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[2024 Update] The typical range for tankless heater installation is between $5,400 and $7,400, averaging out to around $6,400 (including the water heater, warranty and tune ups). The tankless heater installation without the unit can cost between $1800 and $3500, averaging out to around $2650. *Prices vary based on the complexity of the circumstances.

Tankless Water Heater

Few things are more frustrating than losing the functionality of your hot water heater. When your unit goes out, it leaves you suddenly unable to enjoy a nice, warm shower or bath. Even simple household tasks like washing the dishes can become unpleasant. Needless to say, when your water heater breaks down, you’ll want to have it either repaired or replaced as quickly as possible.

Assuming your water heater is beyond salvaging, you’ll immediately face a big decision: What kind of water heater should you get to replace it? You can stick with a conventional one, but what about those fancy new tankless water heaters? These units can provide greater energy efficiency, and potentially greater comfort, for you and your family members.

The tankless water heater isn’t actually that new, but for a long time, these units were fairly unattainable, thanks largely to their sky-high price point. As the units have become more commonplace, the average tankless water heater installation cost has come down considerably. This raises the question: Are tankless water heaters finally easy to afford? (Note: You can now get up to $800 in utility rebates.)

In this post, we’ll tell you everything you need to know about having a tankless unit installed, focusing on the tankless water heater cost.

What is the Typical Tankless Water Heater Cost?

Before we outline some of the major choices you’ll make with regard to your tankless water heater, let’s consider the initial question of price. What should homeowners expect the tankless water heater cost to be?

The typical range for tankless heater installation is between $5,400 and $7,400 averaging out to around $6,400 (including the water heater, warranty and tune ups). The tankless installation without the unit can cost between $1800 and $3500, averaging out to around $2650.

One of the big variables is labor rates. Meanwhile, information from Energy Sage notes that an electric tankless water heater will likely cost somewhere around $2,500, a figure that includes both the equipment and the installation. For a gas-powered unit, the average price point is going to be closer to $3,500.

Water heater repair

What is a Tankless Water Heater?

When we talk about tankless units, what are we talking about? And how does a tankless hot water heater differ from a traditional water heater?

Tankless water heaters, also known as on demand water heaters, use powerful burners to quickly heat water as it passes through a heat exchange. As the water is heated, it is distributed to faucets and showers as needed. At no point is the water ever stored in a tank, which is the main point of divergence with traditional water heaters. Also note that tankless units are typically powered by either electricity or gas; we’ll discuss fuel types a little bit later in the post.

What About Traditional Water Heaters?

By contrast, most homes (especially older homes) have water heaters that use tanks. Most units store between 30 and 50 gallons of water in their tank. The water is heated and then kept in reserve for when it is needed, then distributed to faucets, showers, etc. Like tankless units, traditional water heaters can be fueled by either natural gas or electricity.

What are the Pros and Cons of Getting a Tankless Water Heater?

Before we discuss the tankless water heater installation cost, it may be worth reviewing some of the pros and cons associated with these units.

The Pros of a Tankless Unit

Let’s start with some of the positive attributes of tankless water heaters.

  • You can never run out of hot water. If you have a traditional tank unit, then you know it can sometimes take several minutes for the water to reach an acceptable temperature. Tankless heaters tend to work quite a bit more efficiently. It may take a few seconds to flush out any cold water remaining in the pipes, but after that, you’ll have hot water more or less instantaneously.
  • Your unit will come with a longer lifespan. While tankless water heaters often cost a little bit more on the front end, they can ultimately offer superior value and a 15-year warranty. That’s because they last a lot longer than traditional tank units. Where a conventional water heater may last from 10 to 12 years, tankless ones can last 20 or longer.
  • Tankless heaters are easier to repair. If a traditional tank water heater is broken, you often need to replace the whole unit; this is especially true if the tank itself ruptures or cracks. With tankless water heaters, however, it is easier to simply replace individual components that malfunction. This is another example of how a tankless hot water heater offers considerably better value and longevity.
  • Getting a tankless water heater can help you save money on your utility bills. The average tankless water heater is at least 20 percent more energy efficient than a tank unit. This means you’ll save a few bucks on each utility bill. The month-to-month savings may be pretty minor, but over the course of a year, it’s not unlikely that you’ll save a couple hundred dollars. Savings like that can really add up over time.
  • A tankless water heater helps you conserve space. One of the big knocks against traditional units is that they take up so much room. You’ll need to find a space in your basement or garage to install a big, bulky tank. Tankless water heaters only require a fraction of that space, which means you can reclaim some space for storing other items.
  • Tankless water heaters ensure consistent hot water. If you have a traditional water heater, you’ll eventually run out of water in the tank. So, if everyone in the family takes showers one after the other, the folks at the end of the line may not have the heat they crave. Because tankless water heaters supply hot water on demand, you usually won’t run into that problem, unless you have multiple people taking long showers at the same time.
  • With a tankless water heater, you’ll generally get a longer warranty. Because they are made to be more durable and to offer greater longevity, tankless water heaters are most often backed by more generous warranties. This can give you some additional peace of mind as you make this not-insignificant investment.

