How much does it really cost to install a heat pump?

A heat pump quote lands in your inbox: £14,000.

There’s a box with a fan going outside your house. Maybe a new cylinder in the airing cupboard. A few radiators get changed. So where on earth has fourteen grand gone?

It’s easy to look at heat pump prices — particularly when there’s a government grant involved — and assume installers must be making a fortune. The reality is a little less exciting.

A big chunk of the price disappears into equipment before anyone has picked up a spanner. Then there are several days of skilled labour, system design, vans, tools, certification, admin and the surprisingly expensive business of simply keeping a heating company running.

Let’s take apart a typical £14,000 heat pump installation and see where the money actually goes.

First: there isn’t really a “standard” heat pump installation

This is important. Two similar-looking houses can need completely different amounts of work. A heat pump quote depends on things such as:

• The size and heat loss of the property
• The heat pump required
• The condition of the existing heating system
• Radiator sizes
• Existing pipework
• Whether the hot water cylinder needs replacing
• Where the outdoor unit can be positioned
• Electrical work
• The target flow temperature and system efficiency
• How much of the existing system can sensibly be reused

That means a well-designed £12,000 installation could outperform a £20,000 installation. More expensive does not automatically mean more efficient.

So the interesting question isn’t simply “How much does a heat pump cost?” It’s: what are you actually getting for the money?

What do heat pumps actually cost in 2026?

We don’t have to rely on installer adverts to answer this any more. The Department for Energy Security and Net Zero publishes the reported installation costs of heat pumps completed through the Boiler Upgrade Scheme in England and Wales. Its latest release was published on 24 September 2026 and includes installation-cost data.

The latest quarterly figures cover April to June 2026. For air-to-water heat pumps, the reported costs were:

In other words, half of the air source heat pump installations in the data cost between roughly £11,100 and £15,600, with the middle installation costing just under £13,000. The full 2025/26 dataset gives a very similar median of £13,021, based on 30,590 air source installations.

So the £14,000 installation we’re about to pull apart isn’t particularly unusual. It’s a little above the national median, but still comfortably inside the middle half of real grant-funded installations.

And these aren’t simply the prices of the heat pump units themselves. They’re reported installation costs, so they reflect the wider job: equipment, labour and the work needed to install and commission the heating system.

The standard Boiler Upgrade Scheme grant is currently £7,500, meaning a median-priced £12,908 installation would leave roughly £5,408 for the homeowner to fund. Eligible off-gas-grid homes replacing oil or LPG can currently receive £9,000 instead.

Our worked example: a £14,000 heat pump installation

Now we’ve got some context, let’s use £14,000 as our worked example. That’s not supposed to represent every house. But compared with the latest government data, it’s a perfectly plausible real-world installation price.

And now we can ask the interesting question: where does that £14,000 actually go?

Importantly, that’s the price before the Boiler Upgrade Scheme grant. After the standard £7,500 grant, the homeowner would pay around £6,500. But that doesn’t mean the installer has just received £14,000 for five days’ work. Far from it.

Cost 1: the heat pump itself

The first obvious expense is the heat pump. Depending on manufacturer, output and specification, the outdoor unit itself can cost several thousand pounds. For our worked example, let’s assume approximately £3,500 for the heat pump.

That’s already a quarter of our £14,000 quote gone. But the heat pump itself is only one part of the system.

Cost 2: everything that goes around the heat pump

This is where homeowners can underestimate the cost. A heat pump installation might also need:

• Heating controls
• Pumps and valves
• A hot water cylinder
• Expansion vessels
• Filters
• Pipework
• Insulation
• Fittings
• Electrical components
• Brackets or bases
• New radiators
• Upgraded pipework

Not every house will need all of these. One property might have perfectly usable radiators and pipework. Another might need substantial modification before it can run efficiently at heat pump temperatures.

In our worked example, the heat pump and associated materials bring the equipment bill to roughly £8,000. And the installer doesn’t usually sell those materials to you at exactly what they paid the merchant.

Why installers put a margin on materials

Imagine your cylinder develops a fault after installation. You don’t ring the plumbing merchant — you ring the installer.

Someone then has to diagnose the problem, organise the replacement, travel back to the property, potentially drain the heating system, remove the faulty component and install another one. That costs money.

So installation businesses generally need a margin on supplied equipment to cover purchasing, handling, warranty risk and the time involved when something goes wrong. With roughly a 10% materials margin, the equipment portion of our job comes to about £9,000 — and nobody has been paid for installing it yet.

