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Replacement Window Cost Payback

Replacement Window Cost Payback TIPS

Are you thinking about purchasing replacement windows and doors for your home simply because you feel you’ll save lots of money on your energy bills? Some salespeople count on this fuzzy emotion when they try to get you to sign a contract that commits you to spending thousands and thousands of dollars on this major home improvement.

Do Some Simple Math

I love numbers and used to spend my lunch break on job sites doing all sorts of calculations. One day I produced a very accurate estimation of how many 2 x 4s a lumber company sold in a year.

I did this because I knew how many delivery trucks they had, how many trips the trucks could make in a day and how many 2 x 4’s were on each load. The general manager of the company was shocked at how close my estimate was.

Years ago I decided to use these same skills to see just how long it takes to see if you really save money when buying replacement windows and doors. The fun part is it only takes a few minutes to do this calculation.

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To get accurate numbers for you, I decided to survey all of my subscribers who get my free AsktheBuilder.com newsletter and who live on Long Island. I asked them to provide their actual natural gas cost figures for different months of the year. The results of the survey were astonishing.

Before I go any further, I want you to realize this column only applies to buying replacement windows and doors based on the sole reason that you think it will make financial sense because of the energy you’ll save. If you need replacement windows to make your home look better, or because your existing windows are falling apart and don’t work, your motivation to purchase is quite different.

AAMA Gold Label

You also need to realize that there’s a vast difference in quality in replacement windows. If you want the absolute best ones, you need to buy windows and doors that come with the American Architectural Manufacturers Association (AAMA) Gold Label. These windows and doors, and the components used to make the them, have passed stringent testing for resistance to air leakage, water penetration, and wind pressure. The only windows I’d ever put in my home would have the AAMA Gold Label.

Savings Start AFTER Payback

Before we do the simple calculations, here’s what you need to think about. You only start to save money on an energy-based home improvement after you’ve paid yourself back, in actual energy savings, the amount of money you spent on the improvement.

Get Out Utility Bills

There are sophisticated software programs that can estimate the actual energy savings, but gathering the data can be a burden. To get a real number that’s very accurate you can look at your monthly utility bills.

Let’s me show you how simple it is. My method that follows assumes you use natural gas to heat your home. If you use fuel oil, you already know how much you spend each year for heating by adding up your oil bills.

CLICK HERE to get FREE & FAST BIDS from local replacement window contractors. Ask about AAMA Gold Label windows.

Break Out Gas & Electric Cost

If you study your monthly utility bills and look at the breakdown between the gas and electricity, you’ll be amazed at what you can determine. What you’re trying to determine is just how much money you spend on natural gas for heating only. I know this seems hard to do, especially if you cook, dry clothes and heat water using natural gas.

Look At Summer Use

Here’s the easy part. You use hot water, you cook and dry clothes year round. But your furnace only operates, on average, for about six or seven months per year. The first thing to look at are your gas bills for June, July and August. Your furnace is not on then and the gas you’re using represents what you spend for all the other gas-fueled appliances.

Using the data from my survey of Long Island homeowners like you, I determined that the average gas bill for these three months is about $60 per month. This is what the homeowners are spending, per month, to heat water, cook and dry clothes.

Average Winter Months

I then asked the homeowners in the survey to tell me what they spend on gas for the months of November, December, January, February and March. After subtracting the average of $60 per month, I determined that the average Long Island subscriber of mine was spending about $600 per year on heating costs. Since some may also use central air conditioning in the summer, let’s add about $200 extra for the electricity used to power the AC units.

Average ANNUAL Savings = 19%

I then spent some time looking at different Long Island replacement window company websites. I discovered that some talk about a range of energy savings you may experience by installing new replacement windows. The range is 12 to 27 percent.

Let’s be bold and go with the 27 percent savings. Do the math, $800 X .27, and you’ll see that you may save $216 per year on energy. Now it’s time to see if it’s worth it to buy the replacement windows based on energy savings.

Thousands Of Dollars To Payback!

If you get estimates for AAMA-approved windows, remember these are the best ones, you may discover it will cost you about $600-700 per window. The average home on Long Island may have about ten windows so let’s estimate that the total cost will be $6,500.00. If this is the case, it’s going to take you 30 years before you break even and start to save money on the replacement windows. The payback term is much longer if you finance the improvement and are paying interest on the $6,500.00.

The calculations are more complex because you can factor in the savings from maintaining new windows, the cost of natural gas may go up, and several other things. But you also need to consider what would happen if you kept the $6,500 and invested it.

If you got a modest return on your investment of just five percent, you’d make $325 a year which is more money than you’d save on the energy costs. You’d also still have the $6,500 in your savings account, not that of the window company.

The bottom line is it really pays to run a few simple numbers to see at what point you really start to save money. Often it takes a decade or two before you break even. Be smart when you make large energy-savings decisions.

CLICK HERE to get FREE & FAST BIDS from local replacement window contractors. Ask about AAMA Gold Label windows.