These are some of the big advantages to going tankless… but what about the drawbacks?

The Cons of a Tankless Unit

There are a few notable downsides to getting a tankless water heater, including:

  • Some tankless units offer inconsistent water temperatures. One of the biggest complaints about tankless heaters is that the water temperature is not always consistently hot. This is especially true if multiple people are running hot water at the same time, forcing the unit to heat water and distribute it to multiple faucets or fixtures simultaneously.
  • Tankless heaters are more expensive. We’ll take a closer look at the tankless water heater cost in just a moment, but for now, just note that the initial startup cost can be a little higher than what you’d pay for a tank unit. Again, though, the overall value of a tankless water heater can actually be quite a bit better, thanks to the longer lifespan and the enhanced energy efficiency. It’s also worth noting that the price gap between tank and tankless units has closed considerably over the past decade or so.
  • Installation of a tankless water heater can sometimes be more complicated. Depending on your home setup, you may or may not need your plumber to reroute gas lines or add ventilation before your tankless water heater can be installed. As you can imagine, this increases the complexity and the cost of the installation process.

These are a few potential issues to keep in mind as you consider whether the tankless water heating route is right for you and your family.

What are the Factors That Can Determine the Tankless Water Heater Cost?

A few examples of the factors that can cause your tankless water heater cost to go up or down include:

  • The fuel type you select. As we’ve shown, an electric unit will usually be a lot less expensive than a gas unit.
  • The size of the system. A more robust and powerful tankless water heater, offering a higher GPM output, will usually be more expensive than a less powerful unit.
  • The complexity of installation. Sometimes, installing a tankless water heater is pretty simple. In other cases, it may require your plumber to install a complicated ventilation system, or to rewire parts of the house to support the new appliance. The more complex the installation, the more it is going to cost you and the longer will take it to install the water heater.

Is a Tankless Water Heater Worth Having?

Given the cost of a tankless water heater, it’s natural for you to wonder if the investment is really worth it.

First, consider that installing a traditional tank water heater will probably cost somewhere between $1,200 and $2,400. So, compared with an electric water heater, they’re not any cheaper.

Now, getting a gas-powered electric water heater may cost quite a bit more on the front end. And, it would be disingenuous to say that the energy efficiency of the tankless unit means it will pay for itself. However, we will note that tankless heaters should offer energy savings every month, and over time those savings will add up. Also keep in mind that tankless water heaters are going to last you longer and may even be less expensive to repair. As such, the lifetime value of the tankless water heater may make it a better option.

What are the Top Tankless Water Heater Brands?

You’ll want to ensure you choose a plumber who will recommend and install a reliable brand of tankless unit. Carter’s My Plumber typically endorses the Bradford White brand, but you may also have good luck with Rheem, EcoSmart, Bosch, or Rinnai.

Why Bradford White?

We like Bradford White because of the quality of their products. These tankless heaters lead the field in terms of overall durability, and we believe that homeowners who choose Bradford White will get a lot of good years out of their unit before they ever need to do any repairs.

Alternatives to Bradford White

Though Rheem does not boast quite the same durability as Bradford White, it’s comparable in many respects, and certainly offers a solid, cost-effective product. EcoSmart’s self-modulating units are a good pick for homeowners who place a special premium on energy conservation. Bosch and Rinnai are solid alternatives as well, though again, Bradford White is going to be our top recommendation for more homeowners.

What’s the Difference Between an Electric Tankless Water Heater and a Gas Water Heater?

As you start looking around for a tankless water heater, one of the biggest decisions you’ll face is whether you should get an electric tankless water heater, or one that runs on natural gas. (A third fuel option is propane, but propane water heaters are not as common; for our purposes today, we’re just going to focus on the two more common fuel types.)

There’s not necessarily a “right answer” here, though if your house does not have natural gas access, then your hands might be tied. Otherwise, it’s important to consider the pros and cons of both fuel options. Keep in mind that the fuel type may have an impact on your tankless water heater installation cost.

The Cost of Electric vs. Natural Gas Water Heater Installation

One of the main differences to be aware of is cost. As a general rule, a high-quality gas water heater is going to be more expensive to buy and to install than an electric one. You can shop around and get a cheaper gas option, but of course, this often means you are compromising quality. (This is definitely a situation where you get what you pay for.)