£9,000 gone on materials, £5,000 left

Of our £14,000 quote, approximately £9,000 has already gone on materials. That leaves £5,000 for everything else.

This is the bit that can make heat pump installers look enormously profitable. Five grand for putting a heat pump outside? Not quite.

Cost 3: designing the heating system

A good heat pump installation starts on a laptop, not with a pipe cutter. Before work begins, someone has to work out what the house actually needs. That can involve:

• Measuring the property
• Calculating room-by-room heat losses
• Choosing the heat pump
• Sizing radiators
• Assessing pipework
• Setting design flow temperatures
• Sizing the hot water cylinder
• Planning controls
• Creating the parts list
• Producing technical documentation

There can also be conversations with the local electricity network operator — the DNO — and other administrative work before installation begins. A detailed system design can easily take much of a working day before the engineers even arrive.

To keep our £14,000 example conservative, we’re not even going to allocate that separately. We’ll assume some of it has already been recovered elsewhere in the project.

Cost 4: around 15 person-days of labour

A typical installation might represent roughly 15 person-days of work. “Person-days” matters here: three people working for five days isn’t five days of labour. It’s fifteen. For example, a job might involve:

• Two experienced engineers
• One apprentice or assistant
• Around five main installation days
• Additional time commissioning or finishing smaller jobs afterwards

Take the £5,000 remaining in our quote and divide it by 15 person-days. That’s about £333 per person, per day.

Suddenly the numbers look rather different. And that £333 still isn’t the engineer’s salary. It’s business revenue.

Revenue isn’t wages

Suppose an installation business managed to generate roughly £333 per working person-day consistently. An engineer can’t realistically work on billable installations 260 days every year. There are:

• Holidays
• Sickness
• Training
• Certification
• Quoting
• Surveys
• Cancelled jobs
• Supplier problems
• Paperwork
• Callbacks
• Gaps between installations

Assume something closer to 216 productive days a year, and £333 a day represents around £72,000 of annual revenue attributable to that installer. Sounds healthy. But now we need to run the business.

Cost 5: tools

Heat pump engineers need serious equipment: vacuum pumps, electrical test equipment, drills, press tools, hand tools, analysers, commissioning equipment — and inevitably replacements for equipment that gets damaged or disappears. A working allowance might be around £3,000 a year for tools and equipment.

Cost 6: the van

Then you need to get the engineer and all those tools to your house. There’s the van itself, insurance, servicing, repairs, tyres, road tax, additional security and tool-theft protection. An illustrative annual cost might be around £5,000.

Cost 7: fuel

Heat pump installers don’t work from a desk. If a local installer regularly works across a 30-mile radius, fuel quickly adds up — allow approximately another £3,000 a year.

Our £72,000 of revenue is now closer to £61,000. And we haven’t really started on the boring stuff yet.

The invisible costs of running a heat pump company

This is probably the least visible part of your installation quote. A legitimate heating business might also be paying for:

• Public liability insurance
• Professional insurance
• MCS certification and associated compliance
• Competent person schemes
• Training and renewals
• Accounting
• Bookkeeping
• CRM software
• Quoting software
• Phones
• Websites
• Advertising
• Workwear
• PPE
• Office costs
• Payment processing
• Customer support

Collectively, these can easily consume thousands of pounds every year. For our example, let’s allow roughly £7,000–£12,000 a year. And then there’s one final problem: someone has to answer the phone.

Admin costs money too

While an engineer is underneath your floorboards, somebody still needs to:

• Respond to enquiries
• Send quotes
• Book surveys
• Organise installations
• Chase suppliers
• Process paperwork
• Organise grant documentation
• Schedule engineers
• Answer customer questions

In a very small company, the engineer may do this themselves — which means they’re not earning installation revenue while they do it. As the business grows, they’ll probably need administrative help instead. A modest allowance for part-time support can easily add another £10,000 per installer per year.

Which means that apparent £70,000-plus revenue figure can quickly become something closer to a normal professional income once the cost of operating the company is taken out.

And remember: our simplified calculation still hasn’t properly charged for all the hours spent designing systems, managing stock, visiting prospective jobs and running the company.

So are heat pump installers making £5,000 profit on every job?

No. That’s the important bit. Looking at a £14,000 quote and subtracting the price of the heat pump doesn’t tell you the installer’s profit. A more realistic simplified breakdown might look like this:

That remaining £5,000 then has to support roughly 15 person-days of labour plus all the indirect costs of running the installation company.

