Tankless Water Heater Cost Factors
The typical tankless water heater cost is affected by many factors. Here are the main points that will affect your budget.
Single-Point vs. Whole-House System
When it comes to the world of tankless water heaters, consumers typically choose between single-point and whole-house systems. Each system features its own price range, use case scenarios, and advantages. Single-point (or point-of-use) tankless heaters can cost between $100 and $300, while whole-house systems cost between $450 and $6,000, with the highest range reserved for solar tankless systems.
Some homeowners mix and match here, installing a whole-house unit to handle the primary heating duties and placing a single-point system in an additional bathroom for increased efficiency. This method helps if multiple people in the home take showers at once.
Single-Point System
Single-point tankless heaters that provide hot water to a single faucet or shower are an economical solution for a detached guest house, garage, or workshop.
Single-point systems are highly efficient, as the heated water travels a short distance. However, they aren’t for large homes, as single-point systems travel a maximum of 50 feet and only produce 1/2 to 2 gallons of hot water per minute.
Whole-House System
If you have a large home with plenty of bathrooms and water-based fixtures, a whole-house system is a safe bet. Whole-house systems operate using electricity or gas and come in various sizes that heat anywhere from 5 to 10 gallons of water per minute.
Energy Type
Different energy types of tankless water heaters cost anywhere from $800 to $6,000. The type of tankless water heater you purchase affects the cost, with electric coming in at the most affordable, followed by gas, and then solar.
Quantity
If you're purchasing a single-point tankless water heater, these often range from $100 to $300 each. However, you might end up buying multiple heaters to accommodate different rooms, increasing your project cost.
Quality
For a high-quality tankless water heater, expect to pay around $1,000 to $3,000 more than a lower-quality tankless water heater. Lower prices often mean lower quality and longevity; if you plan to rely on the heater for everyday use, spending a bit more on higher quality products is a good idea. Plus, a high-quality tankless water heater can last up to 20 years.
Brand
There are many brands to choose from when purchasing a tankless water heater. Some of them are more budget-friendly, while others are more expensive. Still, it’s wise not to let the cost of a tankless water heater be the sole determining factor: A mid-priced unit from a reputable brand might cost more upfront, but it will likely last longer than the lowest-priced option from a lesser-known brand.
Here are some of the reputable tankless water heater brands:
EcoSmart®
Rheem®
Eemax®
Rinnai®
Stiebel Eltron
Gallon per Minute (GPM)
Before choosing a tankless water heater, it’s important to evaluate the GPM flow required for your home. A tankless water heater works by heating water on demand, so it should be fast enough to simultaneously heat as many appliances and faucets as needed. An average home needs 5.5 to 7.5 GPM to supply enough hot water at one time.
Condensing vs. Non-Condensing
Condensing tankless water heaters use a second heat exchanger to transfer more heat to the water, reducing the temperature of the exhaust gases to the point of condensation and increasing the flow rate. Condensing units tend to cost more than non-condensing units, but they also operate more efficiently.
Tax Credits
Tax credits may be available for purchasing an ENERGY STAR-certified tankless water heater. The government also offers additional tax credits for solar-powered units.
Materials
Materials to install a tankless water heater will cost about $130 to $280, plus about $10 per linear foot for piping and pipe insulation. You’ll spend about $200 to $2,000 for the water heater unit itself.
Some material costs to consider include the following:
Gas connector kit: $20–$40
Termination vent kit: $40–$100
Hardware and fittings: $10–$30
Two-piece brass valve set: $60–$110
Piping and insulation: $10 per linear foot
Tankless Water Heater Cost by Size
A primary cost factor is the size of the water heater. Larger heaters service a higher volume of water than smaller heaters, so count on increased costs. The amount of energy the heater can handle is one indicator of size. For tankless gas water heaters, the amount of energy they can handle is described in the British thermal unit (BTU); for electric water heaters, it’s described in kilowatts (kWs).
| Tankless Water Heater Size (Gallons per Minute) | Average Cost |
|---|---|
| 1 – 2 | $150 – $250 |
| 2 – 3 | $200 – $600 |
| 3 – 4 | $300 – $700 |
| 5 – 6 | $400 – $1,200 |
| 7 – 8 | $500 – $1,500 |
| 8+ | $600 – $2,000 |
Gas Water Heaters
Smaller water heaters of 120–140 BTUs cost $500 to $1,200, which is enough for a one- or two-bedroom home. Larger water heaters of 180–200 BTUs or more cost $900 to $2,200, and these appliances handle enough volume to service a home of five or more people. Gas water heaters have an average flow rate of up to 5 gallons per minute (GPM).
Electric Water Heaters
Smaller water heaters of 5–8 kWs cost $100 to $250, though this is just enough for a one-bedroom apartment or small home. Keep in mind that electric water heaters only have a flow rate of up to 2 GPM.
