Updated
Quick steps
- Get a written repair quote and a written replacement quote.
- Enter the item's age and how long a new one is expected to last.
- Estimate how many more years the repair would realistically give you.
- Compare the cost per year of each choice and read the verdict.
- Factor in energy savings, safety and reliability before you decide.
When a furnace, air conditioner, water heater or big appliance breaks, the choice is rarely obvious. This repair or replace calculator turns two quotes into a cost per year for each option and checks the common 50% rule of thumb, so you can see whether a fix is good value or money spent on borrowed time.
How to use this calculator
- Repair quote. Ask for a written quote with parts and labor. Diagnostic fees count too.
- Replacement cost. Use an installed price that includes removal of the old unit, permits and any needed changes to ducts, pipes or wiring.
- Current age. Look for a date on the data plate, in the manual or in your home inspection report.
- Expected life of a new one. Ask the contractor or check the maker’s information for the model you would buy. The default of 15 years is a hypothetical example.
- Extra years from the repair. Ask the technician how much life the repair is likely to add. Be honest; for an old unit, this is often short.
How this calculator works
Repair cost per year = Repair quote ÷ Extra years
Replacement cost per year = Replacement cost ÷ Expected life
Repair share = Repair quote ÷ Replacement cost × 100
Life left = Expected life − Current age (not below 0)
Repair if repair per year < 80% of replacement per year AND share < 50%
Replace if repair per year > 120% of replacement per year OR share ≥ 50%
Close otherwise
The 80% and 120% bands keep small differences from flipping the answer. The 50% cut-off is a rough rule of thumb, not a standard.
Worked examples
Example 1 (defaults, hypothetical). Repair $1,200, replacement $8,000, age 12, expected life 15, repair buys 3 extra years.
- Repair per year: $1,200 ÷ 3 = $400
- Replacement per year: $8,000 ÷ 15 = $533.33
- 80% of $533.33 = $426.67, and $400 is below that
- Repair share: $1,200 ÷ $8,000 = 15%, under 50%
- Life left: 15 − 12 = 3 years
- Verdict: repair
Example 2 (big repair on an old unit, hypothetical). Repair $4,500, replacement $8,000, age 14, expected life 15, repair buys 2 extra years.
- Repair per year: $4,500 ÷ 2 = $2,250
- Replacement per year: $8,000 ÷ 15 = $533.33; 120% of that is $640
- Repair share: $4,500 ÷ $8,000 = 56.25%
- Life left: 15 − 14 = 1 year
- Verdict: replace (both tests point the same way)
What your result means
The verdict is a starting point. “Repair” means the fix buys years more cheaply than a new unit would. “Replace” means you would pay more per year to keep the old one going, or the repair is a big share of a new unit’s price. “Close” means money alone won’t decide it; look at safety, comfort, efficiency and how much you can spend right now.
| Test | Repair wins | Close | Replace wins |
|---|---|---|---|
| Cost per year | Repair under 80% of new | 80% to 120% | Repair over 120% of new |
| 50% rule of thumb | Repair under 50% of new | Not used alone | Repair 50% or more of new |
| Other signs | Young unit, rare repairs | Mixed | Old unit, frequent repairs, rising bills |
Rules that change the answer
- Age guidelines. ENERGY STAR suggests considering replacement when a heat pump or air conditioner is more than 10 years old, a furnace or boiler more than 15 years old, or equipment needs frequent repairs while energy bills climb (ENERGY STAR).
- Permits and codes. Replacing a system often needs a local permit and may require code updates that raise the price. Rules vary by city and county.
- Safety. A cracked heat exchanger, gas leak or failing electrical part can make “repair” unsafe or impossible. Follow a licensed technician’s safety advice first.
- Coverage. A home warranty or manufacturer warranty may pay part of either option. Check before you sign.
Common mistakes
- Comparing the repair price with the replacement price without thinking about how long each one lasts.
- Being too hopeful about how many years a repair will add to an old unit.
- Leaving out installation, permits and removal from the replacement cost.
- Ignoring energy savings from a more efficient new unit.
- Agreeing to a high-pressure, same-day replacement offer without a second quote.
Limits and when to get help
This tool compares only purchase and repair costs. It does not include energy use, financing, rebates, tax credits, warranties or safety issues, and it cannot predict when equipment will fail. Get at least two written quotes from licensed contractors, and use our guide on how to hire a contractor to check licenses and contracts. The FTC also explains how to avoid home improvement scams. To save for the next replacement, try the home repair sinking fund calculator.
Frequently asked questions
What is the 50% rule for repair or replace?
It is a rough rule of thumb, not a law or industry standard: if a repair costs half or more of the price of a new unit, replacing is often the better buy. This calculator uses it as one of two tests, together with cost per year.
When should I replace my AC or furnace instead of repairing it?
Consider replacing when the system is old and needs frequent repairs. ENERGY STAR suggests considering replacement when a heat pump or air conditioner is more than 10 years old or a furnace or boiler is more than 15 years old, especially if energy bills are rising.
How does the calculator decide?
It says repair when the repair's cost per extra year is under 80% of the new unit's cost per year and the repair is under 50% of the replacement price. It says replace when the repair's yearly cost is over 120% of the new unit's, or the repair is 50% or more of the replacement price. Anything in between is close.
Does the calculator include energy savings?
No. A newer, more efficient unit may lower your utility bills, which tilts the answer toward replacing. Ask your contractor for an estimate of yearly energy use for both options.
What if the item is past its expected life?
The typical life left shows 0 years. That does not mean it will fail tomorrow, but it does make a long extra life from a repair less likely, so enter a short number of extra years.
Should I get more than one quote?
Yes. Two or three written quotes from licensed contractors give you better numbers for both the repair and the replacement, and help you spot overpricing.
Can a home warranty or insurance pay for this?
Sometimes. A home warranty may cover a breakdown from normal wear, up to its cap. Homeowners insurance usually covers sudden damage from a covered event, not wear and tear.
Sources
- When to Replace Your Heating and Cooling Equipment · ENERGY STAR (U.S. EPA) · accessed
- Maintenance Checklist · ENERGY STAR (U.S. EPA) · accessed
- How To Avoid a Home Improvement Scam · Federal Trade Commission · accessed
Guides that explain this
- How to Hire a Contractor: Licenses, Contracts and Red FlagsHow to hire a contractor step by step: check licenses and insurance, compare written estimates, sign a solid contract, pull permits and pay safely.
- How to Build a Home Maintenance Budget: A Guide for New HomeownersBuild a home maintenance budget that works: rough rules of thumb, a sinking fund for big repairs, an emergency cushion, and how to rank repairs.
Related tools
- Home Repair Sinking Fund CalculatorList the big replacements you expect and when they will likely be due. The calculator spreads each cost over the months you have left and adds them into one monthly savings target.
- Home Warranty Calculator: Will a Plan Save You Money?Compare what a year of repairs might cost on your own with what you would pay under a home warranty, including the plan price, service fees and coverage caps.
- Renovation ROI Calculator: Is a Remodel Worth It?Enter what a project costs, the resale value you expect it to add and any yearly savings, such as lower energy bills. The calculator shows your return on investment, how much of the cost you get back at sale and what the project really costs you.
- Home Maintenance Calculator: Yearly Upkeep BudgetEnter your home's value, a budget percentage and its size to get a yearly and monthly maintenance target. The result is a starting point built on rough rules of thumb, so adjust it for your home's age and condition.