One of the most important parts of your home is your furnace.
If you live in an area where cold and snowy winters occur every year, having a working furnace can mean the difference between life and death.
It also safeguards the longevity of your plumbing.
However, when you move into a new home and need to put in a new furnace, you may face an unpleasant surprise with the average cost of furnace installation being between $4,820 and $9,350.
Here are 10 reasons a furnace installation is expensive.
Why Is Furnace Installation So Expensive? (Top 10 Reasons)
1. Long-Term Investment
One of the reasons furnaces are expensive to install is that you’re only doing it once for a very long time.
On average, furnaces can last for 15 years.
With proper maintenance and care, it’s even possible to get them to last 20 years and longer.
Because they last for such a long time, you’re really making a long-term investment.
There’s even a chance that you’ll have moved out of the house before your furnace needs to be replaced.
This means it will be up to someone else to take on the next cost of the furnace.
If you split up the amount that you pay across 15 or 20 years, furnace installation doesn’t seem to be that expensive at all.
However, it’s the upfront cost that can hurt your wallet.
Since furnaces last for a long time, the companies that make them have to get the most money that they can to last until you need another furnace.
Since they don’t sell as many as they could—for example, if they were to make furnaces that only last five or 10 years—they have to make as much as they can on the small number of furnaces that they do sell.
That means selling at a high price.
2. Safety Concerns
Installing a furnace can be dangerous.
If the furnace uses natural gas to light its burners, for example, the contractor has to deal with gas connections.
If something goes wrong when they test it, it could blow them up or set them on fire.
At the very least, they might find themselves exposed to harmful gases and chemicals.
For example, a furnace that isn’t ventilated correctly or has problems can produce carbon monoxide.
If the contractor isn’t aware that something is wrong, they could be inhaling that gas while they’re working.
Besides their own safety, the contractor has to make sure that the furnace is safe for the homeowners to use.
That requires them to have expert knowledge of how to install the furnace and troubleshoot it.
This is often why it’s not a good idea to try and install the furnace yourself.
You may overlook something that an expert contractor wouldn’t miss.
It could result in deadly consequences.
When you pay for a furnace installation, you’re paying for two things when it comes to safety.
For one, you’re paying the contractor’s health insurance.
In most cases, the contactor probably has some form of health insurance through their company.
Since the dangers of working around large appliances can be quite high, they likely have expensive health insurance policies.
To cover those policies, the company has higher prices on their services like furnace installations.
Secondly, you’re paying for peace of mind.
When you hire a furnace contractor, you’re paying more money for them in the expectation that they’re going to ensure that the furnace is safe to use.
You can always choose to go the cheap route and do it yourself.
However, you can never be 100% sure if you put it together completely right unless you have been trained in furnace installation.
You pay for the convenience of peace of mind.
3. Complex Installation Process
Installing a furnace is not easy.
While it may look simple, the actual installation process is more complex than it seems.
That’s because every house is different.
Even if you watch a DIY episode on YouTube about how to install a furnace, those lessons only apply to that specific house.
Since your house is different, the process is going to be a bit different.
You’re likely going to run into problems that the person on YouTube didn’t run into.
For example, if your house uses natural gas, you need to know how to attach your furnace to the gas line.
If the gas line doesn’t exist, you’re going to need to install that, too.
You’ll then need to check and see if there are any gas leaks.
For example, if you didn’t use the correct pipe, it might not fit well, which means gas might be escaping into your home.
During the installation process, you might have damaged one of the pipes, and that could be causing a gas leak.
If your furnace kicks on during a gas leak, your house could explode or catch fire.
If you have an electric furnace, you need to know what type of power supply to use.
You may find that your house is unable to support the demands of your furnace.
You can save yourself a lot of headaches by having an expert handle your installation instead.
Their experience enables them to overcome problems brought on by each different house.
They know what they need to do to ensure the furnace works in your home perfectly.
This is a complex process that requires an expert technician, and that makes furnace installation expensive.
4. Time Costs
Furnace installations aren’t quick services.
