Do Smart Thermostats Really Save You Money?

A smart thermostat is a home automated device that learns your routine to adjust heating and cooling automatically. It's a worthwhile investment because almost half of the average U.S. household's energy bill goes to heating and cooling, costing more than $900/year. A smart thermostat could help households and businesses save an average of 8% in their heating and cooling costs. However, your specific energy savings will ultimately depend on your HVAC system, insulation, climate, and daily habits.

What Is a Smart Thermostat?

Smart thermostats are Wi-Fi-enabled devices that connect to your home or business's heating and cooling system. They're designed to automate temperature changes based on your schedule, preferences, and even the weather. You can adjust the settings from your phone, a voice assistant, or the thermostat itself. Smart thermostats have become one of the most popular home automation upgrades because they save effort, cut energy waste, and can lower your monthly bills.

How Do Smart Thermostats Work?

Using built-in sensors, smart thermostats track your indoor temperatures, and many models also track whether anyone is home. Over time, they learn your routines and use features like scheduling or geofencing to adjust settings on their own. Since they're connected to Wi-Fi, you can easily check or change settings from anywhere using a mobile app.

Do Smart Thermostats Save You Money?

For most consumers, smart thermostats save money by cutting unnecessary heating and cooling, like warming an empty house all day. For example, in the average American household, smart thermostats can help reduce heating and cooling costs by up to 8%, which translates to about $50/year. Businesses can benefit too, especially offices or storefronts that sit empty overnight and on weekends. With smart thermostats and other building automation tools, businesses can save up to 30% on heating and cooling costs. Your home or business's actual smart thermostat energy savings will ultimately depend on your space, regional climate, HVAC efficiency, and daily usage habits.

Smart Thermostat Benefits That Lower Energy Costs

Smart thermostats are more than just convenient; they reduce your usage over time, which leads to lower energy bills. They have four key features that cut energy waste automatically.

Smart Scheduling & Automated Setbacks

Smart scheduling adjusts the temperature when you're asleep, at work, or away, so you're not paying to heat or cool empty rooms. Adjusting your thermostat by 7°-10°F for 8 hours a day can help you save up to 10% on home HVAC costs each year. For businesses, creating a setback schedule based on operating hours can provide 20% to 40% in energy savings.

Geofencing & Occupancy Detection

Geofencing uses your phone's location to tell your thermostat when you leave or return home. Occupancy sensors work in a similar way by detecting movement in a room. Together, they can switch your system into an energy-saving mode when no one's around and make your space comfortable again before you walk in.

Energy Reports & Usage Insights

Most smart thermostat models send regular reports showing how often your HVAC system runs and why. It can help you spot seasonal patterns, such as your AC working overtime during a summer heat wave. These usage insights make it easier to fine-tune your settings and find even more ways to save.

Weather Responsive Adjustments

Weather-responsive features use local forecasts and outdoor temperatures to adjust your temperature settings in real time. If a mild afternoon is on the way, your thermostat can gradually shut off instead of running at full power. These settings help keep your space comfortable without your HVAC working harder than it needs to.

Factors that Affect Smart Thermostat Energy Savings

Two homes with the same model of smart thermostat can have very different results. Climate plays a big part. Homes that experience more extreme temperature changes between the seasons will generally save more than homes in regions with mild year-round temperatures. Your routine matters too. If you spend most of your day at home, a smart thermostat has fewer chances to cut back on heating and cooling. Other factors like insulation, your HVAC system's efficiency, square footage, and local energy rates also affect how much you save. That's why it's important to view a smart thermostat as just one part of a larger energy-saving plan.

Smart Thermostats vs. Programmable Thermostats

Both types of thermostats can help you save energy by adjusting temperatures on a schedule. The biggest difference is how much work they leave up to you. A programmable thermostat follows the schedule you set and stops there. If your plans change, you'll need to update the schedule yourself. A smart thermostat goes further by offering remote access and automation that adapts to your routine and local weather conditions. That extra automation helps you save even more without any extra effort.

