Written By Scott Feller, CEO and Owner of Koala Cooling & Plumbing | Updated May 29, 2026
Replacing your AC system is one of the biggest purchases you'll make as a homeowner. Done right, it'll keep your family comfortable for 15–20 years and save you thousands in energy costs. Done wrong, it can become a recurring headache from the day it's installed.
I want this guide to help you do it right.
I'm Scott Feller. My wife Stacie and I own Koala Cooling & Plumbing in Round Rock. I've spent years walking Central Texas homeowners through this decision, and I wrote this guide so you can show up to your free in-home estimate — with us or anyone else — already understanding what you're being asked to decide.
CEO and Owner of Koala Cooling & Plumbing, Scott Feller. Action shot at Koala headquarters....probably talking to a homeowner or the team about an AC installation project.
A note before we start: you won't find specific prices in this guide. We publish those separately on our AC Replacement Cost page so they stay current and accurate. What you will find here is everything you need to understand what drives those prices — and how to make a confident decision when the estimate lands on your kitchen table.
Should You Repair or Replace?
Before we talk about new systems, let's talk about whether you actually need one. Not every AC problem requires replacement. Here's the rough framework I give homeowners:
Repair makes sense when:
- Your system is under 10 years old
- The repair cost is less than half the cost of replacement
- The system has been reliable up to now
- The refrigerant is R-410A (still in production and reasonably priced)
Replacement usually makes more sense when:
- Your system is over 12 years old
- Repair costs are climbing year over year
- Your energy bills have been creeping up
- The system uses R-22 refrigerant (no longer manufactured — astronomically expensive when available)
- You've been told "this might be the last fix it can take"
There's a gray zone between those two scenarios, and that's where an honest contractor earns their reputation. If a tech tells you a quick fix isn't worth doing because the next repair is right around the corner — believe them or don't, but get a second opinion before spending big.
Our techs work with this principle: repair, repair, repair, replace. If we can keep your system running affordably, we will. When the math no longer works in your favor, we'll tell you.
What Drives the Price of a New AC System?
If you've gotten two AC quotes for similar-sized homes and they're thousands of dollars apart, you're not crazy — that's normal. Three variables drive almost all of the variation.
1. How Big Your Home Is (and What That Means for System Size)
AC systems are sized in tons. One ton equals 12,000 BTUs of cooling capacity per hour. Here's the rough sizing guide most contractors start with:
Home Size | Suggested System Size |
|---|---|
Up to ~600 sq ft | 1.5 ton |
~600–900 sq ft | 2 ton |
~900–1,200 sq ft | 2.5 ton |
~1,200–1,500 sq ft | 3 ton |
~1,500–1,800 sq ft | 3.5 ton |
~1,800–2,500 sq ft | 4 ton |
~2,500–3,200 sq ft | 5 ton |
But — and this is important — square footage is a starting point, not the final answer. A 2,000 sq ft home with poor insulation, single-pane windows, and full sun exposure may need a larger system than a 2,400 sq ft home that's well-sealed and shaded.
That's why any honest contractor performs a Manual J load calculation before recommending a system size. Manual J is the industry standard endorsed by ACCA (Air Conditioning Contractors of America), and it accounts for square footage, ceiling height, insulation quality, window area and orientation, sun exposure, air leakage, and local climate data.
If a contractor walks your property, eyeballs your house, and quotes you a system size — that's a red flag. Oversized systems cool too quickly, fail to dehumidify, short-cycle, and wear out faster. Undersized systems can't keep up on the worst summer days. Right-sizing matters more than most homeowners realize.
2. What Fuel Your System Uses
In Central Texas, you'll almost always be choosing between two configurations:
Gas furnace + AC coil + outdoor condenser. The most common setup in our area. The gas furnace handles heat in winter. The AC coil and outdoor condenser handle cooling. Natural gas is the most affordable heating fuel in Central Texas, and the equipment cost is competitive. If your home is on propane (LP), the equipment is the same, but a conversion kit is required — typically a $200 addition to the install.
Heat pump system. An all-electric alternative that both heats and cools using the same equipment. Heat pumps are the right answer for homes without natural gas service, and they're highly efficient in mild climates. Central Texas winters are mild enough that a properly sized heat pump can handle most heating needs comfortably, though gas systems still have an edge on the coldest nights we occasionally see.
