# Furnace Payback Period Furnace Payback Period

Choosing a furnace is an extremely important -- not to mention expensive -- decision. Given the high cost of fuel wouldn't homeowners be foolish not to buy the most efficient furnace on the market? If you believe the sales hype, a new furnace will heat your home, conserve energy, and save you money. If you live in an area that has a long cold season, an energy efficient furnace can dramatically decrease your heating costs. But before you put your money on the line, consider a relatively simple calculation that will provide you some perspective on the potential savings: the furnace payback period.

### What is the furnace payback period?

The most common method of measuring a furnace's efficiency is the Annual Fuel Utilization Efficiency or AFUE. Let's imagine that you were considering two furnaces: an inexpensive mid-efficiency (80% AFUE) model and a more expensive high-efficiency (90% AFUE) model. Because the higher-efficiency model uses less fuel each month, it will cost less to operate. However, the initial cost of the furnace and installation is higher. The payback period is the amount of time it takes to pay off that difference in cost based on the energy savings of the more efficient furnace. For instance, suppose that the low-efficiency model would cost \$4,500 installed, and the high efficiency furnace would cost \$5,500. If you expect the more expensive furnace to save \$25 per month (\$300 / year) on your fuel bill, the payback period would be a little over three years -- \$1,000 / \$300.

### How to calculate the payback period

Start with the difference in cost of the two furnaces. In the example above, the difference was \$1,000. (If you haven't received quotes yet, FurnaceCompare.com publishes a furnace price report.)