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23 Responses to Replacement Window Cost Payback

  1. I do think a lot of sellers of windows make it looks like it will only take a 5 years to pay it back but that is for only about 1% of cases. It takes longer for the payback but the savings is only one indication as you point out. One other thing to factor in, Energy Star credits. I recently bought some windows and i'll be able to deduct $200 as a federal tax credit which is directly off what I owe for taxes. Many states also have credit to that helps a bit.

  2. Tim, Excellent article about the cost of replacement windows! I bought a Dutch Colonial wood fram house in 1983. It was balloon construction, not insulated original doors and windows (some original storms some new double hung storms), oil fired steam heat. A friend of mine that I went to hgh school had an insulating business (blow in cellulose) and I had him insulate it. A year or so later ConEd do a home energy survey, and to my suprise, he did NOT recomend changing the windows, he agreed with you and said I would probably never see a savings. The house has 25 original double hung windows, most of which are tightly sealed because of paint.

  3. I love it when I hear the claim that a new window will nearly double the R value of the window. Going from an R 3, glass, air gap and storm glass, to an R 5, glass, gas, glass and some glass treatment, still is not much improvement in the overall R value of the wall. IMHO.

    I pretty much follow the same advise you share, if it broke replace it with best you can afford, If you hate the appearance, replace it with best you can afford. Don't do it to save money.

  4. The trouble is that the USA is # 98 out of 100 country s world wide when it
    comes to simple math. This is what a lot of these companies rely on to up
    their sales. The top IQ person sees right thru this hokes-pokus ! I use
    cheap thin plastic sheets on my most exposed windows in the winter months Saves $$ ---- too

  5. I found this article really very interesting and will pass this on to others.
    In fact I used your video to change my very first outdoor lighting.
    Love that I was able to do so.

  6. Thanks for the good information for window replacement. It makes a lot of good common sense.
    I'm a continual promoter of your Stain Solver!

  7. I would like to add, the trick that was from old days, when window were single pane, and cold are would just creep in through them, was curtains. Nice curtains, can really make a decor look good for a home owner, yet opening and closing of the curtains through the winter months between morning and night can really save tons on the heating bill. Gaining the heat of the sun on a sunny day, through the window into the home, really helps, then adding the R value of the curtain through the nights, can really keep the cold out. We also like to close our curtains so on looks can't see in, yet we need to open them at times. Also, fabric curtains, help with R value greatly, and do even better paired with a sheer curtain or blind system behind.

    Lots of money to save if curtains are tended to well.

  8. I would also comment on this. My house had replacement windows when I bought it, also nice fiberglass doors, but it was still drafty. I pulled the sheetrock off of the exterior walls and insulated them, as they had nothing in them. I found that the sashes were fit into the rough opening and secured. The drafts were coming in through the sashes and around the casings. I used window and door spray foam and sealed all of the sashes before I put all the trim back on. I also caulked the replacement sash to the original sash to seal it. No more drafts, tightened the house up significantly, and cut about 100 gallons off of my oil consumption.

  9. Fifteen years ago, I had a window co. person come out and he was an hour or more late and spent spend a lot of time at my house. His windows cost $1,000.00 per window with cost reduced to $600.00 if I purchased while he was there. I asked him about R value. He said it doesn't matter. What saved me from purchasing was that he lied about R value, the price was too much, and the screen on the window could not be moved to the upper window, and that feature could not be added. I called the window company to complain, and was told the salesman did not work for the company. Yea, right. That company is now out of business, and I assume the lifetime warranty is gone. I hired a contractor who installed contractor supply windows with double glass with a one year warranty. Most of the windows cost $200.00 - $300.00 installed. I have had no trouble with the windows, except for a lock that broke. Noise is reduced and I feel no cold air that my old double pane aluminum windows caused, which was worse when the frames iced up. It was really bad. I have a heat pump. The monthly bill is around $100.00 plus or minus up to $20.00, except three or four winter months when the cost is $130.00 to 160.00. I forgot to mention I also physically added 8" of insulation to my attic 15 years ago. My heating and air-conditioning used to cost a lot more. Relatives paid high prices for many Gilkey windows that steamed up with broken seals. My windows have never had that problem.

    • I may have paid an installation charge. I do not remember. There was no damage from the installation except minor scratches on the outside. I said I would touch up the paint myself. In return, the company installed, free, four new shutters I had purchased for the front of the house. Another well known window company badly damaged a neighbor's walls during installation and refused to fix the walls

  10. Long Island like many other areas has a wide variety of firms doing window (and door) replacements. Some are honest and competent, some not so much. When we moved into our house, we realized we needed 2 new doors urgently, and went with someone's suggestion - and we got expensive, poorly installed doors as a result. We did somewhat better when we did most of our windows; the windows were decent, but we found out later on that the installation was not that great - air and water leaks. When we finally did our siding, 2 last windows and a sliding door, we went with the highest bidder - an engineer with his own construction firm, and are still happy today! The earlier windows no longer leak, lots of underlying problems were fixed, the house became much more comfortable, and finally heating AND A/C bills went down.

