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Highlights
- The typical tankless water heater installation cost is between $1,333 and $3,721, with a national average cost of $2,527.
- Cost factors for installing a tankless water heater include the system size and flow rate, fuel type, brand, labor, and accessibility.
- Tankless water heaters have many benefits, including increased space, improved safety, easy winterization, decreased energy usage, longevity, easy maintenance, and heat consistency.
- Installing a tankless water heater is not a DIY job. Homeowners will want to hire a licensed professional plumber to make sure the installation is done correctly.
For homeowners who are tired of running out of hot water, a tankless hot water heater may be the solution. According to Angi and HomeAdvisor, tankless hot water heater costs range from $1,333 to $3,721, with the national average at $2,527.
It’s not unusual for homeowners to wonder “What is a tankless water heater?” and “How does a tankless water heater work?” Unlike tank water heaters, which store and heat water that can be pumped to the home, tankless units heat water on demand. When comparing tank vs. tankless water heaters, homeowners will note that tankless water heaters (also called on-demand water heaters) have some major advantages. Tankless heaters use energy to heat water only when you open a tap or use an appliance. They can produce an endless supply of hot water, have a lower risk of leaks, take up less space, and usually have a longer lifespan.
The overall cost of installing a tankless water heater varies depending on the type, brand, and flow rate. When hiring a professional to install a tankless water heater, homeowners can expect to pay a plumber either a flat rate for labor or an hourly fee. Some plumbers charge between $45 and $200 per hour to install and connect a tankless water heater. The ultimate costs for labor usually average between $600 and $1,850.
Factors in Calculating Tankless Water Heater Cost
Calculating tankless water heater cost depends on several factors. Prices can differ from the national average due to the type of system, whether it’s a single-point or a whole-house system, the type of fuel it uses, the flow rate, system size, brand, labor, materials, permits, accessibility, and additional charges for the removal of the existing heating system.
System Size and Flow Rate
Tankless water heater systems will have varying prices depending on their size. The size of a tankless water heater is measured in British thermal units (BTUs), which is the amount of energy the unit is able to conduct. A whole-house system will need to have enough BTUs to quickly heat the water as it is needed. The total BTU output is determined by calculating the home’s hot water demand and the BTUs per gallon.
Another important consideration is flow rate. Flow rate refers to the amount of water that can travel through a length of pipe in a certain measure of time, and this is often determined by measuring how many gallons per minute (GPM) are needed. Homeowners can calculate the GPM needed for their home by looking at what fixtures and appliances are used simultaneously and adding those numbers together to determine the maximum GPM necessary.
“Determining the size of a heater is based on how many fixtures can demand hot water at the same time,” explains Billy Bruninga, owner at Billy’s Plumbing and Rooter. “If you have 2 showers, laundry, and a kitchen sink, you will need something providing approximately 8 gallons per minute.”
The average home needs a system between 5.5 and 7.5 GPM to have a reliable source of hot water. Peak demand can be reduced by using low-flow fixtures or not using multiple appliances and fixtures simultaneously. It’s worth noting that gas and electric tankless water heaters will have different GPMs. Gas water heaters have the highest rates at an average of 5 GPM, and electric ones have around 2 GPM.
Various household features require different flow rates, and homeowners will want to account for multiple appliances or faucets being used simultaneously.
- Kitchen sink: 1.0 to 2.2 GPM
- Dishwasher: 1.5 to 3.0 GPM
- Bathroom sink: 0.5 to 2.2 GPM
- Shower: 1.5 to 3.0 GPM
- Washing machine: 2.0 to 3.0 GPM
Fuel Type
The total cost for installing a tankless water heater depends on the type of heater. A high-end gas model can cost upward of $1,500, and a single-point electric model averages around $450. Electric, natural gas, propane, or solar power can fuel tankless water heaters. Each type has its price point and advantages.
Tankless water heaters can be fueled in various ways. They can run on natural gas, propane, electricity, oil, or solar power. Some homeowners prefer to use a tankless water heater that runs on the same fuel source as the home’s heat. Some hot water heaters can use a combination of fuel sources, like an electric heater with a propane furnace. A solar-powered unit is one of the most energy-efficient water heaters and can help reduce energy bills, but it will cost more up front to install.
