Everything You Need to Know About the Cost of a Heat Pump

When it’s time to replace a home’s heating and cooling system, Indianapolis homeowners wonder, “How much do heat pumps cost?” Heat pumps offer an efficient source of both heating and cooling throughout the year, making them a favorite in area homes. Just like other types of HVAC equipment, there are several factors that affect their price. 

What Does Heat Pump Price Cover? 

When you ask an HVAC contractor how much do heat pumps cost, you receive a price that includes both the cost of equipment and installation. Most HVAC contractors do not sell just the equipment to homeowners – you buy equipment from your contractor as well as the skilled labor to install the system. If an HVAC company does not install the system, the company cannot guarantee the equipment, which is why most contractors do not sell to the public. 

A quote for how much do heat pumps cost varies. The actual price for the equipment is affected by several factors, which we get into detail about later on. The price of installation isn’t always the same for every household – different households could purchase the exact same heat pump yet be quoted different prices for installation. This is because there are different attributes of each home that impact heat pump installation. 

Matched Air Handler

Heat pumps are forced air HVAC systems, which means air heated and cooled by the system is blown into the home’s living areas via a blower motor. A heat pump is simply the outdoor portion of the HVAC system – when you purchase a new heat pump, you also must have an air handler. The air handler is the indoor portion of the system, which houses the evaporator coils as well as the blower that moves air into the home. 

When you think about how much do heat pumps cost, you need to consider the entire system, not just the heat pump itself. It is important that a heat pump be properly matched with its air handler for best performance and energy efficiency. If you replace just the heat pump, it is difficult to ensure your existing air handler is the right match, as technology has changed since your air handler was installed. A new air handler that is properly matched ensures your heat pump delivers the benefits you expect, and the longevity of your new HVAC system is improved. 


For these systems to function, a duct system is required. For homes that have not had a forced air HVAC system before, new duct installation is needed to accommodate heat pump installation. Homes with older duct systems often need updates, such as duct sealing, to improve the efficiency of the duct system and allow the heat pump to also efficiently operate. Any needed ductwork improvements affect the cost of installing a new heat pump. 

Average Cost of Heat Pumps

When you consider the equipment element of how much do heat pumps cost, a new heat pump or air handler runs anywhere from several hundred dollars to a couple thousand dollars. The cost of equipment greatly depends on the factors we discuss below. 

How much do heat pumps cost when you buy new equipment and have it placed into service in your home is higher than equipment cost alone because it includes the cost of installation performed by your HVAC contractor. Your contractor installs and connects the new heat pump as well as additional components, like a new air handler, as well as performs other improvements to accommodate the new HVAC system, such as the ductwork improvements mentioned above. 

Total installed price for how much do heat pumps cost typically ranges in the thousands of dollars. Nationally, the average price homeowners pay to have a new air-source heat pump system installed is approximately $5,000.00. Equipment price and installation needs are the determining factors of the final price you pay. 

Factors That Affect Heat Pump Price

As mentioned a few times already, many factors come into play when answering how much do heat pumps cost. While equipment costs vary widely, there are still options available at each end of the spectrum and everywhere in between. No matter your budget for a new heating and cooling system, your contractor works to find an equipment solution that fits your household’s needs at the right price point. 

The factors that contribute to how much do heat pumps cost include: 

  • Type of Heat Pump 
  • Capacity 
  • Energy Efficiency 
  • Brand 

Heat Pump Type

There are a few different types of heat pump systems used to heat and cool homes: air-source, water-source, and ground-source. 

  • Air-source heat pumps transfer heat from one air source to another, from the air inside your home to the air outdoors, and vice versa. 
  • Water-source heat pumps transfer heat between an air source and a water source – the air inside your home and a pond or other body of water on your property. 
  • Geothermal heat pumps are also called ground-source heat pumps, and transfer heat between the air inside your home and the ground below your property. 

How much do heat pumps cost greatly depends on the type of heat pump in question. Both water-source and ground-source heat pumps are considered geothermal heat pumps. Geothermal heat pump equipment is typically more expensive than an air-source unit, with equipment prices running several thousand dollars and up. Installation of a geothermal heat pump system also costs more because the system requires a ground loop, which is an underground network of piping that helps transfer heat to and from the ground or water source. Because of this, geothermal system installation typically runs $10,000 and up. 

An air source heat pump is a more affordable option that still offers great energy efficiency. Even on the high side, how much do heat pumps cost to install runs about half as much as installation of a geothermal system. 

Heat Pump Capacity

Heat pumps are sized based on how many BTUs (British Thermal Units) of heating or cooling are required to condition the air in your home. That number, your home’s heating or cooling load, is determined based on multiple factors, including: 

  • Square Footage 
  • Insulation Levels 
  • Windows and Doors 
  • The Home’s Exposure 
  • Number of Occupants 

In the heating and cooling world, 12,000 BTUs equals 1 ton. You’ve probably heard of air conditioning systems measured by tons – this refers to their capacity, not the unit’s actual weight. Heat pump capacity is also expressed in tons, which reflects how many BTUs of heating or cooling the unit is able to produce. For example, a 3-ton heat pump produces 36,000 BTUs. 

Capacity affects how much do heat pumps cost, as in general, higher capacity heat pumps cost more than lower capacity heat pumps. Homes require a certain capacity of heat pump – you should not choose a smaller unit due to the price. Undersizing a new heat pump due to budget constraints is not practical, as doing so results in higher energy costs, more wear and tear to the system, more frequent breakdowns, early system failure, and great discomfort inside your home. Evaluate your options based on other categories to find a new heat pump that meets your budget. 

Energy Efficiency

A heat pump’s cooling efficiency is measured in SEER (Seasonal Energy Efficiency Ratio), just like an air conditioner’s. In the Midwest, the minimum SEER requirement for a new heat pump system is 13 SEER. A heat pump’s heating efficiency is measured by HSPF (Heating Seasonal Performance Factor). The federal minimum for new heat pump units is 7.7 HSPF. 

There is a wide range of energy efficiency levels available in the heat pump market. While 13 SEER / 7.7 HSPF are the lowest efficiencies legally allowed, efficiency ratings go all the way up to 23.5 SEER / 13 HSPF amongst available equipment. 

Efficiency has a significant impact on how much do heat pumps cost. In general, the more efficient a heat pump unit, the more it costs. Higher SEER / HSPF units come with a higher price tag, but because they make more efficient use of their electricity, they cost less to operate compared to a unit with lower efficiency ratings. Consider ongoing operational costs when you decide which heat pump efficiencies are best for your needs. 


There are several quality HVAC equipment manufacturers that produce heat pump equipment, and prices vary based on brand. The brand also affects how much do heat pumps cost. Certain brands are known for being more budget-friendly than others, while some are known for their elite and innovative equipment. Also, each equipment brand typically produces several heat pump options in their product line, ranging from more basic models to those with all the bells and whistles. More user-friendly features and efficiency-improving technology and innovation go into these elite models. 

Heat Pump Installation from Williams Comfort Air

Williams Comfort Air is proud to offer installation of new Carrier heat pumps to homeowners throughout the Indianapolis area. Don’t worry about how much do heat pumps cost – Carrier offers a great line of heat pump equipment, with options available to meet your comfort needs as well as your budget. Contact us today and we will help you find the right new heat pump system as well as perform the installation work necessary to place your system in service and allow it to run at its best for years to come. 

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