Appliance decision

Cost or constraint

Repair: $480 for an expected 2 more years = $240/year

Timing or value

Replacement: $1,500 less $100 salvage

Cost or constraint

Expected life: 10 years = $140/year

Timing or value

Add energy savings and installation to finish the comparison

Keep the time period, usage and exit point consistent across both choices.

Compare the alternatives on equal terms

Use incremental cash flows

Ignore the original purchase price; it is sunk. Include the repair, likely follow-on failures, replacement purchase, installation, disposal, operating-cost difference and any salvage.

Price downtime honestly

For a refrigerator, work vehicle or business laptop, failure can spoil goods or stop income. Assign a plausible range rather than pretending disruption is free.

Respect non-financial constraints

Safety, parts availability, warranty, environmental impact and the ability to schedule replacement can override a narrow dollar comparison.

This decision belongs in The Real Cost of Devices and Appliances. Use Appliance Energy Cost: Convert Ratings Into Your Utility Bill to check the next assumption, then test the numbers in the Repair vs. Replace Calculator.

For vehicles, a service contract is another path; compare an extended warranty with self-funded repairs rather than treating coverage as automatically cheaper.

Make both options comparable

Compare the repair with the incremental cost of replacement, not with money already spent. Annualized cost helps with unequal lives, but safety, downtime and failure consequences still need a separate judgment.

Evidence for each path

  • Written diagnosis, repair scope and warranty on the work.
  • Installed replacement price and realistic useful life.
  • Energy, downtime, salvage and follow-on repair differences.
  • Ignore the original purchase price because it is already sunk.
  • Estimate the repair’s likely added service life as a range.
  • Price replacement, setup, disposal, and operating-cost differences.
  • Add probable follow-on failures and meaningful downtime.
  • Calculate the break-even life the repair must deliver.

Compare both paths on the same clock

Repair vs. Replace Calculator

Put two imperfect options on an annualized cost basis without counting sunk cost.

Where the comparison stops being fair

  • Replacing automatically when a repair exceeds a percentage of original price.
  • Assuming the repair restores the entire product to new condition.
  • Ignoring installation or data-migration cost on the replacement.
  • Counting the sunk purchase price against only one option.

Questions this decision usually raises

What is a useful repair break-even?

Divide incremental replacement cost by annual savings from replacement to find how long repair must remain useful.

How do repeated failures change the result?

Include probability-weighted follow-on repairs and assess whether you can tolerate the full cash event.

Should energy savings decide it?

Only after the efficiency premium is recovered within the realistic holding period.

Evidence behind the comparison

This page explains a calculation, not a personal recommendation. Contract rules and consumer protections vary by product and jurisdiction. Check the current agreement and official guidance before acting.