These figures aren’t a price list. Every property and every heating company is different. But they show why the entire difference between the equipment cost and the customer quote can’t be treated as installer profit.

Does the £7,500 heat pump grant simply inflate prices?

It’s an understandable concern. If the government gives households thousands of pounds towards heat pumps, what’s stopping installers simply increasing their prices by the same amount?

The important thing to look at is what happened when the Boiler Upgrade Scheme grant increased. The grant for air source heat pumps rose from £5,000 to £7,500 on 23 October 2023. If installers were simply absorbing the subsidy, you would expect installation prices to jump by roughly £2,500 at around the same time.

The government’s own figures show nothing like that. The median reported air source installation cost was £13,495 in July–September 2023 and £13,600 in October–December 2023, then fell to £13,000 and £12,800 over the next two quarters. It isn’t a perfect comparison — quarters are counted by when the grant was paid, and the typical heat pump got smaller over the period — but there’s no £2,500 jump.

That isn’t the same as saying price inflation never happens, or that every quote represents good value. But the existence of a £7,500 grant doesn’t mean there’s £7,500 of spare margin sitting inside every installation.

The government publishes ongoing Boiler Upgrade Scheme statistics, including installation-cost data, so it’s possible to compare market prices rather than relying on individual anecdotes.

The real problem isn’t necessarily the heat pump

This gets us to the more interesting conclusion: heat pumps themselves aren’t necessarily what makes heat pump installations expensive. Changing the rest of the heating system does. If a house needs:

• Eight replacement radiators
• Substantial new pipework
• A new cylinder
• New controls
• Electrical upgrades

then both the material cost and the installation time rise dramatically. So one of the biggest opportunities for reducing heat pump prices is working out exactly which existing components genuinely need replacing — not replacing everything by default, but not cutting corners either.

Could heat pump installations become much cheaper?

Potentially, yes. New system-design tools are increasingly being used to model how existing radiators, pipework and other components will behave when connected to a heat pump. The idea is simple: change only the parts that actually need changing.

If five existing radiators will work perfectly well at the required flow temperature, replacing all five adds cost without necessarily improving the finished system. Likewise, if existing pipework can support the required flow rate, ripping it out simply because the property is getting a heat pump doesn’t make much sense.

Some industry providers now claim their data-led design methods can substantially reduce the number of components replaced during an installation. Those are provider-specific claims rather than a guarantee of what every property can achieve, but the underlying principle is important: better design can mean less stuff.

Less stuff means less material, less labour and less disruption — a cheaper installation. That could ultimately matter much more to heat pump affordability than simply making the outdoor unit cheaper.

What should you look for in a heat pump quote?

Don’t choose an installer based purely on the headline number. Instead, compare what each installer has designed. Ask:

What flow temperature has the system been designed for?

Lower design temperatures generally let a heat pump run more efficiently, provided the radiators and heating system have been correctly sized.

Which radiators are being replaced — and why?

A good installer should be able to explain the requirement room by room.

Does the cylinder actually need replacing?

Sometimes it does. Sometimes an existing setup may be usable. Ask why the change has been specified.

Is the existing pipework suitable?

Again, the answer should come from calculations rather than assumptions.

What heat-loss calculation has been completed?

The heat pump should be sized for the home’s heating requirement — not simply matched to the size of the old boiler.

What exactly is included in the quotation?

Check whether the figure includes:

• Electrical work
• Radiator replacements
• Cylinder
• Controls
• Commissioning
• Removal of old equipment
• MCS certification
• Warranty
• Grant administration

A £12,000 quote and a £15,000 quote may not actually be quoting for the same thing.

So, how much does it really cost to install a heat pump?

Unfortunately, there isn’t one magic number. A relatively straightforward installation that can keep much of the existing heating system should cost substantially less than a property that needs major upgrades.

But a £14,000 pre-grant quote doesn’t mean somebody bought a £3,500 heat pump and pocketed the other £10,500. There’s an entire heating system behind that outdoor unit — and an entire business behind the engineer installing it.

The biggest opportunity for reducing heat pump costs therefore isn’t squeezing another few hundred pounds from the engineer’s day rate. It’s reducing unnecessary work: better surveys, better design, better use of existing equipment, fewer unnecessary component changes and less time on site.

That’s how installing a heat pump starts becoming cheaper without making the finished heating system worse. And it’s ultimately what homeowners should want: not the cheapest heat pump installation, but the least expensive way of getting a properly designed one.