Smart Thermostat

• Learns and adapts to routines
• Remote access through a mobile app
• Detects when the space is empty
• Bigger savings with less effort

Programmable Thermostat

• Follows a fixed set schedule
• Adjusted manually at the thermostat
• Can’t tell when you’re away
• Savings depend on manual programming

‍Smart Thermostat Pros and Cons

Comparing the pros and cons of smart thermostats can help you decide if investing in one is the right choice for your home or business.

How to Maximize Smart Thermostat Savings

Smart thermostats are the most effective when you set them up correctly and let them do their job. Below are a few energy saving tips to get the most out of your smart thermostat.

Best Practices for Lower Energy Bills

• Set a consistent schedule. Match heating and cooling settings to when you’re home, asleep, or open for business.
• Use geofencing or vacation mode. Let your thermostat automatically save energy when you’re away.
• Limit manual overrides. Frequent changes can undo the savings your automated schedule builds.
• Keep up with regular HVAC maintenance. Clean filters and schedule annual tune-ups to keep your system running efficiently.
• Seal air leaks and add insulation. Your thermostat can’t make up for the energy your home or business loses through temperature loss.
• Adjust settings by season. Turn on weather-responsive features so your thermostat can adapt to outdoor temperatures.

Is a Smart Thermostat Worth the Investment?

For many homes and businesses, a smart thermostat is a smart investment, but the true value depends on how you use it. Before purchasing, make sure to research whether your current HVAC system is compatible. Next, compare the upfront cost against your current energy use and daily routine. If your space often sits empty or your schedule changes frequently, you'll likely get more value. However, if you're home all day with steady settings, the payoff for a smart thermostat may take longer.

How Much Does a Smart Thermostat Cost?

Smart thermostats can cost as little as $75 or up to $280 and more, depending on the features you prefer. Installation is another cost to consider. While most simple models can be installed as a DIY project, having a professional install a more complex model with more home automation features can add an additional $50-$200. Fortunately, most utilities offer smart thermostat rebates to help offset the installation cost and encourage energy saving technologies.

Frequently Asked Questions About Smart Thermostats

How much money can a smart thermostat save each year?

Smart thermostats certified by ENERGY STAR can help households save about $50/year, or roughly 8% of their heating and cooling costs. Homes and businesses with higher HVAC bills, more extreme seasonal weather, or irregular schedules may save even more.

Are smart thermostats compatible with all HVAC systems?

Most models work with standard central heating and cooling systems, such as furnaces, central AC, and many heat pumps. Some models don't support high-voltage systems, like electric baseboard heat, and may need a C-wire installed for steady power. Make sure to review each manufacturer's compatibility tool before you buy.

Do smart thermostats work during a power outage?

No, your heating and cooling equipment needs power to run, so a smart thermostat can't control it during an outage. Once power returns, most models will restore your saved settings automatically.

Do smart thermostats require Wi-Fi?

Yes, you need Wi-Fi for most smart thermostat features, like remote access, geofencing, weather-responsive settings, and software updates. Without Wi-Fi, most smart thermostats will still work as a basic thermostat with on-device controls.

Can I install a smart thermostat myself?

Many smart thermostat models are designed for a DIY installation, so long as your existing thermostat has compatible wiring. However, if you need a new C-wire or have a complex system, hiring an HVAC professional is a safer choice.

How long do smart thermostats typically last?

On average, most modern home thermostats can last up to 10 years. Smart models also rely on software support, so it's important to check how long the manufacturer typically supports their devices.

Are there rebates available for smart thermostats?

Yes! Many electric and natural gas utility companies offer rebates on ENERGY STAR certified smart thermostats. Check your utility's website or use ENERGY STAR's Rebate Finder to discover what's available in your area.

Maximize Your Energy Savings with the Right Plan

While a smart thermostat can help you use less energy, the right energy plan helps you pay less for the energy you do use. Whether you're shopping for your home or business, comparing electricity and natural gas plans with Price to Compare can help you lower your monthly bill.