    Don't forget - Long Island has high heating and extremely high A/C costs, so windows, properly done at a reasonable price, make lots of sense. And the house is a lot quieter - only big noise problem is from lawn people.

  11. I recently reglazed and painted 21 double hung wooden windows in my 74 YO house...cost me about $200 in materials and a lot of time, but I took all 42 sashes out, sanded and stripped the old glazing material out, primed and reglazed and painted the 6 over 6 and 8 over 8 sashes. It took a day per window. During the drying time, I replaced sash cords and other adjustments to adjust the fit of the window before cleaning them and reinstalling them...they are better than new and will longer than I will live. And they look so much better than replacement windows!

    • We live in a 105-year-old farm house in Minnesota and I'm doing the same thing. Some of the windows are too far gone to fix but I have the wood-working equipment to build my own sashes. I saw a video online by a well-known TV show that showed what could be added to old windows/sashes to make them reasonably "tight" for air leakage. I also plan on removing trim and injecting foam into the air spaces around the old frames.

  12. Thanks for writing this! We specialize in historic home renovation and are always cautioning our clients against falling for the replacement window myth. I'll be sending this article around for reference.

  13. I replaced some of my wooden windows with vinyl because the frames, center posts and sashes were rotten to much. It was way to much work for me to repair. The advantages have been that, the windows are no longer sticking in the summer (fire escape,bed room) and the AC comes on later in the morning because of the Low E coating. However, now I have brand new windows which are leaking in the area where sash replacement was done. I conclude that for a replacement window to be air tight, the sill and trim need to come off, be insulated again and re-trimmed from the inside. I have 28 windows total and replaced 6 of them, I decided to paint the remaining 22. Painting a window is a lot of work, sanding prep. primer, caulking and two top coats. And for low E you need to add window film. Savings for AC & Heating costs are mainly in the attic and not with new windows. Calculate your efforts and look at your budget in the overall picture. And never think that you have a good contractor, Buyer and Seller have the same goals: get in and out quickly.

  14. I will preface my comments with the disclosure that I own a remodeling company of which 50%+ of our business id replacement windows, doors, siding and roofing.

    The majority of replacement windows I sell fall between $400 & $600. We have been in business for 40 years. We don't tell homeowners they are going to save a specific amount like many window companies do but I have had feedback from customers that will put their payback time anywhere from 7 years to 15 years. Many old homes still have single pane windows and of course they will see a faster payback time. Another window that is very common in our area is double pane clear glass in an aluminum single hung window. These were very common here in homes built from the 60's to the mid 80's. This type is very inefficient and homeowners replacing them see huge savings.

    Windows are typically rated using a U-factor system which tells you how much energy can flow through a product as opposed to the R-Value system that tells you a a product resists (thus the R) energy flow. U-factor is easily converted to R-value by dividing 1 by the U-factor. A window with a U-factor of .30 would have an R-value of 3.33. (1/.30=3.33)

    The formula to determine actual energy that passes through a window is U-factor X sq. ft of window X temp difference int/ext = BTU's through window in one hour.

    Let's assume a window size of 36"X60"
    These examples will show you energy with a 30 degree difference between interior and exterior temperature and they also assume a well sealed window.

    example 1: old wood window with single pane glass. U-factor-1.14
    1.14X15X30=513 BTU's per hour or 12.3 KW/HR per day

    example 2: aluminum window with double pane. U-factor - .90
    .90X15X30=405 BTU's per hour or 9.7 KW/HR per day.

    Example 3: 80's - 90's era vinyl window with double pane U-factor .50
    .50X15X30=225 BTU's per hour or 5.4 KW/HR per day

    Example 4: modern energy star rated low E argon filled U-factor - .30
    .30X15X30= 135 BTU's per hour or 3.24 KW/HR per day

    Example 5: modern triple pane low E krypton filled U-factor - .17
    .17X15X30=76.5 BTU's per hour or 1.84 KW/HR per day

    In our area electricity costs about 10.5 cents per KW/HR.

    Keep in mind above figures are for 1 window.

    • Easy. Any decent professional money manager can get you 5% return on your money. Right now I'm up about 15% this year. Just interview several and ask for a listing of their annual performance over the past three years. Remember that each fund has a different ROI based on the amount of risk you're willing to endure.

  15. Thanks for the article as much of what you write here is accurate. Although sometimes windows need replacement for function issues and looks, not just the energy savings.

    I know that was true in my home. I bought a home built in 1976 with windows that had already been replaced once. But due to low quality windows and even lower quality installation, I installed new windows in most of the home. I was able to save by doing the work myself (money, not time), and I now have top quality windows (from a company that begins with A) that function properly, look great, as well as save energy. But it will be many years before I recover the cost.

    One thing is for sure, especially for homes built by large developers, window and door quality is extremely low in these homes because of the huge savings the developer gets by using a low quality product.

    When considering new or replacement windows for your home, seek out quality brands that have stood the test of time. I know the extra money for these brands is tough to swallow, but you will enjoy your windows for many years to come.

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