It can be difficult deciding whether you should repair your HVAC system or go for a total system replacement.
Dave’s gets this question asked all the time.
Repairs can often end up being quite costly…and no one wants to spend more than they have to!
Moreover, all HVAC systems have a lifespan due to normal wear and tear…so they will need to be eventually replaced regardless of the repair job.
Then you might be wondering…whether it even makes sense to invest in the repair if your system is nearing the end of its life span.
It can be a difficult decision at first glance…no one wants to spend extra money when they do not necessarily have to…but no one wants to end up making a mistake that costs that more money down the line!
Factors to Consider When Repairing or Replacing
There can be several factors to take into consideration when deciding if you should replace or repair your HVAC system.
System Age – How old is your system? All systems have a shelf life…and just because you repair a certain part does not necessarily mean it will prevent other components from nearing the end of their life span.
Energy.Gov suggests replacing your system after at least 10 years of use!
Repair History and Potential Future Repairs – How often has your system needed repairs? Have you ever been forced to call in HVAC professionals to repair yet another problem with your system? If that’s the case, repeated repairs can add up over time – and it makes no sense to continue performing them on an older unit.
Warranty – Is your system still under warranty? Many HVAC systems have a limited warranty. Being out of warranty could mean even costlier repairs!
Potential Cost Savings – Has your energy bill been going up? Systems can slowly start to break down and that can be reflected in higher energy bills. Newer systems are also much more energy efficient.
Inflation and Other Price Factors – HVAC system pricing usually goes up with inflation. Another thing to keep in mind is that manufacturers have been experiencing supply shortages due to the Covid pandemic which has also been contributing to further price increases. Meaning, if you think you’ll need a replacement in the next couple of years…it might be better to act now rather than later!
Introducing the 4k rule: A simple equation to help you decide whether to replace or repair
As you can see, there are a variety of factors to consider when deciding to repair or replace.
A quick and easy way to decide is to use the 4k Rule…a simple equation that helps you make the decision!
This rule takes into consideration the age of the system and the costs of repairing or replacing to help you decide. Its important to note that this rule assumes that you are doing a basic replacement with no additional benefits or offers such as added maintenance or extended warranty.
The formula is simple: if the cost of repairing your unit plus four thousand dollars exceeds the price of a new unit, then it’s time for a replacement.
Replacement Value (RV) = Equipment Age (EA) x Cost of Repair (CR) > 4000
RV = EA x CR
The 4k rule stipulates that if the “replacement value” is close to or exceeds 4k, a replacement system or component should be considered. In addition to these factors, account for system age, operating hours, potential operating cost savings, continued length of resident, repair history, potential future repairs, inflation and warranty on the repair versus a new system.
How to Use the 4K Rule
So lets use an example. To use the 4k rule, we need the age of your current system and also the cost of repairs.
Lets assume the following:
Equipment Age: 10 Years
Cost of Repair: 550 USD
This means the replacement value (RV) is 5,500.
As this exceeds 4k, it might make way more sense to replace your HVAC system than repair it.
If your “equipment age” is 5 years, and the repair cost is still the same at 550 USD…then the replacement value would be just 2,750 USD.
That being said, it might be better to consider repairing your current HVAC system than replacing it!