The energy efficiency of space heaters is rated by Annual Fuel Utilization Efficiency (AFUE) governed by the Department of Energy in the United States which is a simple ratio of usable heat and fuel usage of a single heating device. It doesn't consider the overall performance of the heating system including not only the heating devices but also the characteristics of the building in different applications. The current AFUE method calculates only the energy efficiency which is thermodynamics first law efficiency. In this research, the systematic efficiency of a heating system rather than simple device efficiency has been defined and investigated. The systematic efficiency considers the overall efficiency of the whole heating system and it varies in the different applications even though with the same heating device. So it represents the performance of the system more precisely. Analytical models have been built to calculate both the systematic energy efficiency and exergy efficiency, and to evaluate the systematic energy and exergy efficiency of heating systems for direct fired and indirect fired heaters. Efficiency performances of the systems with these two types of heaters are compared. Sensitivities of input parameters for systematic energy efficiency are studied to show the impact towards systematic energy efficiency. Indoor carbon dioxide concentration level of direct fired heating system is also studied. In a case study, results show that systematic energy efficiency of indirect fired heating system is always constant at heater device efficiency which is 80\% while systematic energy efficiency of direct fired heating system varies from 40%-92% under different condition (heat loss coefficient, ambient temperature and air change requirement), indicating that simple device efficiency is not capable to evaluate the overall performance of heating system. New efficiency method such as systematic energy efficiency used in this research is needed to better describe the performance of the heating system. Results of indoor carbon dioxide level of direct fired heating system, from 1000 to 4500 PPM under different conditions, show that indoor air quality needs to be considered while using direct fired heating.