Tankless Water Heater Cost & Pros and Cons – Are They Worth It?

Water heaters are extremely important to your plumbing system, and this goes for both residential buildings and commercial spaces. Many people are turning to newer options, and this can lead you to wonder what a tankless water heater costs because this style of water heater will only heat up the water you use. Traditionally, water heaters heated and stored water on a continuous basis, and this can be expensive if you use a lot of water. As long as they get installed and connected correctly, it’s easy to control your tankless water heater cost for years at a time. 

You get the choice of a single point unit or whole house units. A single point unit is slightly more inexpensive to buy and install because you put them right next to a water source. Whole house units cost more to install, but they are powerful enough to heat all of the water in your home at one time. The tankless water heater cost has a slightly wider price range due to a variety of the factors, and it starts at $2,000 and goes up to around $4,500 from start to finish. 

The average cost is right around $2,800 for a whole house gas unit. The tankless water heater cost has fluctuating labor rates too. The flow rate, brand, and type will also influence your tankless water heater cost, and this is why you want to get a few estimates before you settle on one company to perform the installation. This can help ensure that you get a fair price with professional-quality results. 

If you want to know more about what goes into estimating a tankless water heater cost, this is for you. We’re going to outline all of the important factors you should keep in mind when you start to consider this project. This way, you’ll get a decent estimate that will help you save money and time and ensure the installation cost will pay off in the long run. 

1 Solar Water Heater
Trying to weigh the tankless water heater cost with the benefits and drawbacks can be challenging, but it’s easy to get a relatively rough estimate before you start this project.
Solar Water Heater by Owen and Aki / CC BY-NC-ND 2.0

How Water Heater Type Influences Cost

One of the first things you have to decide is the type of water heater because this will impact your tankless water heater cost. The type of water heater you pick out will also play a factor in whether you have to knock out drywall or create a larger space for your new water heater. The following are popular types:

Electric

The electric water heater costs are slightly less expensive than gas models, and they have a price range of $800 to $1,500. The installation process for this model isn’t as complicated because the contractors won’t have to vent, so this reduces your labor costs. They perform very well, are easy to maintain, and they have high energy ratings. It’s more effective with one tank by up to 30%, and it will emit no greenhouse gases. They do draw more energy than other models, and you might have to hire an electrician and have them rewire your home for this one. This can add to your tankless water heater cost by $50.00 to $100 an hour. You can choose from: 

  • Electric Hybrid – These types of heaters come with a higher upfront cost, but they’ll heat faster than a standard electric one. They share a lot of elements with a tankless water system despite not being technically tankless. The highest BTU rating they have is 8,7000 BTUs. 
  • Point-of-Use – This product can help control your tankless water heater costs, and they range between $100 and $300 each. They offer an easy installation process and they are very affordable. They’re nice to use in small areas like under your sink or by washing machines. This is what you want for a small unit in your boat or camper. They’re lightweight, won’t corrode, and are insulated. They also help save water by heating it up fast. 

Natural Gas/Propane

 To install a natural gas or propane model, your tankless water heater cost will range between $1,000 and $1,500. Both will use almost the same way to fuel your system, but there are marked differences in the operating costs and how much it’ll cost you to get one over the other. 

To start, you’ll have to buy your propane separately while natural gas uses a utility supply line. If you live within a set distance from a natural gas line, law may require you to go with this model. Natural gas is a less expensive option than propane, and it usually costs around $200 a year. Propane is slightly more expensive at $200 to $400 per year. However, propane is more efficient and generally cleaner, but it has a higher BTU capacity. 

There is a huge range of sizes and models available for gas tankless systems, and this can make your tankless water heater cost go up. Their output range starts at 140,000 BTUs and goes up to 380,000 BTUs. You can get commercial or residential-grades. Also, if you have a natural gas line available in your area, check and see if your appliances can convert before you make the switch. If they can, consider doing so on your next kitchen remodel

Single Point

You can install a single point model on the exterior or interior of your building as long as it’s by a water use point and at least 50-feet from an adjacent power source. Your power source will have to be at least 220-volts for an electric heater, but this adds some flexibility to help control your tankless water heater cost. However, you will need a tankless water heater for every water source. So, if you have a dishwasher and two bathrooms, you’ll need three units unless they’re all close to one another. Every unit will cost right around $150. 

