The continuing importance of energy conservation in the building sector has drawn major attention to energy audits of existing buildings in different climates. In this paper, the energy conservation potential of a residential building located in Iran’s cold climate was investigated through an analysis of its actual energy consumption and through computer simulation. The building base-load was determined using a linear regression method based on existing energy bills, and was used to validate the computer simulation of its energy usage. The impact of typical energy saving solutions was evaluated for three cost refurbishment scenarios: low, medium and high. The results show that the existing construction and envelope materials fail to meet the national standards of Iran, but insulating the envelope was found to be a more cost-effective measure than modifying the windows. The results also demonstrate that although the use of energy-saving solutions has a significant impact on energy consumption, even the most economic solutions investigated will have a payback period longer than one decade. Thus, with current energy prices the reviewed energy conservation strategies are not economically justified in Iran from the consumer perspective, as investment in the methods considered typical in other parts of the world will not show a return for at least a half-century.