If you're looking for a new cordless drill at a hardware store, you'll see several options that look pretty much the same. The only difference you can see is that it's called a hammer drill, or more accurately a hammer drill driver. In fact, a closer look at a comparison of a hammer drill to an electric drill reveals that the two tools are very similar. In fact, many look the same except for the internal hammer mechanism.
It is this hammer drill mechanism that makes this tool different from a drill. That might justify why you should pay a little more to get it.
10 second summary
Hammer drills add a mechanism that gives the bit a cutting motion while drilling and add very little weight and length. For an extra $10 to $20, you can drill 25 percent faster in concrete, according to our tests.
You may also want to check out our articles on Hammer Drills vs Impact Drivers and Rotary Hammers vs Hammer Drills for more information.
Hammer Drills vs. Drill Bits: Physical Differences
To make a hammer drill, most manufacturers start with a drill bit, then add a hammering mechanism behind the chuck. In most cases, it adds a small amount to overall length and a few ounces to overall weight. Looking at the two side by side, you might not even be able to tell the difference.
Modern power drills and impact drills have a clutch setting and a power drill setting. When you look at the rotary hammer, you will see that it has an additional hammer mode that you can switch to.
Some models have the mode changes separate from the clutch collar, while others have them all on one collar. Regardless, the Hammer pattern is almost always next to the Drill pattern. Even on impact drills with electronic setups, the clutch, mode and transmission are still mechanical switches and collars in the head.

The hammer mechanism introduces a forward and backward cutting motion, similar to the action of a rotary hammer. In the best hammer drills, this action can occur over 30,000 times per minute!
Hammer Drills vs. Drill Bits: Performance Consequences
When you're drilling holes in concrete or masonry, it's time to use the hammer mechanism. Drilling without it can still make good progress. In our tests, the hammer drill ran about 25% faster on average.
We recently tested it with a 1/4" utility bit in a Milwaukee M18 Fuel impact drill. In standard drilling mode, it took about 8.5 seconds to drill to our desired depth. Kick it into hammer drill mode and it only takes about 6.5 seconds.

2 seconds doesn't seem like a big deal. However, things are very different when you use a larger drill bit or when you are drilling a lot of holes.
You'll also notice a huge difference in sound when you're drilling in hammer mode. In addition to the sound of the drill bit, there is a quick humming sound as the hammer mechanism works.
Never use the hammering mode when drilling holes in wood, metal, plastic or other materials. Cutting motion does nothing to help drill holes faster in these materials. In some cases it slows you down and adds a lot of vibration to the experience.
final thoughts
Most hammers are only $10 to $20 more than drill-driven models. Even though you probably don't do a lot of concrete drilling, it's a handy feature when you do. With virtually no weight or size loss (anymore), we recommend you go ahead and spend a little more to get it.
Like the look of the impact drill we used in the photos? This is the Skil PWRCore 20 Brushless Impact Drill. Get the kit for about $150 on Amazon.