Energy efficiency: is the higher appliance price worth it?
Efficiency needs a price comparison, too.
When comparing two new appliances, enter the full price of both offers. The more efficient model saves money only if its lower running costs offset any higher purchase price within a useful period. A badge alone cannot answer that question.
EnergyGuide helps compare energy use among similar appliances. The FTC notes that the estimated annual dollar cost uses assumptions about use and energy prices. Read the energy-use figure, then apply your own rate. [1]
Worked example: two new appliances
Invented offers: A costs $500 and uses 250 kWh per year. B costs $700 and uses 150 kWh. At 20 cents per kWh, B’s premium is $200 and its annual electricity saving is $20. Over ten years A totals $1,000 and B totals $1,000.
The electricity rate changes payback
| Cents per kWh | Annual saving | Premium recovered |
|---|---|---|
| 10 | $10 | 240 months |
| 20 | $20 | 120 months |
| 30 | $30 | 80 months |
| 40 | $40 | 60 months |
This is a sensitivity check, not an electricity-price forecast. A smaller consumption difference or shorter ownership period leaves less room to recover a premium. If payback occurs after you plan to stop using the appliance, electricity savings do not justify the premium within your chosen period.
Compare the complete offers
- Keep required capacity and features comparable.
- Include delivery and required accessories in each purchase price.
- Check warranty and repair options separately.
- Do not assume financing costs or resale value are included.
An unchanged fixed utility charge is not an additional cost of each appliance. Time-of-use pricing requires a suitable rate assumption because this calculator does not know when you use electricity.
If you already own A, use the keep-or-replace comparison. To start with electricity alone, see annual kWh costs.
Cost difference over 10 years
$0.00Same total cost
| Cost | A | B |
|---|---|---|
| Upfront cost from today | $500.00 | $700.00 |
| Electricity per year | $50.00 | $30.00 |
| Electricity over 10 years | $500.00 | $300.00 |
| Total cost | $1,000.00 | $1,000.00 |
- Annual electricity saving with B
- $20.00
- B’s premium recovered after
- 120 months
Assumptions behind this calculation
- Unchanged electricity rate and annual use throughout the selected period. Annual costs are rounded to cents. Excludes repairs, financing, price changes, resale value and environmental impacts. Payback spreads annual savings evenly and rounds up to whole months. An assumed period is not a lifespan guarantee.
The full calculator with an example, the method and sources: Appliance Cost Calculator: Buy and Run
What you can do about it
-
Check inputs
Use your electricity consumption and rate.
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Compare alternatives
Include purchase and running costs over the same period.
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Check your budget
Plan with money that is actually available.
Frequently asked
Does an efficiency badge settle the comparison?
No. Compare annual consumption, suitable capacity and the complete price of each offer.
What if both use the same electricity?
There is no electricity saving to recover a higher price. Any other benefit needs its own assessment.
Does this calculator include financing?
No. Assess interest and payment timing separately.
Sources
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