Compare cost per year, not sticker price. Divide the repair quote by the number of years that repair will actually buy you. Then divide the cost of a new system by how long it should last, and subtract what you’d save on energy bills. The lower number per year wins. (One shortcut: if the part that failed is still under warranty, repair it – the math doesn’t even apply.)
That’s the whole answer. The rest of this page shows you why the rule most companies use instead is broken, walks the math with real numbers from a real service call, and gives you a free calculator to run your own – including the cases where it tells you not to buy a new system from us.
The rule the industry uses – and why it’s rigged now
For decades, HVAC companies have leaned on a shortcut called the $5,000 rule: multiply the repair cost by the system’s age. Over $5,000, replace. Under, repair.
It sounded reasonable when it was written – because back then, a complete new system cost $6,000-$9,000 installed. Today, between equipment prices, new efficiency standards, and refrigerant changeovers, replacements commonly run $10,000-$20,000 or more. The cost of the new system doubled. The $5,000 threshold never moved.
Here’s what that means in practice: a $500 repair – a blower motor, a control board – on any system ten years or older automatically fails the rule. Ten years × $500 = $5,000. The rule now tells you to spend $15,000 to avoid a $500 fix.
That’s not a decision tool anymore. That’s a sales tool. And plenty of contractors have quietly admitted the threshold is outdated – you just won’t hear it during a sales visit.
The honest math: cost per year
Here’s what we use at Schraer, and it fits on the back of an envelope.
Option 1 – Fix it:
Annual cost = repair cost ÷ the years that repair buys you
Option 2 – Replace it:
Annual cost = (new system cost ÷ expected life) − annual energy savings
Real call from last week: compressor’s dead on a 12-year-old system. Repair quote: $2,800.
Fix it: A 12-year-old system with a fresh compressor might give you five more years. $2,800 ÷ 5 = $560 per year – with no warranty, on older refrigerant, where the next failure is your problem.
Replace it: $9,000 for a comparable new system over a 17-year expected life is about $530 a year. Subtract roughly $300 a year in energy savings (new equipment runs cheaper, especially through a Missouri summer): $229 per year – with a 10-year parts warranty.
$560 versus $229. Replace. Same verdict the old rule would have given – but now you know why, and you know exactly what you’re buying.
Where the two rules disagree – and why it matters
This is the part that proves the old rule is broken.
Say it’s a $600 blower motor on a 9-year-old system. The $5,000 rule: 9 × $600 = $5,400. Over the line – replace, it says.
Our math: that blower buys you the rest of the system’s life, call it eight years. $600 ÷ 8 = $75 per year. Against $229 a year for a new system, that’s not close. Fix it.
Any company that quotes you a full replacement on that call is using the rule to sell, not to help. We’ll say it plainly: if a calculator always tells you to buy a new system, it’s not a calculator – it’s a brochure.
Run your own numbers
Your system’s age, the repair quote in your hand, a fair replacement price. The calculator shows every step of the math – the same fractions you’d write on paper – and yes, sometimes it tells you to fix it. That’s the point. No email required.
The part nobody shows you
One more thing most companies leave out of this conversation: if you repair, you don’t escape buying a new system. You postpone it.
The chart in the calculator above draws both paths over time. The repair path runs flat and cheap – right up until the old system dies anyway, and there’s the jump: you buy the new system after all, just later. So the real question was never “repair or replace.” It’s whether the repair dollars buy enough time to be worth it. Sometimes they absolutely do – that $75-a-year blower is a bargain. Sometimes you’re just paying twice.
What the numbers can’t see
Three judgment calls the math depends on:
What broke matters. A capacitor is routine maintenance territory. A compressor or a refrigerant leak on an older system is a sign the rest of it is tired – be conservative about how many remaining years you plug in.
Refrigerant. Older systems run refrigerant that’s being phased out. Supply shrinks every year, which means every year, big repairs on old units get more expensive. Time is not on an old system’s side.
Warranty. If the failed part is still covered, repair it, full stop. The cost-per-year comparison doesn’t even apply when the part is free.
Want a second opinion on a quote you were handed?
Bring it to us. We’ll run this exact math with you at the kitchen table – your numbers, every step visible – and if fixing it is the right call, that’s what we’ll tell you. We’ve been doing business that way in this area since 1946, and it’s why we’re still here.
Call Schraer Heating & Air Conditioning: 636-456-5041
Serving Warrenton, Wentzville, Wright City, and Warren, Montgomery, St. Charles & Lincoln Counties, Missouri.
Frequently Asked Questions
What is the $5,000 rule for HVAC?
Multiply the repair cost by the system’s age; if the result is over $5,000, the rule says replace. It was calibrated when new systems cost $6,000-$9,000 installed. With replacements now commonly $10,000-$20,000+, the fixed threshold pushes almost every repair on a 10+ year-old system toward “replace,” which is why we recommend comparing cost per year instead.
How do I calculate whether to repair or replace my AC?
Divide the repair cost by the number of years the repair will realistically buy you. Then divide the new system’s cost by its expected life (15-20 years for a well-maintained AC) and subtract your estimated annual energy savings. The lower annual cost wins.
How long does a repaired AC last?
It depends on what failed. A minor part like a capacitor doesn’t change the system’s lifespan. A major repair like a compressor on an older unit may buy 3-5 years. Be conservative – the rest of the system is still the same age.
Is it worth repairing a 12-year-old air conditioner?
Run the math. A small repair (a few hundred dollars) on a 12-year-old system usually pencils out – it can cost under $100 per year of life it buys. A major repair like a compressor often doesn’t, once you compare it to the annual cost of a new system with a fresh warranty and lower energy bills.
Should I repair my AC if the part is under warranty?
Yes. If the failed part is covered, repair it – the cost-per-year comparison doesn’t apply when the part is free.
636-456-5041