Brand
There are many brands to choose from when buying a tankless water heater. Some will be more budget-friendly, while others will be more expensive. It’s recommended that homeowners consider all the options for a tankless system and not just the overall cost. Warranties are another important factor—some brands may come at a relatively low price but have a warranty period of only a few years. It may be worth looking through some tankless water heater reviews to find out which brand is best.
| Brand | Average Cost (Unit Only) |
| American Standard | $990 to $1,010 |
| A.O. Smith | $580 to $1,550 |
| Atmor | $280 to $1,600 |
| Bosch | $480 to $2,350 |
| Bradford White | $1,050 to $1,700 |
| Eccotemp | $330 to $900 |
| EcoSmart | $450 to $680 |
| Marey | $480 to $750 |
| Navien | $1,000 to $2,000 |
| Noritz | $550 to $2,600 |
| Rheem | $350 to $2,000 |
| Rinnai | $500 to $2,300 |
| SioGreen | $700 to $1,000 |
| Stiebel Eltron | $300 to $1,000 |
| Takagi | $500 to $1,900 |
Labor
When plumbers install tankless water heaters, they typically charge between $45 and $200 per hour, depending on the location. It usually takes close to 3 hours to install a tankless water heater, based on water heater type, fuel source, and location. Installation typically involves opening up walls, which will add to the overall cost of the project. There may be additional fees added for repairs and paint. To install an access door for water heater repairs, homeowners can hire a carpenter. Additional costs for installing ventilation and insulation may accrue if you live in a colder climate. Fuel type can also affect cost if new fuel lines will need to be run to the heater.
Accessibility
If the existing water heater is difficult to access, homeowners will need to be prepared to pay more for its removal and to install a new one. The prices will depend on the exact home and situation, but for units that are difficult to access, homeowners can expect to spend an additional 10 to 15 percent more. This is because it takes longer to work in a tight space, so the labor may take longer than usual.
Additional Costs and Considerations
There will be additional price factors and considerations beyond the basics when budgeting for the cost to install a tankless water heater. These can include whether the unit is a single-point or whole-house system, removal of an old water heater, permits, electrical work, insulation, gas line installation, structural modifications, whether the unit uses a power vent or a direct vent, and condensing versus non-condensing tankless water heater models.
Single-Point vs. Whole-House System
A point-of-use or single-point tankless water heater system is placed by the faucet, appliance, or shower that needs it. These are easy for a professional to install and cost between $100 to $300 each. They are efficient since the water has a short distance to travel, so less water is wasted. Single-point systems are standard in homes with multiple bathrooms and appliances. These water heater systems can be installed inside or outside the house and no more than 50 feet away from an adjoining power source using an electric heater. This requires a separate water heater for each water source. A single-point unit produces from 0.5 to 2 gallons of hot water per minute.
A whole-house system can cost between $450 and $1,500 and is typically installed near an exterior wall for proper venting for gas units. One whole-house system can provide hot water for multiple appliances and bathrooms even when they’re being used simultaneously, and homeowners can choose from a variety of sizes to suit their needs. A whole-house system produces between 5 and 10 gallons of hot water per minute. Some houses may need multiple whole-house units if several people are showering, doing laundry, and running the dishwasher simultaneously. If the home’s output exceeds the maximum 198,000 BTUs for residential water heaters, it’s recommended to go with two smaller tankless water heaters that will work in tandem. Some homeowners decide on a whole-house tankless system with a few single-point units for specific rooms. It’s a good idea to consult a tankless water heater professional for advice on which of the best tankless water heater systems is the right fit for the home.
Existing Water Heater Removal
If it’s time to replace an old water heater, the removal of the current water heating system can cost $500 or more, depending on the size of the unit, the accessibility, and the hourly rate of the contractor. When shopping around for installation estimates, homeowners will want to be sure that the price quote includes the removal and disposal of your current water heater.
Permits
Depending on the building codes in a particular area, having a tankless water heating system installed in a home may require a permit. Some areas consider a water heater replacement and a new water heating system as two different jobs. One may require a permit while the other may not. A professional plumber would know the difference and whether your installation project needs a permit. Propane-powered heating systems typically require that the installation is handled by an insured and licensed professional. Depending on the home’s location, permits may cost anywhere from $50 to $100.