There are actually three different types of gas water heaters available, and the option you pick will have a big impact on your tankless water heater costs. Consider:

  1. Non-condensing tankless systems. Non-condensing systems tend to be less expensive to buy, but they may be more expensive to install. That’s because these systems will require your plumber to install a more complicated ventilation system.
  2. Condensing tankless systems. These units extract heat from the exhaust before it travels through the ventilation system; the upshot is that these units are simpler and less expensive to install, though the cost of buying the unit itself may be more.
  3. Outdoor systems. Outdoor systems do not have any ventilation needs at all, which means installation tends to be less expensive than either of the other options.

By contrast, electric tankless water heater installation tends to be less expensive, and the units themselves also cost less. However, there is one big exception: If you live in an older home, you may need to upgrade your electrical system in order to accommodate your electric tankless water heater. Naturally, this causes the price tag to increase considerably.

What About Performance and Efficiency?

In addition to cost, electric and gas water heaters can also differ with regard to their performance and energy efficiency.

Water Heater Energy Efficiency

Of course, one of the primary reasons why homeowners seek tankless water heater installation in the first place is to improve their household energy efficiency (and thus to save some money from month to month). However, the efficiency of any tankless water heater is variable according to several different factors, most notably the demand for hot water within the home. It should be noted that even the least efficient tankless unit should outperform a conventional water heater.

Something else to keep in mind is that water heaters (and many other appliances) come with an energy factor (ER) rating, which is a measure of the unit’s overall energy efficiency. More specifically, the EF rating measures the useful energy that the water heater generates. The higher the EF rating on a given unit, the more energy efficient it is.

So what does all of this have to do with your decision about electric vs. natural gas water heaters? Well, if you compare the EF ratings for different units, one thing you’ll notice is that electric units tend to have a higher EF rating. However, this doesn’t really tell the whole story; if you live somewhere where gas is a less expensive fuel source than electricity, then running a natural gas unit can still be the more cost-effective solution. To put it slightly differently, electric water heaters are usually more energy efficient, but in some cases, they can also be more expensive to operate.

Water Heater Performance

Both gas and electric water heaters are going to heat and distribute water, but when you look more closely at how they operate, you will find that this is where the similarities end.

We won’t get into the specifics of each fuel source and how they impact performance, except to note that gas water heaters tend to offer superior hot water output, as measured in gallons per minute, or GPM.

In fact, gas units typically deliver about twice as much hot water when compared to electric tankless water heaters. If you’re in a larger household where many different people will need hot water, getting a gas unit is usually the superior option.

Understanding BTUs

As you shop for a heater, something else you’ll want to know about is the measure of BTUs, or British thermal units. This references the quantity of heat needed to raise one pound of water by one degree F. Water heaters generally come with ratings for BTUs per hour, which basically just tells you how much water the unit can heat in an hour’s time.

Choosing a Single-Point Vs. Whole-House Unit

You should also be aware of the difference between single-point water heaters (which are really more like appliances, usually designed to heat just a single faucet) and whole-house units (which can heat water to any faucet in your home). Single-point heaters are not as common and are generally not recommended, but it’s still worth knowing about them.

Maintaining Your Unit

Gas and electric water heaters can also vary in terms of their maintenance requirements.

A tankless water heater that runs on natural gas is going to be more prone to the buildup of mineral content inside it. As you get more and more mineral buildup within the unit, it causes the heater to work extra hard. This not only diminishes the energy efficiency of the unit, but it may also place you at greater risk of the tankless water heater burning out or shutting down.

All of this can be avoided by flushing the tankless water heater annually, or by calling a plumber to come inspect it and flush it as needed. And, if you live in an area where the water is hard, you can augment your tankless water heater with a water softener, which can help cut back on that mineral buildup. Again, to install a water softener, simply call an experienced plumber in your area.

By contrast, electric tankless water heaters require a lot less maintenance. You may need to do a lime scale flush from time to time, but other than that, these units do not require any special care in order to work at a peak level.

With specific questions about maintenance for your unit, we advise just chatting with the plumber who handles your tankless water heater installation.

What Else Should I Know About Getting a Natural Gas Tankless Water Heater?

As you think about your options for tankless water heaters that are fueled by natural gas, there are a few other considerations to make… all of which can have a big impact on your unit’s performance, but also on your tankless water heater costs.

