Is your hvac bid fair?
Heat Pump vs Furnace: Cost, Efficiency, and Which to Choose
Chuck Thompson is a retired homebuilder and contractor who owned L.C. Thompson Construction in Jefferson City, Missouri. TheFatBook Cost Index V3 2026 (built from BLS wage and Craftsman labor data) referenced throughout this article is our proprietary dataset that powers all of our calculators and bid-fairness checkers. Full details are on the methodology tab.
Most heat pump versus furnace articles compare the wrong two numbers. A furnace heats. A heat pump heats and cools. So when a contractor quotes you $3,548 for a furnace and $11,097 for a heat pump, those bids are not for the same job. The furnace bid leaves you without air conditioning. The honest comparison is a heat pump against a furnace plus a cooling system, and that changes which one looks expensive.
Here is the comparison the way I would run it on my own house. A gas furnace installed runs $3,548 on the national average, with most bids landing between $3,350 and $4,187. A full furnace-and-AC system runs $10,565. A heat pump, which does both jobs with one piece of equipment, averages $11,097 with a typical range of $10,304 to $12,676. Line the heat pump up against the combined system, not the furnace alone, and you are finally comparing like for like: two prices for the same pair of jobs, close enough that the right answer comes down to your climate and your utility rates instead of the sticker.
Where $11,097 Goes on a Heat Pump
| Component | Cost | Share |
|---|---|---|
| Material (the equipment) | $5,881 | 53% |
| Labor | $1,241 | 11.2% |
| Permit | $124 | 1.1% |
| Overhead | $1,960 | 17.7% |
| Contractor margin | $1,891 | 17% |
| Total | $11,097 | 100% |
The equipment is the story. Like most modern HVAC work, you are mostly buying the box, and the box got better and pricier as heat pumps moved from mild-climate specialty to whole-country equipment. The crew's share is real but modest, and the permit is a rounding error that varies by city. The lowest realistic price on this job, the number where a qualified contractor is covering costs plus the leanest sustainable margin, sits at $10,304. A bid meaningfully under that figure is not a bargain. It is a contractor who mismeasured the job or plans to make it up somewhere.
The Furnace Case
A furnace wins on three grounds, and they are real grounds.
Upfront cost, if you already have cooling. If your AC is young and healthy and only the furnace died, replacing like for like at $3,548 is the cheap path, and there is nothing wrong with the cheap path. Nobody should buy a heat pump just to replace a working air conditioner it duplicates.
Deep cold performance. Gas heat does not care what the thermometer says. Modern cold-climate heat pumps hold their rated output far below freezing now, and that improvement is genuine, but in the coldest stretches of the Midwest and Northeast a gas furnace still delivers the cheapest BTU on the worst ten days of the year. That is why the dual-fuel setup exists: heat pump for the shoulder seasons, furnace for the brutal weeks.
Gas prices where you live. Heating economics ride your local utility rates. Cheap gas and expensive electricity favor the furnace on operating cost; the reverse favors the heat pump. Your last two January bills tell you more than any national efficiency table.
The Heat Pump Case
One system, both jobs. This is the argument the sticker price hides. At $11,097, a heat pump competes head to head with the furnace-plus-AC combination at $10,565, with one outdoor unit, one air handler, and one service visit a year instead of two of everything.
Efficiency where winters are mild to moderate. A heat pump moves heat instead of making it, which is why its effective efficiency beats any flame-based appliance across most of the country's climate map. In warm and mixed climates it is not close.
All-electric direction. If your utility, your state, or your own plans point away from gas, the heat pump is the equipment that gets you there without a second system.
What Actually Decides It
Run these three checks in order and the decision mostly makes itself.
Check what is broken. Furnace dead, AC healthy: furnace replacement at $3,548 is hard to argue with. Both aging out together: now the heat pump at $11,097 is competing against the combined system at $10,565, and that is the comparison to price.
Check your climate honestly. South of the Mason-Dixon line and along the coasts, the heat pump case is strong on its own numbers. In the cold-winter interior, price the dual-fuel option before committing either direction.
Check the sizing before the brand. An oversized unit of either kind short-cycles, wears early, and in the heat pump's case dehumidifies poorly. Size the load first with our BTU calculator, then make anyone bidding the job show their own load math. If their number lands more than half a ton above yours, make them explain the gap.
Checking the Bid
Whichever direction you go, the check is the same. The index prices this work from the actual bill of materials: the crew hours the job books, the local BLS wage for the trade, the equipment at current prices, and your city's permit fee. That is what the bid checker compares your quote against, line by line, for your metro rather than a national blur. Contractor margin on HVAC runs 17% on the average job here, which is normal and fair. The point is not to grind anyone below the floor. The point is knowing where the floor is: $10,304 on a heat pump, so a quote at the top of the range has to earn the gap with scope, not confidence.