How much does a heat pump cost in 2024?

Based on hundreds of real-world quotes for heat pump installation through the EnergySage Marketplace, the median cost to install a new heat pump in 2023 was $16,025 after incentives. That includes ducted heat pumps and ductless mini-splits.

We’ve seen huge retrofits that cost as much as $66,000, and some tiny projects with no out of pocket costs (thanks to really generous incentives in one city). But the vast majority of heat pump installations cost between $7,120 and $36,000.

Loads of factors can affect the cost, including the local climate, the size and layout of the heat pump, and whether a backup heat source is part of the picture. Here’s how the prices break down.

An overwhelming majority of our quotes come from Massachusetts and Colorado, where the weather and local incentive programs favor high-end heat pumps built to work in cold weather. 

So it’s no surprise that the average cost of installation is much higher than in sunny Florida, where most homes can get by with a simpler, lower-cost, warm-weather heat pump. 

It's a bit of a mystery as to why the median cost is so high in California. Most parts of the state have a mild climate, which should keep the costs down. To be fair, we’re drawing relatively few quotes overall—but they’re not far off from some of the anecdotal reports we’ve heard.

What about local incentives?

It’s not totally clear whether heat pump rebates and tax credits are helping to reduce the cost of heat pump installations—or if manufacturers and installers are just pocketing some or all of the difference.

But we’ve found an encouraging sign that points to some savings for consumers.

At first glance, it’s disappointing that the median net price for a heat pump is almost the same in Massachusetts as it is in Colorado. Most Mass homeowners are eligible for an extra $7,800 in incentives, yet they only save $700 compared to Coloradans. What gives?

The numbers look much more favorable once you break it down by system type: Ducted heat pumps are much less expensive on average in Massachusetts than in Colorado.

The overall price in Massachusetts is skewed upward because of how common whole-house ductless heat pumps are in that state (and around the Northeast in general). They can be more expensive than ducted heat pumps due to all the extra parts and labor it takes to set up individual air handlers in every room.

Mini-splits aren’t exactly rare in Colorado, but most of the quotes we see on EnergySage are for smaller, partial-home systems—so it’s tougher to make apples-to-apples comparisons between the two states.

Naturally, bigger heat pumps for bigger, draftier houses tend to cost more than smaller systems. The costs don’t follow a smooth line upward, though.

For example, the median price for a 5-ton system is actually lower than a 4-ton system, and we’re not sure exactly why that’s the case. 

Then at 6 tons, the price skyrockets. That one makes sense. The largest residential heat pump unit is only 5 tons, so once you jump to 6 tons total, it means you’re using two outdoor units—double the equipment cost, and maybe not double the labor but something close to it.

Sprawling multi-zone ductless systems also drive up the price toward the top end of that graph. Beyond three zones, the costs start to add up—it’s a lot of equipment, often a second outdoor unit, and quite a lot of time to mount, connect, and quality-check each indoor air handler (aka “head”). It’s more accurate to think of ductless system pricing in terms of the number of heads, rather than the number of tons. There’s no meaningful price break or discount for adding more heads.

It's always possible for a heat pump to handle all your home’s heating and cooling. Sometimes, though, it’s more practical to pair a heat pump with a backup heating system.

Heat pumps can often work with an existing heater, but in other cases it makes more sense to just throw in a new furnace alongside the heat pump.

About 15% of the quotes on the EnergySage Marketplace include a new furnace baked into the price. (We count them separately from all the heat pump prices we've shared above.)

The median price is a few thousand dollars higher than the price of a ducted heat pump alone. That’s in basically in line with the wholesale cost of a furnace, which is about $1,000 to $3,500, depending on the size and efficiency.

We don’t have good data about heat pump systems with electric heating strips as the backup source. We’ve seen plenty of quotes that include them, but we found it difficult to sort them out from the pack. The wholesale price for a heat-strip kit is no more than a couple hundred dollars, so it shouldn’t have a huge effect on your overall costs.

Heat pumps aren’t cheap, but the equipment itself typically makes up less than half the final cost of a project. 

Wholesale heat pump equipment costs

The cost does vary by brand and size, but the most popular brands on the EnergySage Marketplace (Mitsubishi and Bosch) are in the same price range. And in the context of a $20,000+ installation (pre-incentives), even the difference between a premium brand like Mitsubishi and a less-expensive (but still capable) cold-climate model made by Gree or Midea isn’t a complete game-changer.

Those numbers don’t account for other equipment expenses like copper line sets, stands, wiring kits, extra refrigerant as needed, and so on. That can add up to anywhere between a few hundred and a few thousand dollars, depending on the project. 

Overhead

The rest of the cost of an installation has to cover overhead: Staff wages, training, trucks and tools, cushion for callbacks on systems that aren’t working right, and a little extra to take home.