They take a bit of time.
First, the technician or technicians need to prepare the site.
That might mean they need to drill a few holes, have some electrical wire brought in and installed, or have a gas pipe lead into the house.
That’s almost an entire job in itself.
Then they need to carry the heavy furnace into the area where you want it.
In most cases, these are areas that aren’t visible to most visitors.
It might mean the furnace is in a closet or downstairs.
Because it can be difficult to get the furnace into the area, that takes a lot of time, in itself.
Then there’s the actual installation process.
At this point, the technician will hook everything up and troubleshoot it.
If something isn’t quite right, it costs more time to correct it.
Some technicians will also clean the area after they’re done.
Because of the lengthy process involved with furnace installation, it’s understandable that it’s expensive.
You’re essentially paying for the technician’s services by the hour.
You’re also paying for the fact that they’re spending a majority of the day’s time with you instead of servicing other homes.
This means that they’re unable to take in more of a profit overall.
Since you take such a large chunk of their time away from them, they have to make up for the loss in profit.
They do so by charging a high price on furnace installations.
5. Interest And Financing
Because furnace installations often cost a lot of money, many people are unable to afford them when they find themselves in need of one.
Most often, homeowners discover that the price to install a furnace is higher than what they budgeted for.
As a result, the only option for these homeowners is to finance with the company.
This can become even more expensive depending on the terms with the financing company.
For example, if they finance with the actual furnace company, it may be affordable.
These companies don’t charge interest as long as the homeowners continue to pay what they owe for the furnace each month.
That’s because the furnace company is making their money, regardless.
However, not all furnace companies handle financing themselves.
They’ll often partner with a finance company that handles loans and payments.
These companies will likely charge some sort of interest.
That’s the usual method for how they earn money.
Since you’re paying interest on top of the money that you borrowed to pay for the furnace installation, you end up paying more than what the installation cost in the first place.
This makes furnace installation even more expensive.
The problem becomes even worse when the financing company charges you high interest.
It can make your monthly payments extremely expensive.
Luckily, most financing companies that work with furnace companies won’t charge you too high of an interest rate.
It’s when you have to find your own financing company that high interest rates are likely.
These companies aren’t associated with other businesses.
As such, they rely solely on interest to generate a profit.
Depending on your credit score and some other factors, you could end up with a high interest rate that makes your furnace installation very expensive.
Another reason furnace installation is expensive is the furnace itself.
With climate change affecting more and more people, there’s a push for making appliances more energy-efficient.
When something is energy-efficient, it means it requires fewer resources to power it.
Since it requires fewer resources, it demands less from the grid, which means fewer fossil fuels are burning up and going into the atmosphere.
It also usually means that the appliance has a longer lifespan, too.
Since it’s able to do its job in less time, there’s less deterioration.
This impacts the price of a furnace because it means those appliances are using specialized or higher-quality parts.
The furnace is also more complicated than it used to be.
With its complexity and more expensive parts, it takes more time and money to make a furnace.
You’ll find that the most energy-efficient furnaces cost the most to purchase.
That’s because they use special parts that allow them to have that energy efficiency.
Those parts don’t come cheap since they are made with expensive and high-quality materials.
It’s cheaper to make less efficient furnaces, but those aren’t selling as well since more and more people want to help reduce their carbon footprint.
It also helps them save on energy costs.
Because they’re not selling well, many manufacturers instead focus on selling the more expensive, energy-efficient, furnaces.
They have to follow demand to sell their products.
That also means that there’s a limited supply of cheaper furnaces.
That alone ends up increasing their price more than it should be.
Furnace installation is expensive because furnaces are more expensive due to a focus on energy efficiency.
7. Trade School Costs
The technicians performing the furnace installation need adequate payment, too.
To work as a heating, ventilation, and air conditioning (HVAC) technician, they have to go through trade school.
At trade school, they’ll learn everything they need to know about furnaces and air conditioners.
This enables them to safely and correctly install, repair, and replace the systems.
Unfortunately, trade school isn’t that cheap.
