What is the $5,000 Rule?

The $5,000 Rule is a simple formula used by HVAC professionals to help homeowners decide whether to repair or replace their heating and cooling system. It takes into account both the age of your system and the cost of repairs to give you a clear financial guideline.

How Does It Work?

If the result is less than $5,000: Repairing your system is likely the most cost-effective choice. Your system still has useful life remaining, and the repair investment makes financial sense.

If the result is greater than $5,000: Replacement is typically recommended. The combination of age and repair costs suggests you’re better off investing in a new, more efficient system rather than continuing to pour money into an aging unit.

Why This Rule Makes Sense

This formula accounts for two critical factors: older systems require more frequent repairs (diminishing returns on your investment), and older systems are less energy-efficient, costing you more money every month in utility bills.

A new HVAC system typically offers better efficiency, improved reliability, warranty protection, and lower monthly energy costs. When your decision number exceeds $5,000, these benefits usually outweigh the cost of continued repairs.

Important Considerations

While the $5,000 Rule is an excellent guideline, also consider: the frequency of recent repairs, whether major components like the compressor have failed, your system’s energy efficiency compared to modern standards, and your future plans for the home. A professional HVAC technician can help you evaluate these factors alongside the $5,000 Rule calculation.