Mid-sized electric water heaters of 10–24 kWs cost $210 to $630 and can efficiently service a two-bedroom home. Large heaters of 27–36 kWs cost $420 to $800 and can handle enough volume for an expansive home.
Solar
Installing a tankless solar water heater costs between $1,000 and $6,000. Ideal for very sunny areas, solar models are more expensive to purchase and install. Since they use the sun's energy to heat water, they can lead to significant energy savings over time.
You can measure solar water heaters’ performance by solar fractions, which is the portion of the total conventional hot water heating load. High solar fractions indicate a greater solar contribution to water heating, lessening the energy required by the backup energy source. Average solar fractions for solar tankless water heaters range from 0.5 to 0.75.
How to Determine Which Size Tankless Water Heater You Need
Before choosing a tankless water heater, you should ensure it has the proper flow rate that you’ll need to accommodate the appliances in your home. A tankless water heater works by heating water on demand, so it should be fast enough to simultaneously heat as many appliances and faucets as you might need. An average home needs 5.5 to 7.5 GPM to supply enough hot water at one time.
To determine what size of tankless water heater you’ll need, add up the total GPM output for all the appliances you think you might need to run simultaneously. Here are some basic appliance outputs to reference when calculating the GPM capacity necessary for your home:
Conventional shower head: 4–6 GPM
Eco-friendly shower head: 2–3 GPM
Faucet: 1–2 GPM
Washing machine: 2–2.5 GPM
Dishwasher: 1.5–2 GPM
Cost to Install a Tankless Water Heater by Fuel Type
Wondering how much you can save (or spend) on a tankless water heater? One of the best ways to calculate your expenses is by the type of hot water heater you choose. There are four types of tankless heaters to consider:
| Tankless Water Heater Fuel Type | Average Cost |
|---|---|
| Electricity | $800 – $1,500 |
| Natural Gas | $1,000 – $1,500 |
| Propane | $1,000 – $1,500 |
| Solar | $1,800 – $6,000 |
Electric Tankless Water Heaters
As the most affordable option, installing an electric model tends to fall between $800 and $1,500. Note that you won’t have to spend on ventilation systems or related maintenance.
Natural Gas Tankless Water Heaters
Tankless natural gas water heaters cost between $1,000 and $1,500 to install, plus the additional cost of approximately $200 a year to run the gas. These have a better flow rate than electric heaters and are a little more expensive.
Propane Tankless Water Heaters
Though propane water heaters cost the same as natural gas ones at $1,000 to $1,500 for an installation, the fuel itself can add up, with propane costing approximately $350 per year to run.
Solar Tankless Water Heaters
As the costliest option, solar heaters range from $1,800 to $6,000, though some can be more than $13,000. Keep in mind that you have a higher return for solar heaters, with a 30% tax credit and a 50% to 80% decrease in your expenses for heating water.
Tankless Water Heater Installation Cost
When working out tankless water heater costs, factor in hidden costs for equipment, installation, and use. For example, equipment costs can increase if you need accessories to connect the tankless water heater to your pipes. Labor, permits, and power source conversion all impact the final tally.
First-time installations cost more than water heater replacement prices, as these will require additional electrical work and piping installation. Also, if you’re moving the water heater to a whole new location in your home, this will also drive up installation costs.
Labor Costs
All told, labor costs to install a tankless system add up to $600 to $1,850 on average. In other words, the work takes around three hours to complete, though it may be more in the case of special circumstances, such as old pipes that require cleaning or replacement.
You’ll need to hire a plumber, water heater installer, or HVAC contractor to install a tankless water heater. Plumbers charge $45 to $200 per hour, depending on demand, job complexity, experience level, and other factors. Labor boils down to around half the project, with materials and components making up the other half.
Permits
In some parts of the country, work permits and post-job inspections are required to update a home’s water heating system. Work permits for this type of job are easily obtained by your plumber or by heading to a local regulatory agency, costing $50 to $100, depending on where you live. In many cases, acquiring the permit also pays for an inspector to come out to take a look at the finished project. Check with your state or county to check water heater installation code requirements and if you need a permit to install a tankless water heater.
Accessibility
If the desired location of the new tankless system is difficult to access or narrow and harder to work in, this can raise the labor costs to up to 10% to 15% of your project total. Prices will vary based on the home and setup.
Pressure Regulator Replacement
If your home’s water pressure is not powerful enough to handle a tankless heater, replacing the pressure regulator is a common fix. Professional plumbers replace a pressure regulator, clear clogged pipes, or install a larger pressure tank (if you're on a well) if your house pressure is low.
Replacing a pressure regulator costs $250 to $350, but it pays for itself by lowering your home’s PSI. This, in turn, reduces energy bills and boosts the longevity of pipes, fixtures, and appliances.
