Guide to Air Conditioning Replacement Cost

May 23, 2024
A pile of towels on top of an outdoor HVAC unit that is being replaced

If your HVAC technician has informed you that an air conditioning replacement is necessary, it can be overwhelming. It’s not a small purchase with an average cost of $5,900. It can also be more expensive if your home doesn’t have the necessary ductwork or you purchase a more expensive system.

Before buying an AC unit replacement, it’s important to have all the facts and figures and have reasonable price expectations going into your search. Whether you’re looking for a similar system to what you have or want to upgrade, there are important factors to consider. 

In this guide, we’ll help you understand everything there is to know about AC replacement so you can make the best purchase for your needs.

Table of Contents

Average Cost of a New Air Conditioning Unit

As we said above, the average cost for an air conditioner replacement is $5,900. Replacement is the keyword here. 

If you are installing a new AC unit for the first time, your costs will likely increase by $1,300 to $6,000, depending on the job’s complexity and home size. Some projects can cost as much as $20,000.

Replacement Cost by Unit Type

When comparing AC replacement costs, it’s important to understand the different types of units, as they play an integral role in the overall cost.

Central AC

Average cost: $6,000 – $11,500

A central AC unit uses forced air to cool your home’s air. It forces the air through the ductwork and contains a condenser, compressor, and evaporator.

Central AC units cool your entire house at once and may help provide cleaner air. The air that’s pulled from your home to cool goes through an air filter to remove harmful particles. They are also usually quiet because the compressor is located outdoors.

Ductless Split AC

Average cost: $3,200 – $13,000

As the name suggests, ductless AC doesn’t require ductwork. They have an outdoor unit and individual units in each room you want to cool. They work well in smaller homes or new homes that don’t have ductwork.

Ductless split air conditioners use the same cooling process as central AC, except you can zone the cooling by only putting the units in specific rooms.

Air-Source Heat Pump

Average cost: $3,500 – $7,500

A heat pump is a common alternative to a traditional AC/furnace setup. It removes hot air from homes during the warmer months and pulls warm air from the ground in cooler months.

There are many types of heat pumps to consider, including an air-source heat pump, which is the most affordable option. Many homeowners choose this option because it’s safer. Heat pumps don’t use gas, so there is a lower risk of carbon monoxide poisoning or a gas explosion.

Geothermal Heat Pumps

Average cost: $13,000 – $36,000

A geothermal heat pump is a much more expensive option but can be a good fit for homes in extremely cold climates. Geothermal heat pumps use the air from underneath the ground to heat or cool the house.

Geothermal heat pumps are supposed to save you money on utilities over time, making up for the higher upfront cost.

Replacement Cost Factors

Consider these cost factors when determining your budget for an air conditioner replacement.

Size of Unit Needed

The larger your house, the larger the AC unit you may need. Larger units usually cost more, depending on the brand. It’s best to shop around with different brands to compare your options for the AC size needed.

The good news is that purchasing an AC unit that cools your entire house is more energy efficient. If you purchase a unit that’s too small, it will need to work harder to keep your home cool, leading to higher AC repair costs and a shorter lifespan on the unit.

On average, you need a 1.5-ton unit for a 1,000-square-foot home, a 2-ton for 1,500 square feet, and another ton for every additional 500 square feet.

Type of Unit Needed

The type of unit plays an important role in the cost of AC replacement. If you’re replacing what’s already there, it may not be as expensive as if you needed to make changes to handle the new system. For example, if you went from central air to a geothermal pump, you’d need to pay for excavation, which greatly increases the costs.

The cost will also increase if you need ductwork installed or repaired. This may happen if your ductwork is old or insufficient or if you need more of it to accommodate the new system.

Energy-Saving Features

Each AC unit has a SEER rating or Seasonal Energy Efficiency Ratio. A higher SEER rating corresponds with a more energy-efficient system, and vice versa. As you can expect, more energy-efficient systems cost more, but you may save more money throughout its operation.

The Department of Energy sets minimum SEER requirements for AC units. Currently,  it’s 13, but the average homeowner purchases units with a SEER of 13 to 21.

Labor Costs

Labor costs are a significant part of the AC replacement cost. Expect to pay $75 to $250 an hour for air conditioner replacement. The cost depends on many factors, including the complexity of the project and your local area. For example, if installers must remove and dispose of an existing unit or add more ductwork, the job is more complex and will cost more.

Additional Upgrades

If you replace your AC with a higher-end unit or switch from central AC to a geothermal unit, you’ll pay more for the upgrades. The extent of the work, labor costs, and circumstances determine how much extra you’ll pay for installation.

Signs Your Air Conditioning Unit Needs Replacement

So, how do you know when to repair or replace your AC? Here are some signs that your AC unit is beyond repair and that replacing it makes more financial sense.

Excessive noise

It’s normal for AC units to make some noise, but excessive noise could be a sign that it’s time for a replacement. If you hear popping, clicking, hissing, or banging noises, at the very least, contact an HVAC professional. Some noises may indicate you need a quick repair, and others may mean it’s time for a replacement, especially if the noise becomes bothersome indoors.

