Knowledge Is Power: Understanding Energy-Efficient Window Installation Costs and Consumer Drivers
June 12, 2019 — While it’s fairly common knowledge that energy-efficient windows can help homeowners both save energy and improve the level of comfort inside their homes, the total cost of installing these types of windows is largely a mystery to the average homeowner. Transparency across the industry is lacking, and costs can vary significantly at different points in the value chain.
A recent Clean Energy Manufacturing Analysis Center (CEMAC)/Joint Institute for Strategic Energy Analysis (JISEA) technical report, Cost Modelling for Energy-Efficient Window Replacements, seeks to help address these knowledge gaps. In the report, researchers James McCall, Ran Fu, Rob Tenent, and Margaret Mann assessed the role of hardware and non-hardware (or “soft”) costs in the total installed cost of energy-efficient replacement windows to pinpoint the central drivers of soft cost variation.
Using a bottom-up cost model, researchers zeroed in on the key cost drivers in window replacement products. The report included several soft costs for window replacement, such as dealer profit; installation labor; labor overhead and profit; sales, general, and administrative expenses; shipping; state sales tax; permit cost; and contingency.
To gather data, researchers relied on six key sources:
- Window replacement and insurance industry professional estimation software,
- Window invoices collected through social media platforms,
- Direct installer invoices,
- Surveys of window replacement industry organization members,
- Direct contact with past industry members, and
- A retail cost analysis of online window suppliers.
To determine hardware costs, Lawrence Berkeley National Laboratory, D+R International, and NREL worked with manufacturers, performed secret shopper exercises, and completed an online search of products available on the Home Depot and Lowes websites, respectively.
Researchers identified several key findings:
- On average, window hardware costs accounted for approximately 55% of total installed cost; soft costs comprised the rest.
- The average cost of window replacement discerned via real-life invoices and cost modeling was roughly $600 per window. The cost variation in real-life window invoices ranged from $200 to $980 per window replacement.
- Data gathered via invoices and other real installation costs came in at 15% to 20% higher than insurance industry cost estimation models.
To identify non-cost barriers to increased window replacements and provide a more complete view of the industry, NREL researchers convened an industry roundtable meeting. Out of this meeting emerged three means of encouraging customers to replace their windows with more energy-efficient models:
- Consumer education – reduces upfront customer acquisition costs and provides consistent messaging across the industry;
- Communication of window replacement benefits and trade-offs – helps consumers make rational investment decisions and reduce upfront costs; and
- Improved ease of quality window product identification and installation certification – lets customers know that they are receiving a quality product and could reduce consumers’ “decision paralysis.”
Armed with an improved understanding of the hard and soft costs of energy-efficient window replacement, as well as the drivers that encourage consumer adoption, the industry can forge a path toward increased adoption rates, while consumers reap the energy savings.
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