If you have natural gas, the choice usually comes down to personal preference and your view on long-term energy costs. If you don't have natural gas, the choice is almost always a heat pump.
3. Efficiency (SEER2 Rating)
SEER2 is the federal efficiency standard that replaced SEER in 2023. The higher the SEER2 number, the more efficiently the system cools — and the lower your monthly electric bill.
The SEER2 minimum in our region is 14.5. Premium systems reach 22+. The difference in efficiency over a 15-year lifespan can amount to thousands of dollars in electricity costs, especially in Central Texas where AC runs hard for seven or eight months a year.
But SEER2 isn't just about efficiency. Higher-SEER2 systems usually also offer two-stage or variable-speed compressors — which brings us to the next decision.
Single-Stage, Two-Stage, or Variable-Speed?
Most reputable HVAC companies organize their offerings around these three compressor types. The names vary — "Good/Better/Best," "Bronze/Silver/Gold," or in our case "Essential/Enhanced/Comfort/Ultimate" — but the underlying technology is what matters.
Single-stage runs at full capacity or not at all. Reliable, proven, easy to service. Lowest upfront cost. Best for homeowners who prioritize simplicity and value over premium comfort features.
Two-stage runs at low capacity (~65%) most of the time and ramps to high capacity when needed. Quieter operation, better humidity control, more even temperatures, lower energy bills than single-stage.
Variable-speed (inverter) modulates continuously between roughly 25% and 100% capacity. The quietest, most comfortable, and most efficient option. Significantly better humidity control. Higher upfront cost, but typically pays back through energy savings and longer system life.
The comfort difference between a single-stage and a variable-speed system isn't subtle. It's the difference between an AC that blasts cold air for 15 minutes and then shuts off, versus one that gently maintains your set temperature with minimal swings — and dramatically better humidity control. In Central Texas, where humidity often matters more than temperature, that distinction is everything.
Which tier is right for you depends on how long you plan to stay in your home, how much you value comfort versus upfront cost, how humidity affects your family, whether anyone has allergies or respiratory considerations, and your monthly energy budget.
For current pricing across all tiers and both Carrier and Daikin equipment, see our AC Replacement Cost page.
What's Included in the Price (and What Sometimes Isn't)
A proper AC installation quote should include, at minimum: matched indoor and outdoor equipment sized correctly for your home, all labor, refrigerant, electrical connections to the existing disconnect, drain lines, mounting pads, a fusible disconnect, required permits, applicable taxes, and manufacturer warranty registration.
Watch for these add-ons that sometimes get tacked on later:
Plenum modification. Variable-speed systems often require enlarging the supply and/or return plenum to handle higher airflow. Reputable contractors assess this at the estimate and quote it in writing before work begins. If it shows up as a surprise charge on installation day, that's a problem.
Electrical upgrades. If your existing wiring or breaker can't handle the new system, you'll need an electrician. This is rare for standard replacements but more common when upgrading to a higher-capacity or variable-speed system.
Ductwork repair or replacement. Old or leaky ducts can lose 15–30% of your conditioned air to attics and crawl spaces. Installing a high-efficiency system on a leaky duct network is throwing efficiency away. A good contractor will assess your ducts during the estimate and quote sealing or replacement separately so you can decide.
LP conversion. If your home runs on propane, you'll need a conversion kit (~$200).
Permit and inspection fees. Make sure these are included, not added later.
If any of these come up after you've signed but before the work is done, push back. They should have been identified at the estimate.
Warranties: What Actually Matters
Every AC system comes with two warranties: parts and labor.
Parts warranty is provided by the manufacturer. Carrier offers 10 years on registered systems. Daikin offers 12 years on the Fit line. These are industry-leading and effectively standardized — if a contractor offers you less, something's off.
Labor warranty is provided by the installing contractor. This is where contractors actually differ. Some offer 1 year. Some offer 10. Some pretend to offer labor warranties but actually outsource them to third-party administrators — meaning when you need warranty service, you're navigating a phone tree, not calling the people who installed your system.
Ask explicitly: "Is your labor warranty in-house? Or is it administered by a third party?"
