In comparison to storage tank systems, tankless water heaters are costlier upfront – meaning a higher price tag and more expensive installation.
However, operating costs are much lower due to almost zero standby losses which will save you money in the long run.
Above that, a tankless system lasts for up to 20 years, a traditional unit a mere 10 to 15.
So are tankless water heaters worth the cost? And how much does a tankless water heater plus installation cost anyway? Learn everything you need to know in our guide below!
Please keep in mind that most numbers on this page are estimates!
Depending on the scope of the project and who you ask, a new tankless water heater including installation can cost anywhere between $250 and more than $5,000 USD.
Now obviously, this is not really helpful, so let’s break this down in a little more detail:
Purchase & Installation
The price for a tankless gas water heater ranges from $100 USD for the smallest point-of-use unit to about $2,000 USD for a large whole house system that is highly efficient and has lots of extra features.
The price for an electric tankless water heater ranges from $100 USD, again point-of-use, to about $900 USD if you go whole house.
The average cost to install a tankless water heater is about $1,900 – $2,000 USD (although the cost to install an electric heater can be as low as $150 USD). This average includes expenses for labor, installation materials, permit pulling and warranty on labor.
How much is a tankless water heater? Answering this question is not as easy as it may seem. That’s because there are a variety of factors that we need to take into consideration:
Tankless gas water heaters are typically priced higher than their electric counterparts.
240,000 BTU, 380,000 BTU – the price for commercial tankless water heaters goes into the thousands depending on your specific requirements. Therefore, it doesn’t really make sense to talk about estimates here. We recommend you contact a couple of suppliers in your area and continue from there.
Where to buy a tankless water heater?
Naturally, we always prefer to buy online, for example at Amazon or Home Depot, for the best prices.
But of course most manufacturers also distribute their hot water heaters through local dealers and/or licensed contractors. Another viable option are hardware and big-box stores.
Generally speaking, electric water heaters are easier to install than gas. This is because the latter needs venting.
This can change, however, in case you have to rewire your home or upgrade your electrical system to meet the amperage requirements of your new electric water heater.
It also matters if you are only replacing an old heater which needs to be removed but means that most or even all of the plumbing connections etc. already exist, if you plan to switch fuel sources, fixes required to comply with plumbing or electrical codes, and whether or not you want to upgrade from tank-based to on-demand.
In other words, how much the installation of a tankless water heater costs varies significantly. Apart from basic labor, other factors to take into account are:
|Full installation (mounting, cold and hot water connections, gas line, venting)||About 8 (10) hours||Copper/flex piping, gas piping and kit, vent piping and kit, valves, fittings, mounting hardware, …||$1,000 – $1,700 USD|
|Replacement of old water heater, already existing gas line + venting can be used||3 – 4 hours||Gas kit, vent kit, valves, fittings, mounting hardware, …||$200 – $700 USD|
|Other Cost Factors||Pricing|
|Upgrade to larger gas pipe diameter||~$500 USD|
|New venting system||$150 – $600 USD|
|Removal and disposal of old water heater||$100 – $300 USD|
|Full installation (cold and hot water connections, electrical connection)||2 – 5 hours||Copper/flex piping, valves, fittings, mounting hardware, …||$150 – $750 USD|
|Replacement of old water heater, already existing water lines can be used||1 – 3 hours||Valves, fittings, mounting hardware, …||$150 – $250 USD|
|Other Cost Factors||Pricing|
|Outlet must be installed and wired back to electrical panel||$100 – $200 USD|
Cost Estimates & Hiring
Of course, it is impossible to cover every single scenario here, so contacting 3 or 4 companies in your area to ask for price estimates is probably the best idea.
Pro tip: Look for contractors that are licensed and insured, have been in business for years and that offer warranty on their labor. An A+ rating on the BBB website and other directories is also a good indicator for a reputable service provider.
Depending on your type of tankless water heater, gas or electricity will make up your main operating cost, obviously. And the more hot water you consume, the higher your bills are going to get.
Gas vs. electricity – which one is more affordable? As a rule of thumb, a gas water heater will cost about a third less to run than an electric unit, although this also depends on utility cost in your area.
Another deciding factor is temperature rise which is determined by feed water temperature as well as output temp settings. Now, there isn’t much you can do about inlet water temp except for moving to a warmer climate. But you can adjust your water heater’s thermostat to the minimum output temperature you feel comfortable with.
Annual cost to operate a gas tankless water heater ranges from less than $200 USD up to $500 USD. System efficiency plays a minor role only.
Powered from a utility supply line, natural gas is the less expensive option. Propane, on the other hand, is the more efficient fuel with much higher BTU but needs to be purchased independently. For natural gas as well as propane prices vary by region.
Annual cost to operate an electric tankless water heater ranges from less than $100 USD up to $300 USD and higher. System efficiency can be neglected.
When it comes to maintaining a tankless water heater, all that an electric/gas unit needs to perform at its peak is occasional descaling a.k.a. deliming and flushing of the heating elements. This usually has to be done once every 12 months, depending on your water hardness and usage.
FYI: You don’t really have to worry about descaling if you have a softener installed upstream of your instant hot water heater. What’s more, the involved steps are not overly complicated, so you could do this yourself in order to save a few bucks. However, you would need to buy a system descaler kit which retails at about $120 USD.
Maintenance performed by a plumber takes 1 to 2 hours. Expect to pay between $50 and $120 USD for this.
As mentioned in the introduction, compared to a storage tank system, a tankless water heater is a costly upfront investment. But it cuts recurring costs by a large margin due to almost zero standby losses – unlike storage tank systems.
Depending on how much hot water you use on an average day, on-demand water heaters can be about 30 percent more energy efficient, says the U.S. Department of Energy.
And yet still, the question remains: Are tankless water heaters worth the cost?
“Water heating is the second largest energy end use in homes (…). It accounts for 16.8 percent of residential energy consumption and can cost a household anywhere from $200 to $600 a year”. (Source)
A typical family of four using 64 gallons of hot water a day can save about $115 USD annually, when switching from gas tank-based to gas tankless. If you are using lots of hot water, about 85 gallons a day, energy savings of 8 – 14 percent are realistic.
With electric heaters the cost savings are a little bit less, but so are the initial expenses.
All in all, tankless water heaters have a very long payback period, roughly 20 years, which is about as long as the average system lasts.
If you have any questions about the cost of a tankless water heater please don’t hesitate to leave a comment below!