heating or cooling your home when it's not necessary. On average, a programmable thermostat can save you up to 10% on heating and cooling costs annually.

Clean Or Replace Your Air Filters Regularly

Regular maintenance of your heating and cooling system is crucial for its efficiency. One of the simplest yet most effective maintenance tasks is cleaning or replacing the air filters. Clogged or dirty filters force the system to work harder, consuming more energy. Cleaning or replacing the filters every other month can improve airflow and system efficiency, leading to lower energy bills.

Use Ceiling Fans for Air Circulation

Ceiling fans can be a great addition to your home, especially during warmer months. They help circulate air, making rooms feel cooler even when the AC is set to a higher temperature. This means you can set your thermostat a few degrees higher, reducing the AC's workload and energy consumption.

Schedule HVAC Check-up Annually

Regular check-ups by HVAC professionals can ensure that your system is running efficiently. Technicians can identify and fix any issues, clean the system, and ensure it's operating at its best. This not only improves efficiency but also extends the lifespan of your system.

Seal Crevices And Cracks

Ensuring that your home is well-insulated can significantly reduce heating and cooling costs. Seal any cracks or crevices around windows and doors to prevent drafts. This keeps warm air in during the winter and cool air in during the summer, reducing the need for your system to work overtime.

Close The Drapes

Sunlight entering your home can increase indoor temperatures, especially during the summer. By closing drapes or blinds, especially on windows facing east or west, you can block out direct sunlight and reduce the need for cooling.

Understanding Heating Or AC Costs

While heating and AC systems are crucial for maintaining comfort in homes and businesses, their costs can vary widely based on several factors. It's essential to understand these factors and consult with HVAC professionals to make informed decisions about the best systems for your needs and budget. By understanding these factors and making informed decisions, homeowners can ensure they get the most value for their money. 

Find out how long do air conditioners last by checking out our detailed guide. Visit HVAC Of America and browse through the available resources to learn more.

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