What Determines the Cost of a Furnace?

What Determines the Cost of a Furnace?

It doesn’t matter what stage of life you’re in — the price of a furnace is always a bit of a sticker shock. But what goes into that seemingly steep price?

The answer might surprise you: it’s complicated. There are a number of components that will determine how much your new furnace costs. Read about the most impactful ones below.

Fuel Source

The biggest reason why furnace cost varies is because of the fuel source. There are three main fuel source types: oil, electricity, and natural gas. Each of these types have different prices for the construction, maintenance, and installation, plus the ongoing cost of the fuel itself.

Generally, electric furnaces cost far less up front than the other two but can be far more in monthly energy bills. They are a great option if you are looking for a cheaper furnace in the short term, not the long term.

Natural gas furnaces also are on the cheaper side, which is why they’re so popular. They’re also a lot cheaper than electric furnaces on a monthly basis but can sometimes be more costly to install because of the risk for gas leaks.

Furnace Size

Size is a major factor in furnace prices. Bigger furnaces are more expensive but are needed in order to heat larger homes. But it’s not a good idea to get a furnace that’s too large for your home, as it will cycle on and off and increase your energy consumption.

Similarly, don’t get a furnace that’s too small because it’s cheaper. Furnaces that are too small struggle to heat your home, which leads to higher maintenance, less efficiency, and less reliability.

But how do you figure out what size furnace is perfect for your home? Every furnace can produce a certain number of BTU, or British Thermal Units.

Still unsure? Don’t worry. Any one of our HVAC professionals would be more than happy to help you pick out the right size for your home and needs.

Energy Efficiency

While more energy-efficient furnaces may cost more up front, they are less expensive in the long run. So, if you are planning to move in a year or two, it might not be worth the investment.

Image: a man going over finances to determine if he can afford the cost of a furnace.
However, if you are purchasing the furnace for your own prolonged use, any HVAC specialist would recommend getting a high-efficiency furnace.

Furnace efficiency is measured in Annual Fuel Utilization Efficiency (AFUE). All modern furnaces are above 80% efficiency, and most are above 83%. A high efficiency furnace would be at least 95%.

Installation Cost

Installation costs can vary significantly, especially if you need additional supportive work like ductwork. This is not an opportunity to save money by DIYing your furnace installation, however. Installing a furnace on your own could be dangerous, not to mention that improper installation can damage your system.

Image: Inside of a furnace.
Another reason that furnace installation costs skyrocket is because of switching fuel sources. The cost to switch is usually high, sometimes up to $10,000. If you want to switch to a higher-efficiency fuel source, however, it may be worth the investment.

This is why it is highly recommended to consult a HVAC specialist before purchasing a furnace replacement; there are often unexpected costs.


More reputable brands are more expensive overall. This increased cost comes at the benefit of reliability and lower maintenance costs.

Furnaces from more reputable brands break down far less frequently, and when they do, parts are cheaper to replace. If you go for a cheap, off-brand furnace, expect to get what you pay for in terms of quality.

Other Factors to Consider:


Most furnaces have a warranty of up to ten years. This warranty usually covers many things, but the precise nature depends on the warranty itself.

Image: a woman going over warranty options on a tablet.


It is very important to keep up with an annual routine furnace maintenance, as if issues are not addressed right away, they might spiral. In fact, most warranties require maintenance records to validate the warranty.

Image: a man changing out an HVAC filter.

Tax Credits

If you purchased a furnace that has a more than 95% efficiency rating, you may be entitled to a $150 tax credit. Check to see if you’re eligible for any tax credits or incentives when you’re shopping for a furnace.


Before replacing your furnace, have an HVAC specialist check your insulation in order to make sure it’s in good condition. This is especially important if you live in a colder area. Even the most effective furnace would struggle to heat a home with poor insulation.

Image: rolls of insulation being installed in an attic.
If you have any questions or worries, schedule an appointment with one of our HVAC specialists at Bell Brothers!