Your AC died in July and the technician says your compressor is shot. He can replace it for $2,400 or sell you a whole new system for $7,500. The decision isn't about what broke - it's about a number called the "5,000 rule" that HVAC contractors don't want you to know.
Multiply your system's age by the repair cost. If the result exceeds $5,000, replace it. If it's under $5,000, repair it. A 12-year-old unit with a $2,400 repair = $28,800, way over the threshold. A 6-year-old unit with a $1,200 repair = $7,200, still borderline. A 4-year-old unit with any repair under $1,250 = repair every time.
This rule accounts for efficiency gains and future repair probability. Modern systems use 40% less electricity than units from 2010. On a $200/month summer cooling bill, that's $80/month in savings, or $480 per cooling season. A $7,500 system pays for itself in efficiency savings over 8-10 years, not counting avoided repairs.
When you do replace, size matters more than brand. An oversized unit short-cycles and dies faster. An undersized unit runs constantly and never cools properly. Get a Manual J calculation - it's the engineering standard that accounts for insulation, window placement, and local climate. Any contractor who sizes by square footage alone is guessing.
Timing your replacement saves $1,500-3,000. November through February is the off-season when contractors drop prices by 20-30%. You also get better installation crews instead of whoever's available during the summer rush. And never pay upfront - standard terms are 50% at install start, 50% when you verify everything works.