The average cost of a trade school is $33,000.
Although this is still cheaper than most four-year universities, it’s still an expense that the technician must take on.
Once they graduate from a trade school, they have to immediately start looking for a job or get started opening their own business.
To cover their debt, technicians charge a high rate.
Some established companies will also help pay for trade schools for new technicians.
If the company is in dire need of skilled labor, they’ll take on that cost.
The problem is that because it’s an expensive cost, especially if they’re helping more than one technician through school, they need to make sure they cover those costs.
That usually means their services, like furnace installation, become expensive.
Technicians who start their own business after trade school take on even more debt.
They usually have to take out a business loan to get a storefront and tools as well as any licenses and permits required by their locality.
With those debts on top of their student loans, they need to get money into their bank fast to start paying off their debt.
That results in higher prices.
Furnace installation is expensive because of the cost of a trade school.
8. Skilled Labor
Not just anyone can perform furnace installation.
To install a furnace, you need to not only understand how furnaces work, but you also need to understand plumbing and electrical work.
Furnace installation involves all of those fields.
As such, those who perform furnace installations are jacks of all trades.
They get paid accordingly.
That sort of skilled labor and expert knowledge is vital when determining how successful the installation was.
A poor installation either means the furnace doesn’t work or it wasn’t done safely.
A great installation ensures that the furnace is working and isn’t going to cause safety concerns.
Experience and knowledge determine the two.
The more experience that a technician has, the more expensive their services are.
That’s because you’re less likely to face problems with them.
Their experience allows them to solve unique problems with complex solutions.
You’re also more likely to have a furnace that doesn’t have any safety problems.
When an expert installs your furnace, you’re usually assured that it will last for at least 15 years.
The problem with hiring skilled labor is that it’s expensive.
There are only a few people who choose to work in a trade.
Since they’re the only ones who can safely perform this type of work, you have to pay the prices that they set.
There isn’t really another alternative apart from trying to do it yourself, so
you will have to pay the high prices that the technicians set.
9. Electrical Components
If you ever opened up your furnace before, you likely found several electrical components inside of it.
This is another reason you should never do furnace installation on your own.
Those components all need to be wired properly to function correctly.
They’re also expensive to make.
Electrical components, whether it be a motherboard or something else, are expensive because they sometimes use expensive materials.
Certain metals or other materials can fluctuate drastically in price when a shortage occurs.
If there are labor problems affecting factories or mines, this can impact the price.
Then there’s also the cost of making the components themselves and assembling them into their final products.
Since these components are usually small and delicate, it’s easy to break them and have to start over.
Others are sensitive to certain conditions like extreme temperatures or even exposure to the sun.
Because they’re delicate, they’re also expensive since it costs the factory more money to ensure they’re kept in ideal conditions.
When it comes to building a furnace, these expensive electrical components are required for the unit to work.
Since they add to the cost of the furnace, they also add to the cost of furnace installation.
That’s because you’re paying for both the furnace and the labor it takes to install the furnace in your home.
10. Lack Of Competition
While it may seem like there’s no shortage of HVAC technicians or their companies, that isn’t always the case.
Most HVAC companies only operate within a certain radius of their store.
That’s because it costs them more money to travel outside of that radius.
At some point, the cost of gas and travel ends up eating into their profits.
To keep profits tight and costs low, they only operate within a certain mile radius.
This means that in some parts of the city or rural areas, you’re actually out of luck when it comes to choosing between technicians.
You usually only have one or two options.
The lack of competition also drives up the price of a furnace installation.
That’s because the companies can set whatever price they want without worrying about another company coming in and offering lower prices.
They’re also able to set those prices because they know that you have no choice but to call them and book a service.
Since furnace installation requires skilled labor, you have no choice but to pay what they ask.
Furnace installation is expensive because of the lack of competition between some HVAC technicians.
Furnace installations can be extremely expensive.
However, for most of the United States, a furnace is necessary for survival during the winter.
The cost of parts and labor are two of the biggest reasons behind high furnace installation prices.