Solar

The tankless water heater cost for a solar model is slightly more expensive, and the average range starts at $1,500 and goes up to $5000 for the unit and to install it. However, prices can go up to $13,000 easily. But, you get some of the highest returns with them to help offset the costs. They can give you a tax credit up to 30%, so this means that you’ll get $1,800 back on a $6,000 install price tag. 

You can easily pair your tankless water heater with a solar system to get excellent energy savings, and there are solar grants available to help with the conversion cost. Solar tanks also tend to store more heated water from their collectors, and your tankless unit can then use it. There is a bigger upfront cost for the solar components of the system to consider. 

Whole House

Finally, you have the whole house system. You install them by an exterior wall so they can reach the vent required for gas units. One unit is powerful enough to handle several bathrooms and kitchen appliances, even if you run them simultaneously. Your tankless water heater cost for this model starts at $1,000 and goes up. 

A whole house unit can heat between five and ten gallons per minute while a single point heater can heat between half and two gallons per minute. If you have a home that has multiple people using the bathroom or running the washing machine, you’ll want a whole house unit to help keep up with the greater demand. A single person could get away with a single point heater. For most homes, a whole house system works well. However, you want to consider all of your options before you settle on one. 

2 Installing a Tankless System
Deciding on the type of system you want will help you narrow down your tankless water heater cost. It also gives you a base to compare various models and see which one will work best for you.
tankless hot water heater installation 003 by Roger Mommaerts / CC BY-SA 2.0

Determining a Size for Your Tankless Water Heater

Once you settle on a type, the next factor that will impact your tankless water heater cost is the size of the model. If you get one that is too small to match your needs, you’ll run out of hot water far too quickly. If you get one that is too large, you could pay a lot for something you don’t use. 

Since a single point system will only heat water for one source, you’ll need several to cover every place in your home that routinely uses hot water. However, if you want a whole house tankless system, there are several considerations to keep in mind. 

A tankless system doesn’t hold as many gallons as a more traditional unit will. You have to make a purchase depending on how much hot water you need at a given time and the flow rate. This is listed as gallons per minute, and you can add together every appliance you’ll use at the same time. For example, say you want to run a washing machine that uses between 1.5 and 3.0 gallons per minute and a dishwasher that uses between 1.0 to 2.5 gallons per minute at the same time. To heat both of these appliances at the same time, you’ll need 5.5 gallons per minute at the highest point. If you want to heat a bathtub at 27 gallons or a hot tub at 470 gallons, you’ll need more hot water. 

It’s also important to consider how much the water temperature needs to rise. If you live in a warmer climate, this isn’t a huge concern because your water is lukewarm to start with. However, people who live in colder climates start out with cold water. As a result, the water heater will have to work harder to bring the water temperature up. 

Tankless Water Heater Installation Cost by Fuel Type

When you’re figuring out your tankless water heater cost, you do have to consider the fueling type because this will be an ongoing price you have to pay. Some will help keep your tankless water heater cost down better than others, and some have lower installation costs. 

Electric

Electric is one of the most popular tankless water heaters available for homeowners. It’s eco-friendly, and it has very low maintenance needs. It does require electricity to work, so you may have to bring in an electrician if you have old wiring. Costs range between $400 and $1,000 for installation of the electric model. 

Natural Gas

Natural gas is a great choice if you live in a colder climate, and they’re widely available. You won’t have to worry about a higher electric bill, and you won’t need to purchase oil for it. It’s safe for the environment, and it won’t produce any smell when it runs to make it healthier for everyone in your home. The tankless water heater cost for installation of this model ranges from $400 to $2,000. 

