How to use the appliance replacement payback calculator
- Enter the price of the new appliance and any rebates or trade-in value you would receive.
- Enter the energy saved per year in kWh and the electricity price per kWh from your own bill.
- Add any other savings per year, such as water or avoided repairs, and the years you expect it to last.
- Read the payback time and the total saved over its life.
Formula
Cost to recover = price - rebates and trade-in value
Savings per year = energy saved (kWh) x price per kWh + other savings
Payback in years = cost to recover / savings per year
Total saved over its life = savings per year x years - cost to recover
If savings per year are zero, the cost is never recovered, so the tool reports no payback instead of a number.
A $1,000 refrigerator that saves 300 kWh a year
A $1,000 appliance that saves 300 kWh a year at an example price of $0.15 per kWh saves $45 a year. The payback is $1,000 / $45 = 22.2 years, or about 266.7 months.
With a $100 rebate the cost to recover is $900, and the payback is 20 years. Over a 25 year life the total saved is $1,125 less $900, or $225. If you also expect to avoid $15 a year of repairs, savings rise to $60 a year and the $1,000 payback falls to 16.7 years.
Where the energy figure comes from
The energy saved is the difference in yearly use between your old appliance and the new one. Yellow labels and manufacturer specifications give an estimate for the new model, and a plug-in meter can measure the old one. Both figures are estimates, since real use depends on how often you run the appliance.
Your electricity price is on your utility bill. It may be a single rate or a tiered one, so enter the rate that applies to the next kilowatt-hour you would use.
Is a long payback a bad sign?
Payback is a simple measure and does not tell you what to do. A new appliance can be worth buying because the old one is failing, because it is quieter or has better features. A long payback only means the energy savings alone do not cover the cost for a long time.
The tool leaves out the value of your old appliance continuing to work, financing costs and price changes over time. For other savings projects see the solar payback calculator and the electricity cost calculator, and to decide if a warranty is worth it use the extended warranty calculator.
Assumptions and limits
- Energy saved per year and the price per kWh stay the same every year.
- Rebates and trade-in value are received in full at the time of purchase.
- Other savings per year are amounts you estimate.
- The tool ignores financing costs, the lifespan of the old appliance and any value other than savings.
Frequently asked questions
How long does it take for an energy efficient appliance to pay for itself?
Divide the price, less rebates, by the money saved each year. With $45 saved on a $1,000 appliance that is about 22.2 years.
Where do I find the kWh an appliance saves?
Compare the yearly energy use on the yellow label or spec sheet of the new model with the use of your current one. A plug-in energy meter can measure the old appliance directly.
Should I include rebates?
Yes. Rebates and trade-in value lower the cost you need to recover, so they shorten the payback.
What does no payback mean?
It appears when the yearly savings you entered are zero or less, so the price is never earned back through savings.