Converting the Power Source
In some cases, tankless electric water heaters require an upgrade in electrical service to accommodate the new system. Hiring an electrician to perform this work costs $50 to $100 per hour, and takes up to 2 hours. Additionally, some homeowners opt for an entirely different fuel source for a new tankless system, like going from natural gas to electric. This requires an electrician for the conversion process, with the same pricing scheme as above.
Current Heating System Removal
Removing an existing hot water heating system can cost $500 or more, depending on the unit's size and accessibility, as well as the contractor's hourly rate. When looking for an installation quote, make sure the quote includes the removal and disposal of your current water heater.
Additional Tankless Water Heater Costs
There are additional cost factors and considerations when budgeting for a tankless water heater, including electrical work, insulation, gas line installation, home structure modifications, and more. Here’s a breakdown of how these additional costs will impact your budget.
Electrical Updates
If you’re installing an electric tankless water heater, you may need to budget extra for the cost to hire an electrician for electrical updates, which typically ranges from $50 to $100 per hour. You may need to upgrade some structures and electrical systems to meet the voltage requirements of your new water heater, requiring professional help.
Insulation
For some installations, plumbers and electricians may need to design new installations with additional materials, such as pipes and insulation, which typically cost $10 per foot. If you live in a colder climate, you should insulate your water pipes to help prevent them from freezing when temperatures dip.
Gas Line Installation
Installing a tankless gas water heater may require gas lines to be specially adapted to the water heater, which could add up to $1,000 to the cost of this project. If there is no available gas line for the water heater, you’ll need to install a gas pipe.
Home Structure Changes
Some homes may require structural modifications to accommodate a new tankless water heater. Older homes may require a permit to build a cabinet for a tankless heater. Check with your contractor to see if any additional building permits are needed for structural modifications.
Vent Types
Tankless gas water heaters need to be ventilated to the outside via a power vent or a direct vent. A power vent draws in air from the room holding the water heater and uses a fan or blower to expel the exhaust gases through a duct. A direct duct vent draws in outside air and exhausts it through another chamber or duct within that same duct. Small enclosed spaces are suitable for direct ventilation.
Utility Bills
Running your tankless heating system costs money, of course, so calculate utility costs to include prices for natural gas or electric power. Tankless units spend less energy than conventional systems, as you only use the heater when needed, but this is not a night-and-day difference. In other words, your utility bills should decrease by around 10% each month, depending on usage.
According to the Department of Energy, gas tankless water heaters can lower energy costs by $100 per year, and about $50 per year for electric tankless water heaters. Since you’re using less energy, you can expect to see a decrease in your monthly utility bills.
DIY vs. Hiring a Pro
While it’s possible to install a tankless water heater yourself, we don’t recommend it. You must have experience to save money and safely DIY the installation. We strongly advise against attempting to complete this project yourself. Doing so could cause serious injury or damage to your property.
Tankless water heaters can explode or release carbon monoxide into the air if done by an untrained handyperson. Not to mention, many warranties are void if a pro doesn't install a system, and your home is at a higher risk of not being up to code if you ever choose to sell your property. In a nutshell, don’t try this at home! We recommend hiring a water heater professional near you.
Cost to Maintain a Tankless Water Heater
If your tankless water heater needs to be serviced, plumbers usually charge between $50 and $250 per visit. Tankless water heaters may require occasional maintenance due to hard water and mineral buildup. It’s best to have your tankless water heater inspected by a plumber twice a year to prevent any problems. Keep in mind that tankless water heater repairs cost an average of $600.
Ways to Save Money on a Tankless Water Heater
Installing a tankless water heater can be a big home improvement expense, but its efficiency and longevity will pay off in the long run. Still, if you want to avoid the sticker shock, there are ways to save money on tankless water heater costs.
Check for Rebates and Tax Incentives
ENERGY STAR-certified water heaters may be eligible for tax credits. Because of the Inflation Reduction Act, qualifying tankless water heaters can earn 30% of the project cost (usually up to $600). Some products may also qualify for rebates. You can check ENERGY STAR's energy-efficient products to see which financial incentives your specific water heater can earn.
Consider the Fuel Type
Keep in mind that the fuel type your water heater runs on can affect your installation costs and ongoing costs. Electric water heaters don’t require added ventilation and are one of the least expensive options. Natural gas and propane units have low to moderate up-front costs, but they’ll also require you to spend about $200 to $350 per year on fuel. While solar water heaters may cost the most to install, these tend to qualify for more tax incentives and can considerably cut down monthly utility costs, saving you money in the long run.
Buy the Right Size:
While you don’t want to underestimate the size of the water heater you need, you also don’t want to go overboard and buy a water heater that exceeds your needed capacity. Choose the correct size for your space and household to avoid overpaying.
Buy Your Water Heater From a Store
Buying a water heater from a plumbing company can cost up to 30% more than buying a unit from a major retailer. Shop around for the best price, but be wary of deals that seem too good to be true.
Lawrence Bonk contributed to this piece.
