HVAC Pro Blog
Selling with Rebates : The Simple Payback

The easiest way to show a homeowner how their investment in high-efficient equipment will help their wallet is to use the "Simple Payback" Calculation. This 'tried and true' sales tactic will quickly explain how many years before the additional investment to upgrade is paid off. Of course, there are many features that a high-efficient system provides, like superior levels of comfort, wether it be climate control or just condenser noise just outside their children's bedroom. These factors can be hard to quantify for most homeowners, and for replacement systems you will likely find they are not weighted as high as the almighty dollar. So, although costs can vary drastically from Manufacturer to Manufacturer, or even Contractor to Contractor, try inserting your prices, rebates, etc. into the equation next time you recommend an upgrade.









As you can see, there are a few pieces of information needed to calculate the Simple Payback (in Years) for an upgrade in efficiency. First, you will need to know the total cost (equipment/materials + Labor) of the installation of the base model equipment.








In this example, we will say the replacement 13 SEER system will cost $5k. Then, you will need to calculate the total cost of the 16 SEER/13 EER installation. For example purposes, we will say the investment will cost the homeowner an additional $1,300, total $6,300. The operating costs of the high-efficient system will save the homeowner a conservative estimate of $50 per year, based on the few run hours in the Northeast. If you were to not include rebates, or the hard to quantify comfort, the system's simple payback would be an astonishing 26 years, well beyond the life expectancy of the system - maybe two systems!


If you were to introduce available local utility rebates, like the MassSave Rebate, this system could qualify for $50/ton paid to the homeowner!  If this was a 3-ton system, that would be $150. By reducing the initial investment from $1,300 to $1150, then taking into account the annual energy savings, this system would now have a simple payback of only 23 years.  Not a significant difference, but could help.


The real savings start to pile up when instead of replacing the A/C system with the same, specifying a Heat Pump.  These rebates range from $250 per ton mixed/ducted heat pumps, or even as much as $1250/ton when integrating into existing propane or oil systems (MA Integrated Control Rebates).  A recent payback calculation on a job using a Mitsubishi mixed ducted/ductless 3-ton system, instead of replacing with the 13 SEER A/C, brought the payback down to 14 years!  This took into account a $20k system installation cost (vs. the $5k, 26 year payback, 13 SEER), $3750 in rebates, and $350 in fuel oil (very conservative with low prices right now) & cooling electric savings a year.


Did I mention the system that qualifies for the rebate will likely qualify for a 0% MassSave Loan, for a period of up to 7 years! Yes, you read that correctly! Plus Mr. Or Mrs. Homeowner, you will be more comfortable with a much quieter, more reliable system that will be installed with the highest of quality! Where do I sign?




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