Oil

This type of heater isn’t available all over, but there are many advantages to having it. They can heat a very big amount of water, and they’ll heat the water very quickly. These are also energy-efficient models, but they have a higher cost to install it. You’ll spend between $1,000 and $3,000 to install this system, and this doesn’t include the price of the system itself. 

Propane

Propane is very popular because it can cost less as an initial investment, and the maintenance is generally lower than other types. Propane is also cheaper than oil or electricity to run, and it has a slightly longer lifespan than other types. Lower repair costs can also help keep your tankless water heater cost down. The installation costs will range from $500 to $1,000. 

Solar

If you live in sunny areas, many people recommend you go with solar tankless water heaters. They give you a very quiet operation, and they’re very easy to maintain. However, the installation process and any possible repairs can be expensive. However, this is more of the environmentally-friendly types available, and the costs can range between $2,000 and $7,000. 

3 Installation Costs
Depending on how involved your installation process is, this can impact your overall tankless hot water costs. Labor is a huge part of the costs, and some units are less expensive and less involved.
Water heater -Insulation? By Chris Bohn / CC BY-SA 2.0

Labor Costs

If you hire a plumber to complete the installation, your tankless water heater cost will go up by a rate of $50.00 to $150 an hour. The average hourly rate is $85.00, and the average time ranges between two and three hours. This brings your labor total between $150 and $450 by itself. A gas heater can have labor costs that range around $1,200, and you’ll have to factor in the gas line price of $500. If you need heat pumps, pipes, or water pumps, the price can go up by $250 to $500. 

Maybe you need to open the walls and perform a complete remodel of the area. If so, you’ll have to include the costs of drywall that can easily reach $200. A lot of traditional water heaters sit in closets to give you an easy access point. However, tankless models may require an additional access door in case you have to perform quick repairs. If a carpenter comes in to install this door, they usually charge $70.00 per hour. This can add between $100 to $300 to your tankless water heater cost. 

Anyone who lives in a cold climate may find themselves paying for extra labor during the installation process. You’ll have to insulate the pipes running to the heater, and you have to make sure there is proper venting. The vent has to run at least six feet in northern climates. The average installation cost for labor in cold climates is around $400. The total project cost for a tankless water heater installation in cold climates runs up to $1,400. 

How the Installation Process Works

Once you’ve decided on a unit type and size, your plumber will come in and remove your old system if you have one. They’ll go to whichever site you picked for the new tankless system and prep it. They may have to open the ceiling or some walls. This depends on where you want the unit and where the pipes in your home run. For single point units, you want them close to where you’ll use the hot water so there are no heating delays. Whole house systems give you more flexibility and control of your tankless water heater cost. 

You might have to run a gas line to the installation point in your home, or you might need to enlist an electrician to upgrade the wiring or circuit panel around your unit. In some instances, you’ll have to have new plumbing installed to accommodate your system. This means that your total installation time has a slightly more broad range, and it starts at two hours and goes up to eight. An electrical unit is usually on the lower end while a gas unit is on the higher end. 

Ongoing Maintenance Costs for Tankless Systems 

These types of water heaters are sometimes called maintenance-free models. However, this isn’t technically true, and this is especially true if you have hard water. Hard water can easily cause mineral buildup inside your tank, and this can lead to clogging. Even if you don’t have hard water, you should descale your system at least once a year to prevent buildup. If you have hard water or if you keep your system’s temperature up, descale it once every six months. 

If you don’t, this can cause your system to work far harder than it has to, and this can push your utility bills up. You can descale your system by yourself as long as you follow the directions. Doing it incorrectly can lead to damage, and this can drive your tankless water heater cost up. A repair won’t fall under warranty either if it’s from you descaling it incorrectly. You’ll pay between $40.00 and $65 an hour in plumber fees for maintenance costs, and most maintenance takes between one and two hours. This means your tankless water heater cost for maintenance can cost between $40.00 and $130 a year. 

