This study evaluates both exergetically and exergoeconomically a building along with its heating system, which is examined from the generation stage to the envelope of the building. The energy and exergy flows between all the stages are determined using a predesign tool, which has been recently used to optimize various building designs. The findings based on applying the proposed new term, the lowexergoeco (a combination of the low exergy and exergoeconomics) analysis method is utilized to investigate the system performance. A steam boiler, a heat exchanger and a radiator in a room are considered to analyze the heating system. The ratio of thermodynamic loss rate over cost ((R) over dot(ex)) is calculated to be 4.52 W/US$ for the generation stage while it is 19.77 W/US$ for the steam boiler. A new indicator, exergetic cost effectiveness, defined as the multiplication of the components' contribution to the total cost and contribution to the total exergy destruction in the system is also proposed. This parameter gives designer or researcher the possibility to decide which components of the system to be improved. First two high values are found to be 0.278 and 0.063 for the generation and the building envelope, respectively. (C) 2013 Elsevier B.V. All rights reserved.