Electrical Updates
An insufficient electrical supply is likely to result in the electric water heater not working as it should. If a homeowner chooses an electric tankless water heater, some electrical designs and systems may need to be updated to aid with the voltage requirements of the new water heater. An electrician is likely to charge between $50 and $100 per hour, and the project typically takes 2 hours at most. Converting from gas to electric will also require the help of an electrician.
Insulation
Some tankless water heaters cannot be installed in the same location and configuration as a tank-style heater. A plumber and electrician may have to design a new setup with additional materials like piping and insulation, which can cost $10 per foot. If the home is located in a location with a cold climate, the water pipes will need to be insulated. Plumbers typically charge $45 to $200 per hour to insulate or modify pipes.
Gas Line Installation
Tankless gas water heaters require more time and effort to install. The gas line that runs to the tankless heater needs to be fitted specially to the heater. If there isn’t an existing gas line or an offshoot where the water heater will be installed, a gas line will need to be run. Gas line installation costs can increase the project total by up to $1,000. Keep in mind that tankless gas water heaters have restrictions on where they can be installed, especially if they need to be vented to the outside.
Structural Modifications
Some homes may need structural modifications when a tankless water heater is being installed. Older homes may require a permit for building a cabinet for a tankless heater, but it’s a good idea to ask the contractor if structural considerations are included in a plumbing or electrical permit.
Vent Types
Whether they’re natural gas or propane, all tankless gas water heaters need to be vented to the outside. They can be vented in two ways: with a power vent or direct vent. A power vent draws indoor air surrounding the water heater and utilizes an electric blower or fan to vent the exhaust through a horizontal or vertical duct. A direct vent brings in air from the outside through a duct and exhausts through a different chamber or duct within the same duct. Small and enclosed spaces work well for a direct vent. Tankless water heaters can be vented via the roof or an exterior side wall.
Condensing vs. Non-Condensing
Tankless water heaters are available in condensing and non-condensing varieties. Condensing tankless units have a second heat exchanger that traps the extra heat before it exits to the venting system and uses it to heat the water. This increases the energy efficiency of the water heater to 90 percent or more. Non-condensing tankless water heaters utilize a single heat exchanger and vent the exhaust heat to the outside. These types of water heaters have an energy efficiency rate of 80 percent.
Types of Tankless Water Heaters
Tankless water heater cost can vary depending on the type of water heater that’s installed. A natural gas or propane heater will cost more in upfront costs but will save money down the road. Electric water heaters are cheaper to install, but the cost of running them over the appliance’s life depends on the local cost of electricity. A solar-powered water heater is one of the most expensive heaters to install, but they will save money in the long run by using a renewable power source.
| Tankless Water Heater Type | Average Cost (Materials and Labor) |
| Electric | $800 to $1,500 |
| Natural gas | $1,000 to $1,500 |
| Propane | $1,000 to $1,500 |
| Solar | $1,700 to $6,000 |
Electric
Electric tankless water heaters are less expensive to install than natural gas or propane heaters. They typically run between $800 and $1,500 to install, and since there is no need to vent to the outside, the installation is not as complicated. Electric heaters are easier to maintain, have high energy ratings, and perform well. A tankless electric water heater is more energy efficient than a tank-style heater.
This type of tankless water heater is very popular with homeowners. It’s environmentally friendly since it only needs electricity to run and requires minimal maintenance, but it’s rare to find an electric heater with outputs of more than 7 or 8 GPM. If a homeowner has above-average hot water usage and wants to have an electric heater, it may be recommended that they opt for a tank-style heater instead. If they are set on a tankless option, a different fuel source may work better for their household.
When converting from a natural gas heater, it may be necessary to hire an electrician on top of a plumber for $50 to $100 per hour. A professional can help homeowners pick out the best electric tankless water heater for their home, whether it is a point-of-use or whole-home model.
Natural Gas
Natural gas water heaters cost between $1,000 and $1,500 to install. Natural gas water heaters are a popular choice and work well in cold climates. These heaters rely on a utility supply line, and the average cost to run a natural gas heater is approximately $200 per year. Tankless gas water heaters can supply about 15 to 20 GPM—more than electric heaters. Gas heaters are ideal for larger households, those who live in colder climates, and those with above-average use of hot water.