According to some contractors we’ve heard from, a typical cost breakdown might be something like 40% equipment, 50% business expenses, and 10% profit—or that's at least what they'll tell customers who ask. Pre-incentive prices include a lot more cushion built in than that structure implies.

Another way to look at the cost structures: Edward Louie, an efficiency researcher at the Pacific Northwest National Laboratory, wrote up an itemized breakdown of all the individual costs that go into operating a small HVAC contracting business, and how much you’d have to charge per project to meet them.

Sales strategies

So how does that all affect the prices you’ll see on a heat pump quote? Different pros take different approaches to their pricing practices.

Many contractors offer menu-style pricing (including some on the EnergySage Marketplace). That is, they set prices based almost exclusively on the system size and type. Need duct modifications or electrical upgrades? You can pick those adders off the menu as well. The costs don’t vary significantly from customer to customer. 

Other contractors are more fluid with their prices. Their salespeople tend to work on commission and might have freedom to experiment with sales tactics and tweak their prices as they see fit.

This is a very nuanced answer, and we plan to cover it in depth in a separate article. 

The short answer is that the payback period ranges from “instantly” to “never,” depending on a whole host of factors: Your home, local climate, energy prices, incentives, the installer, and more.

Heat pumps generally don’t save money if they’re replacing gas heating in a cold climate. 

But there are plenty of other scenarios where a heat pump could save money, either on the cost of installation, or through long-term utility savings, or both.

• In warm climates, a heat pump will often cost the least to install and to operate. (We see this in our pricing data for Florida.) This is true even if the heat pump has to rely on an electric-resistance strip heater for backup from time to time.

• If it’s replacing expensive heating fuel like propane, “regular” electric resistance, or sometimes oil, a heat pump will cost less to operate. It may or may not cost less to install than a more traditional heating and cooling system, but the long-term savings may well tilt in your favor.

• If you want built-in AC but don’t have ductwork, ductless heat pumps tend to be the least-expensive and least-invasive way to get a high-quality cooling system. That’s not to say a whole-house ductless setup is cheap! But it does tend to cost less than retrofitting all-new ductwork and a central air conditioner. The super-efficient heating is almost like a bonus.

• If you’re willing to (or even prefer) a hybrid system, it could cost less than going for a whole-house heat pump if you would need big upgrades to your ductwork, electrical, and / or insulation to make the heat pump work well.

• If you can go solar, running a heat pump could cost nothing, as long as you have the space and budget for all the extra panels you’ll need. But even if you can only offset some of the energy use, it could still be a money-saver.

If you get your electricity from the grid, heat pumps won't always save money compared to other HVAC systems, as we've covered. But with free electricity from rooftop solar panels, heat pumps can become an unbeatable deal. 

Even if you can't completely offset your heat pump's electricity usage with solar, every free kWh helps drive down your total energy costs. The upfront investment is high, but tax credits and other rebates can help bring the cost down, along with financing options. Done right, it works out to be an excellent investment over the lifespan of all the equipment.

If you’re retrofitting a heat pump into an older home, you might also need to upgrade some of your home’s infrastructure. Some of these projects can include:

• Duct sealing and modifications: $1,000 - $5,000. High-performance heat pumps are extra-sensitive to leaky ductwork, and they need bigger ducts than furnaces do.

• Electrical panel upgrades: $1,000 - $10,000. If your breaker box only handles 100 amps of service, it’ll be tough to fully electrify your home. You’ll probably need some kind of upgrade.

• Insulation and air sealing. $1,000 - $15,000. While weatherization isn’t strictly necessary to make a heat pump work well, it’s still a really good idea if your house is obviously drafty and uncomfortable.

• Removing old equipment / capping the gas line. $300+. The cost of removing old HVAC equipment usually gets baked into the price of a new heat pump. But if you want your contractor to haul away equipment that isn’t in the way of the new heat pump—an old boiler or oil tank or radiators for example—it might cost extra. Ditto if you’re disconnecting the gas line from your home.

It's derived from hundreds of quotes uploaded by vetted contractors for real-world projects to the EnergySage Marketplace.

"One of the important things EnergySage does as a marketplace is share insights into fair market pricing, using data from large volumes of actual quotes that people receive while shopping with us," says Emily Moder, the Director of New Market Development at EnergySage. "We believe this is the best way to really understand what a fair price looks like for each individual."

One of the best ways to make sure you're getting a good deal from any contractor is to get multiple quotes. The EnergySage Marketplace makes that part easy. When you sign up (at no cost), we'll share some details of your project (but not your contact info!) with our network of vetted, experienced contractors.

We'll also connect you with an EnergySage Energy Advisor—one of our in-house heat pump experts who can help guide you through the installation process.

And don't forget: When heat pumps run off of renewable, zero-emissions electricity from solar panels, they're even better for the environment and can even eliminate your heating and cooling bills entirely. The EnergySage Marketplace can help you find a top-quality solar installer in your area, too.

Photo credit: Bosch