What Determines the Cost of a Furnace?

Ever look at the price tags of a new furnace? They can be so expensive! Several factors contribute to the final cost of a furnace, including the size of the space you’re heating, the efficiency, brand, installation time, and more.

Whether it’s your first time buying a furnace or you’re replacing an old one, these are the factors that impact the cost of a furnace.

Fuel Source

One of the biggest contributors to the cost of a furnace is its fuel source. Natural gas furnaces are the most common and some of the least expensive to operate monthly. Electric furnaces are also common and can be inexpensive.

If you are looking for an affordable furnace replacement, it is often cheaper to stay with the same fuel source rather than switching to a new one, since the latter comes with higher installation costs.

That said, if you’re switching to a more energy-efficient type of furnace, it may be worth the upfront installation cost. For example, switching from oil to natural gas is better for your utility bills and the environment.

Oil is increasingly less common but preferred for many people. Oil is purchased yearly or bi-yearly, though it’s typically found in much older homes or climates with extreme winters.

Furnace Size

As expected, bigger furnaces cost more money, especially up front. However, this can pay off in lower utility bills if the larger size is more appropriate for your home.

But bigger isn’t always better. If you buy a furnace that’s too large for your house, it will cycle on and off frequently, leading to higher utility bills and poor efficiency. Similarly, a furnace that’s too small will work much harder to heat the space, taking a toll on the system and raising your energy bills.

If you are worried about getting a furnace that is too big or small, check the British Thermal Units (BTU) of the new furnace and compare it to the old one. A higher BTU means the furnace is more powerful.

On average, you will need to multiply the square footage of the space needing to be heated by 40 to get the BTU required to heat it. Other factors influence the size of the furnace you need, such as the quality of the insulation, your climate, and more. If you’re not sure, hire a professional HVAC technician to help you determine the best size for your home.

Energy Efficiency

Furnace energy efficiency is measured in Annual Fuel Utilization Efficiency (AFUE). The higher AFUE a furnace has, the more efficient it is and the less fuel you’ll waste.

The downside is that higher AFUE furnaces have a higher upfront cost. According to the United States’ Department of Energy, the lowest efficiency rating in available furnaces is around 80%, though most on the market range from 83 – 95%.

Image: A Person Going Over Finances To See If They Can Afford The Cost Of A Furnace.
Some gas furnaces are even more efficient, at around 98.5%. Though once the AFUE goes above 95%, maintenance and repair costs rise dramatically.

Installation Cost

On top of the high cost of the furnace itself, the furnace installation can add to the costs. Furnace installation is a specialized skill that requires a certification.

Furnaces, especially newer, higher AFUE models, are complex and intricate in their designs. It is highly recommended that you do not try to install the furnace yourself, as that can lead to a variety of problems.

Image: The Inside Of A Furnace.
Gas furnaces in particular are difficult to install yourself. If everything isn’t installed properly, there is a high chance of a potentially deadly gas leak. Oil and electric furnaces carry a high chance of a fire if installed incorrectly.

It’s best to invest in a professional HVAC technician for your furnace installation to ensure it is installed safely and correctly.


A big factor in the price of your furnace is the reputation of the brand. More reputable, well-known brands can charge a premium price for their products, but this premium ensures the furnace’s quantity.

In addition, premium brand furnaces have parts that are easier to find if you need a repair or replacement. This can significantly lower your maintenance costs over the life of the furnace.

Other Factors to Consider:


Most reputable companies have a manufacturer warranty of up to ten years, though some of them are only valid so long as you can prove that the system is regularly maintained. However, make sure that you get the warranty in writing, especially if it is not that reputable of a company.

Image: A Woman Goes Over Warranty Options On A Tablet.


Maintenance is key for keeping your furnace running its best. Regular maintenance keeps everything operating efficiently and identifies small problems before they can snowball into serious issues or a breakdown. A regular air filter change and cleaning routine could extend the life of your furnace and ensure that it lasts for the next 20-30 years.

Image: An Hvac Technician Is Changing Out A Furnace'S Air Filter.
Regular maintenance may seem like an unnecessary expense, but it’s a small price to pay to avoid the high price of major repairs or breakdowns. Depending on the problem, repairing a furnace can cost thousands of dollars.

A general guideline is that if the cost to repair your furnace is a third of that to replace it, the system has reached the end of its lifespan and should be replaced.

Tax Credits

If you recently purchased or are looking to purchase a high AFUE furnace, you may be entitled to a tax break. The push toward more renewable, efficient energy is driving politicians to give more tax breaks to those who go for green solutions, rather than fossil fuels. Check to see if you qualify for one of those breaks.


If you live in an older house, your insulation is likely to have issues. Poor insulation can reduce the efficiency of high AFUE furnaces and may lead to much higher monthly heating costs. Ensure your insulation is in good condition prior to installing a new furnace.

Image: Insulation Being Installed In An Attic.

If you’re looking to install or replace your furnace, contact the pros at Service Champions today!