Propane
Tankless propane water heaters are considered more fuel-efficient than natural gas, though their installation costs are the same at $1,000 to $1,500. It costs $350 per year to run a propane tankless water heater, so it’s slightly more expensive than a natural gas heater. Propane heaters are an excellent option for those who do not have access to a natural gas line or for those who have expensive electricity prices. Propane is typically more expensive than natural gas but more budget-friendly than an electric or oil-powered water heater.
Solar
The average cost for a solar tankless water heater is $1,700 to $6,000, but the cost can skyrocket as high as $13,000 or more. A solar water heater qualifies for a 30 percent tax credit, and studies have shown that they reduce water heating expenses by 50 to 80 percent. These types of water heaters are recommended in sunny locations. They’re easy to maintain and operate quietly, but the installation and repairs are costly. Once the solar water heater is up and running, they don’t have any energy costs since they run on the sun’s power. This will pay for the heater over time.
Benefits of Choosing a Tankless Water Heater
Converting from a standard tank-style water heater to a tankless on-demand hot water heater is a beneficial upgrade to any home. Tankless-style water heaters typically last longer than their tank-style counterparts, use less energy, provide an endless supply of hot water, and reduce utility bills.
Increased Space
Traditional tank-style water heaters hold approximately 40 to 60 gallons of water. They typically measure 60 inches tall by 24 inches wide and take up considerably more space than a tankless version. The standard size for a tankless water heater is 28 inches tall by 20 inches wide by 10 inches deep. Tankless heaters are usually installed inside the wall or in a cabinet. This can free up space in a basement or utility closet.
As Brininga explains, “Tankless water heaters […] are compact. You do not have to dedicate so much space for the tank.”
Improved Safety
If a tank-style water heater fails, it can potentially leak or spill dozens of gallons of water into the home. There’s no risk of that with a tankless water heater. Tankless heaters also do not promote bacteria growth, and they will not topple over in an earthquake or other natural disaster. Since the air supply to the heater and the vents to the outside are sealed, there is no risk of harmful carbon monoxide exhaust backing up into the house.
“Tankless water heaters […] do not store water,” explains Bruninga. “So if the unit leaks, you will not lose all 40 or more gallons of precious water.”
Easy Winterization
Suppose a homeowner owns a seasonal home or a vacation rental. It can be time-consuming and difficult to drain a traditional tank-style water heater before closing the house up for an extended period. A tankless water heater can be drained in seconds with a compressor, then simply unplugged.
Increased Efficiency
Condensing tankless water heaters can use up to 96 percent of the fuel’s heat and reuse it. This is because the second heat exchanger traps the exhaust heat before it’s expelled out of the vent. Condensing tankless heaters are about 25 percent more expensive than their non-condensing counterparts. Furthermore, they create an acidic condensate that will need to be offset and neutralized. If the heater doesn’t come with a built-in neutralizer, a water heater professional will need to install one.
Decreased Energy Usage
The energy savings with tankless water heaters are much more significant compared with traditional tank-style heaters. Water heating makes up approximately 30 percent of a home’s energy bills. A tankless water heater can save up to 50 percent, which adds up to $80 to $100 per year. Since tankless water heaters only heat water as it’s needed, it can significantly reduce energy use. Additionally, some tax credits may be available for homeowners who choose Energy Star–certified units.
Longevity
The cost to replace a water heater is not insignificant. A major benefit of gas-powered tankless water heaters is that they can last for 20 years or more. They last longer and require less maintenance than tank-style water heaters since they do not store water in a tank at risk of corrosion and leaks.
Easy Maintenance
Tankless water heaters are easy to maintain, but there may be more work involved if the home has hard water. The minerals in hard water can cause buildup and lead to clogged pipes. When this happens, homeowners may notice their water heater making noise or operating less efficiently. It’s recommended to do a yearly descaling even in homes without hard water. If the water temperature is kept hotter than average, it’s recommended to descale every 6 months. The Department of Energy suggests periodic maintenance as proposed by the manufacturer. A plumber who fixes water heaters will also be able to descale the unit. Hourly plumber fees average between $45 and $200 for tankless water heater maintenance, with most jobs taking between 1 and 2 hours.
