Selling with Rebates: The Simple Payback

  The easiest way to show a homeowner how their investment in high-efficient equipment will help their wallet is to use the "Simple Payback" Calculation.  This 'tried and true' sales tactic will quickly explain how many years before the additional investment to upgrade is paid off.  Of course, there are many features that a high-efficient system provides, like superior levels of comfort, wether it be climate control or just condenser noise just outside their children's bedroom.  These factors can be hard to quantify for most homeowners, and for replacement systems you will likely find they are not weighted as high as the almighty dollar.  So, although costs can vary drastically from Manufacturer to Manufacturer, or even Contractor to Contractor, try inserting your prices, rebates, etc. into the equation next time you recommend an upgrade.

  As you can see, there are a few pieces of information needed to calculate the Simple Payback (in Years) for an upgrade in efficiency.  First, you will need to know the total cost (equipment/materials + Labor) of the installation of the base model equipment.

In this example, we will say the replacement 13 SEER system will cost $5k.  Then, you will need to calculate the total cost of the 16 SEER/13 EER installation.  For example purposes, we will say the investment will cost the homeowner an additional $1,300, total $6,300.  The operating costs of the high-efficient system will save the homeowner a conservative estimate of $50 per year, based on the few run hours in MA & RI.  If you were to not include rebates and tax incentives, or the hard to quantify comfort, the system's simple payback would be an astonishing 26 years, well beyond the life expectancy of the system - maybe two systems!

  If you were to introduce available local utility rebates, including the MA & RI Cool Smart Quality Installation Verification (QIV) incentive, this system would qualify for $650 paid to the homeowner!  This would be in addition to the $300 25C tax credit, extended through 2013.  By reducing the initial investment from $1,300 to $350, then taking into account the annual energy savings, this system would now have a simple payback of only 7 years!  Did I mention the system that qualifies for the rebate will likely qualify for a 0% Loan, for a period of up to 7 years!  Yes, you read that correctly!  Plus Mr. Or Mrs. Homeowner, you will be more comfortable with a much quieter system that will be installed with the highest of quality!  Where do I sign?