Also ask: "What's required to keep the parts warranty active?" The answer should be "annual professional maintenance." Both Carrier and Daikin will void your parts warranty if you don't document annual service. A good maintenance plan handles this automatically. (Ours is called Koala Club, and we prepay it for the matching warranty period with every system installation — but the broader point applies to any contractor: ask about maintenance requirements before you sign.)
Questions to Ask Any HVAC Contractor
Before you sign anything, get clear answers to these questions. Any reputable contractor will welcome them. Anyone who deflects or rushes through them is telling you something.
- Did you perform a Manual J load calculation, and can I see it?
- Is the labor warranty in-house or administered by a third party?
- What annual maintenance is required to keep the parts warranty active, and what does that cost?
- What's your TDLR license number? (In Texas, you can verify any HVAC license at tdlr.texas.gov.)
- Is the quote all-inclusive — equipment, labor, permits, taxes, all standard installation materials?
- What conditions could change the price after I sign? How are those quoted?
- Are you locally owned, or are you part of a larger corporate group? (This matters more than you'd think — I wrote about why in our list of locally-owned HVAC companies serving Round Rock.)
- Do you carry workers' compensation insurance? (Don't let an uninsured worker on your property.)
- Will my system be properly sized for my actual home, or are you defaulting to whatever was there before?
That last one is critical. A surprisingly large number of replacement systems get installed at the same size as the old one — because that's easier — even when the original system was the wrong size to begin with. Manual J doesn't just inform new installations. It often reveals that the old system was oversized or undersized for the home.
Heat Pump or Gas? A Central Texas Take
I get this question constantly. Here's my honest take.
Choose a heat pump if your home doesn't have natural gas service, you want a single system that handles both heating and cooling, you value energy efficiency in a moderate climate, or you're motivated by reducing your carbon footprint.
Choose a gas furnace + AC if you already have natural gas service, you want maximum heating capacity for the few really cold nights Central Texas sees, you prefer the heating "feel" of a gas furnace (warmer air, faster recovery), or you want the most affordable winter heating costs in our region.
Neither choice is wrong for a typical Central Texas home. The right choice depends on your house's existing infrastructure and your priorities.
Timing Your Replacement
The HVAC industry has predictable seasonal demand patterns. Summer (June–September) is peak demand — contractors are slammed and prices reflect it. Winter and shoulder seasons (November–April, plus October) bring lower demand, often lower pricing, and easier scheduling.
If your system is on its last legs but still working, replacing in the off-season usually means lower seasonal pricing, faster scheduling, more attention from the installation crew, and less stress (no race against a 100-degree forecast).
If your system has already failed during a summer heat wave, you don't have the luxury of waiting. But if you have the option to plan ahead — plan ahead.
For our current seasonal pricing, see the AC Replacement Cost page.
Financing 101
Most reputable HVAC companies offer financing through third-party lenders. Approvals typically come back in minutes. Common options include standard installment loans (fixed APR, usually 8–12%, terms of 5–15 years), promotional 0% APR plans for qualifying buyers (often shorter terms), and reduced-rate plans (lower APR for longer terms).
Compare the total cost over the life of the loan, not just the monthly payment. A lower monthly payment over 15 years can cost thousands more than a higher payment over 10.
Also: ask about cash discounts. Many HVAC companies (us included) offer 3–5% off for ACH, check, or cash payment — because they save the credit card processing fees and want to share that savings with customers paying cash.
The Bottom Line
Buying a new AC system isn't a decision you should make in 30 minutes around your kitchen table while a salesperson stares at you.
Take your time. Get multiple quotes. Ask the questions I listed above. Compare warranties, not just prices. Make sure whoever you hire is licensed, locally accountable, and being transparent with you about what's in the quote — and what could change it.
When you're ready to see real installed prices for the systems we offer, our AC Replacement Cost page has every tier, every size, gas and heat pump, with current seasonal pricing and discount stacking shown transparently. No "call for a quote" games.
And if you'd like to see who else in the Round Rock and Austin area I'd trust with this job — including eight of our competitors — read my list of the best locally-owned HVAC companies in the area.
This is one of the biggest purchases most homeowners make. You deserve to make it with confidence.
— Scott
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