Heat Consistency
When the entire supply of a home’s hot water is stored in a tank, the possibility of running out of hot water at an inopportune moment is likely. Tankless water heaters heat water as it’s needed for as long as it’s needed. “They are endless hot water systems,” explains Bruninga, “Meaning you will never run out of hot water.”
Tankless Water Heater Installation: DIY vs. Hiring a Professional
Installing a tankless water heater is not a project for the average DIYer. Many homes will need modifications to accommodate a new tankless water heater. These can include new electrical wiring, new gas lines, pipes, fittings, or drywall. Some locations require that this work be done by a trained and licensed professional. Some codes involve carbon monoxide emissions, venting, thermal resistance, and location-specific regulations for earthquakes in California. If homeowners are unsure of who installs water heaters in their area, reaching out to a local plumber is a good place to start.
If homeowners have any uncertainty about what size or fuel type their new tankless water should be, a professional will also be able to clear up these questions. A plumber will examine the temperature of the water coming into the house and determine how many BTUs it will take to turn cold water into 120-degree Fahrenheit water. They will also be able to determine the peak demand by examining the sum of the flow rates of all the fixtures and appliances used at the same time that use hot water.
To ensure that the new tankless water heater is installed correctly and that the system will meet all of the home’s water demands, it’s wise for the homeowner to hire an experienced plumber. It’s also a good idea for them to hire for this project sooner rather than later, as replacing an old water heater before it fails can prevent damage and save homeowners money on energy costs.
How to Save Money on Tankless Water Heater Cost
Tankless water heater costs can be high, and the additional costs associated with the project can quickly add up. One way to save on tankless water heater costs is to install the cheapest water heater, but there are other ways to save without compromising quality.
- Rebates. Condensing tankless water heaters are more energy efficient than traditional options, and they’re certified by the federal Energy Star program and qualify for rebates. The rebate amount is typically enough to make up the price difference between a condensing unit and a non-condensing one. Ask your water heater professional about manufacturer rebates.
- Tax credits. The government offers a 30 percent tax credit if you opt for a solar-powered tankless water heater.
- Get multiple estimates. Get at least three estimates from reputable plumbers in your area to compare installation costs.
- Fuel type. Deciding on a natural gas, propane, or solar-powered water heater will affect the project’s overall price. Some fuel types are more expensive up front but will save more money down the road. Consider the options and choose the type of tankless water heater that will work the best in your home.
Questions to Ask About Tankless Water Heater Installation
Asking a professional the right questions about tankless water heater costs can minimize miscommunication, save money, and get the desired results. There are several questions a homeowner can ask a tankless water heater professional:
- Are you licensed and insured?
- Is a tankless water heater the best fit for my home?
- Who will install the tankless water heater?
- What size tank do I need?
- What is the flow rate of the new unit?
- What fuel source do you recommend?
- What brands of tankless water heaters can I choose from?
- How energy efficient is the unit?
- How long will the installation take?
- Does this job require a permit? If so, who is responsible for obtaining it?
- How will you remove and dispose of the current water heater?
- Do I need to schedule maintenance appointments?
- What type of warranty do you offer?
FAQs
Deciding on a tankless water heater while staying within budget can be a daunting process. Homeowners will want to consider some frequently asked questions about tankless water heater costs for guidance in this decision-making process.
Q. Can I run out of hot water with a tankless water heater?
A tankless water heater will heat water on demand so that there is enough hot water to supply the home when it is needed.
Q. What is the main downside of a tankless water heater?
One of the cons of a tankless water heater is that when homeowners are comparing tank vs. tankless water heater costs, the up-front expense of a tankless unit is higher than a tank-style water heater. It can take several years to see the savings of a tankless heater, and these units can supply inconsistent water temperatures if an incorrect size is installed. Additionally, water heater repair costs tend to be higher for tankless units. Probably the biggest downside is that a tankless system does not provide hot water during a power outage.
Q. How long will my new tankless water heater last?
On average, the lifespan of a tankless water heater is approximately 20 years with proper maintenance.
“Tankless water heaters last 15 to 20 [years],” says Bruninga. “It all depends on how each unit is installed, what maintenance you perform, and other factors like location, inlet water pressure, and chemicals in your water.”
Sources: HomeAdvisor, Angi, HomeLight, HomeGuide