4 Labor Costs
Performing ongoing maintenance can help your unit last longer, and it can save you money because it won’t drive up your utility bills by working harder than it has to.
tankless hot water heater installation 002 by Roger Mommaerts / CC BY-SA 2.0

Pros and Cons of Tankless Water Heaters

Just like anything else you purchase for your home, you want to know the pros and cons. Doing so will help you justify the tankless water heater cost you pay to install and maintain it. There are more pros than cons to these units, but it’s important to weigh your options. 

Pros

Tankless units can heat your water very rapidly. Depending on the gallons per minute, it can produce continuous levels of hot water based on your needs. In turn, this is more efficient to use. The tankless water heater costs start around $1,500, and this isn’t much higher than a traditional water heater at $1,000. However, you get far more consistency and lifespans with the tankless units. 

The energy savings is also much greater with tankless systems when you compare them to traditional systems. Water heating can account for up to 30% of your energy bills, so this can help cut your overall costs in half. Annually, this saves you between $80.00 and $100. 

They’re very easy and cost-effective to maintain once you get them installed, and they can last up to 20 years. This helps you justify the slightly higher tankless water heater cost. They’re smaller, and you can easily put them in spaces that don’t have enough room for traditional tanks. They’re usually around 10-inches deep by 20-inches wide by 28-inches tall. 

Cons

The upfront tankless water heater cost is more expensive than a traditional tank, and the installation costs are much higher. Even though they give yo usavigns on your energy bill, it can take right around 20 years for you to make up your initial investment. This is the end of the unit’s lifespan. They can also offer inconsistent temperatures if you don’t buy the correct size or type for your needs. 

If you have a power outage, tankless systems won’t work. This means that you don’t have any water on-hand during an emergency. If you have hard water, it’s essential for you to install a water softener to stop calcium buildup and avoid future problems. If you don’t make a point to maintain it annually, the tankless system will have a much shorter lifespan than the projected 20 years. 

Where You Can Find Water Heater Contractors 

Looking for professional help with your water heater installation? Use this resource to find water heater contractors near you:

Frequently Asked Questions

5 FAQs 2
Asking the correct questions through the selection and installation process will help ensure you get the best price point for this entire process.
Rinnai tankless water heater by Jesus Rodriguez / CC BY 2.0

1. How good are tankless water heater systems?

On average, a tankless water heater will heat between two and five gallons of water a minute. This is enough for most uses, and it’s enough for multiple people to use. They can last up to 20 years with the proper maintenance, and this is around five years longer than a traditional water heater. 

2. What is the optimal temperature setting for a tankless water heater?

You want to avoid scalding yourself with water that gets too hot, so the recommended temperature setting is at 120-degrees Fahrenheit. The Consumer Product Safety Commission puts out this recommendation. Never set your temperature above 140-degrees Fahrenheit because you can severely burn yourself at this temperature. 

3. On average, how many gallons of water do you go through in a 20-minute shower?

On average, your shower will go through 2.5 to 3 gallons every minute. This means that you’ll cycle through 50 to 60 gallons each time you take a 20-minute shower. Most of the water heaters on the list produce between four and eight gallons a minute, so this is sufficient to heat your water. 

4. How do tankless hot water heaters work?

You install your tankless hot water heater very close to the point of use. This will be wherever you need the hot water. There is a heating element that warms up the water and it runs through your heater. This is different from continuously heating the water like a traditional water heater does. 

5. Does every model require electricity to run?

Unfortunately, not one tankless water heater will work without electricity. Even gas models need electricity because it’s electricity that controls the unit’s spark igniter. So, if your power goes out, you’ll be without water until it comes back on. 

Are Tankless Water Heaters Worth It?

When you try to justify the tankless hot water heater cost, it’s important to weigh all of your options. We found that it’s easy to take the tankless water heater cost and add it to the benefits you get. They far outweigh the cons. Additionally, the lower maintenance costs help offset the higher tankless water heater cost. So, yes, we believe that it’s worth the cost of looking into upgrading your current system and installing a tankless one. 

Tankless Water Heater Cost 1 Tankless Water Heater Cost 2