Different Types of Ignition System

One of the choices you’ll need to make with regard to your gas-fueled tankless water heater is what kind of ignition system to get. There are three basic options: Standing pilot light, direct ignition, and hydro-power ignition. Here’s a quick summary of each ignition system type:

  • Standing pilot light. This type of tankless water heater has a pilot light that’s always burning, which means your energy savings will be somewhat diminished. However, the initial cost of a standing pilot light unit tends to be quite low.
  • Direct ignition. This type of tankless water heater sends a spark to the main burner any time water flow is detected. This type of ignition system is quite popular, but be advised that it will require either batteries or an electrical hook-up in order for the sensor to work properly.
  • Hydro-power ignition. This type of ignition system uses a turbine system. When water flows into the turbine, it activates the burner. These units do not require batteries or electrical hookups.

Condensing vs. Non-Condensing Units

Still another important consideration to make when installing a gas-fueled tankless water heater is whether you want a condensing or a non-condensing unit. Basically, these represent two different ways for tankless water heaters to handle their exhaust.

Let’s talk about non-condensing tankless water heaters first. These units tend to be less expensive to purchase but more expensive to install, something we noted in an earlier section. The reason they are pricier to install is that they require a more complex ventilation system. For example, you can opt for a direct vent system, which draws air from outside of the home into the water heater for combustion. Or, you can choose a power vent option, which draws air from inside the home.

Condensing tankless water heaters are a little pricier to buy, but they can be easier and more affordable to install. No complex ventilation configurations or expensive materials are needed, as these units draw heat from the exhaust before releasing it into the ventilation system.

With specific questions about any of these options, we recommend talking with your plumber about the type of tankless water heater that’s best for your home.

Finding the Right Plumber to Install Your Water Heater

As you consider your options for tankless hot water heaters, there’s one final decision you’ll need to make: Who will you hire to install your tankless heater? Make sure you do your due diligence and find a reputable local plumber who will provide you with quality workmanship at a fair, honest price.

If you don’t already have a good local plumber in your contacts list, here are a few tips and suggestions for finding one.

  • Ask around. The best place to start is by simply inquiring among your friends, co-workers, neighbors, and family members. Ask them if they have had any plumbing work done recently, and if so, which plumbing company they hired. Ask if they would ultimately recommend their experience.
  • Do some online research. You can also find good local plumbers by conducting some Google research. Pay special attention to reviews on sites like Facebook, Google, and Yelp. While these reviews are far from infallible, they can tell you a lot about different plumbing companies’ customer service standards, quality of work, etc.
  • Ask for an estimate. It’s reasonable for you to want a general estimate for how much it is going to cost to have a new hot water heater installed. Make sure you find a plumber who is willing to offer some clear upfront pricing information. Be wary of plumbers who seem evasive any time questions of pricing come up.
  • Seek exceptional customer service. We recommend interviewing three to five different plumbers before choosing someone to install your tankless heater. One thing to be alert for is customer service. You deserve a plumber who will treat you with decency and respect; if you dislike how a plumbing company representative speaks to you, that’s reason enough to look elsewhere.
  • Ask about credentialing. You should always verify that the plumber holds a valid license. It may also be worthwhile to inquire about things like BBB affiliation or membership in the local Chamber of Commerce, both of which can reveal much about the plumber’s reputation in the community.

By following these basic guidelines, you can find a skilled plumber who will make quick work of your tankless heater installation. And remember, following the installation, to ask any questions you may have about maintenance for the unit, and to request a copy of all relevant warranty information.

Summary: Key Considerations for Your Tankless System

As we conclude this article, it may be helpful to offer a quick summary of our conclusions:

  • Investing in a tankless system is going to come with a steeper installation cost than what you would associate with tank water heaters.
  • However, due to the improved energy efficiency and longevity of tankless water systems, they may represent the superior value overall.
  • Before investing in a tankless unit, you’ll need to do plenty of research to understand different options for fuel type, ventilation type, and more.
  • As for the typical installation cost, you can anticipate $2,500 for an electric model and $3,200 for gas models.
  • However, a number of factors can impact installation cost, including fuel type but also the size of the system, and the complexity of installation.
  • One final decision is regarding the plumber you select, which can also have a big impact on installation cost, as well as on the quality of workmanship.

If you are ready to have a new gas tankless water heater installed or if you have any questions about your current one, we invite you to contact Carter’s My Plumber. Our team of experts has ample expertise with gas water heater models and would love to help at any time. Please note that here at Carter’s My Plumber, we no longer recommend or install electric water heaters since they are so unreliable.

Kelson Carter

Article reviewed by:

Kelson Carter, aka, The Prince of Plumbing

Kelson is a 3rd generation Plumbing Contractor. His family business is located in Greenwood, Indiana, and provides Residential Plumbing Service to the Indianapolis Metro market.

Kelson grew up watching his grandfather and father do plumbing. After graduating high school, Kelson went to Trade School and became a Licensed Master Plumber and Licensed Plumbing Contractor. He is also Certified in Backflow Prevention. He currently owns and operates Carter's My Plumber with his parents.


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