Increase in Home Humidity Level

If your air conditioner cannot battle the home’s humidity levels, your home may never feel comfortable. The AC pulls humidity from the air and cools it. If your AC can’t keep up and repairs don’t fix it, a replacement may be necessary.

Frequent Breakdowns

It’s typical to try AC repairs before air conditioning replacement, but it becomes too much at some point. If you have your AC repairman on speed dial or are calling for repairs much more often than not, it’s best to consider replacing the unit. A reputable AC company will help you compare the ROI on repair costs versus replacing your unit.

Spike in Energy Bills

A sudden increase in your energy bills, despite not using your AC more than usual, is a sign that something is wrong. Your utility bills will spike when your AC must run more than necessary. A repair may temporarily fix the problem, but a replacement may be necessary if the spikes keep happening.

When you choose an AC replacement, you may want to consider one with a higher SEER rating. The higher the SEER, the more efficiently an AC unit can cool your home and the lower your utility bills will be.

Hot Air Blowing

If your air conditioner blows hot air, it could be a sign of several problems. The easiest fix is swapping out the air filter. If it’s been a while since you’ve done this, try installing a new filter to see if it fixes the problem.

If it doesn’t, you may have a larger issue, such as a refrigerant leak or compressor problem. Depending on the extent of the problem, you may save money by replacing the AC unit rather than fixing it.

Burning Smells

Burning smells coming from your air conditioner are never a good sign. Sometimes, something as simple as a clogged air filter or burnt dust must work through the system.

Sometimes, it’s something more serious, like a broken capacitor, an overheated motor, or a belt-drive motor. If your unit has a burning smell, turn your AC off immediately and call for professional HVAC support. A technician can tell you what the problem is and if it’s safe to fix or if you should consider AC replacement.

Repair vs Replacement

When deciding if you should repair or replace your air conditioner, consider these factors:

  • How old is the unit? Air conditioners last an average of 15 to 20 years with proper maintenance. If your AC is nearing that age and needs repairs, you may consider replacement instead. A new unit may be more energy efficient, have a warranty, and have fewer problems.
  • Cost of the repair vs. replacement: AC repair costs are usually less than those of a new unit, but how long will the repair last? Some homeowners use the 5,000 rule, which states that you multiply the AC unit’s age by the repair cost. If the answer is greater than $5,000, then you should consider air conditioner replacement.
  • How well have you maintained the unit? If you’ve had your annual checkups, changed the air filters on time, and had any necessary repairs completed right away, repairing the unit may make sense. However, if you’ve neglected regular maintenance, buying a new unit that doesn’t need extensive repairs may make more sense.
  • What is your AC unit’s SEER rating? If you have an older AC unit, it may have a low SEER rating, which means it’s not energy efficient and may cost much more in repairs than you prefer. A new unit must have at least a 13 SEER rating, which means good energy efficiency and potentially lower bills.
  • How long will you live in the home? Investing in a new AC unit may make sense if you don’t plan to move anytime soon. Not only will it make your home more comfortable, but it may also lower your utility bills. However, if you plan to move soon, you may not see a return on your investment and are better off repairing rather than replacing your unit.
  • Did your warranty expire? AC repair costs can get excessive, so any help you can get is appreciated. A warranty is a great way to get some coverage (it doesn’t cover all problems), but when it expires, you’re on the hook for all repair costs. It may be time for a replacement if you no longer have a warranty and constantly find yourself repairing your unit.

Conclusion

Air conditioning replacement costs can be frightening at first, but when you look at the big picture, they often make sense. Newer units are often more energy-efficient and better able to run without needing repairs. Knowing when you should repair or replace your AC is an important step in making the right decisions for your home, and you shouldn’t make the decision without a reputable HVAC company helping you.

FAQs

Why is replacing AC so expensive?

Like any home appliance, there are many options for AC replacement at all price levels. However, overall labor costs are high for AC installation, and some brands cost more than others, especially if you choose one with a lot of upgrades.

How often does an AC need to be replaced?

The average AC unit lasts 15 to 20 years, but how long yours lasts depends on how well you maintain it. Regular maintenance and immediate repairs can lengthen the life of an AC unit.

How much cheaper are new AC units than 20-year-old units?

The cost to run older AC units may be higher than newer units because older units have a lower SEER rating. For example, a 20-year-old unit with a SEER rating of 10 may cost $1,884 a year, whereas a new unit with a $5,000 upfront cost may only cost $1,334 a year to run. While the upfront cost is higher than any typical repair, you’ll recoup the costs with the $550 per year savings.

What is the best time of year to replace an AC?

The best time of year to replace an AC unit is spring or fall. Most homeowners aren’t using their AC unit during this time, so the demand isn’t as high. You may get better prices on the equipment and pay lower labor costs when demand is lower.

Sources

Additional HVAC Resources