Tankless water heaters are gaining popularity, thanks to their relatively low operating costs and impressive levels of energy efficiency.
Understanding what a tankless water heater is and how it works is crucial for homeowners who are considering having one installed.
Average costs for tankless water heater installation can range from around $1,000 all the way up to $3,300 or even higher, in some cases. This breaks down to $500 to $1,500 for the water heater itself, and $500 to $1,800 for installation.
Even though a tankless water heater tends to cost more than a tank heater to install, its usually cheaper torun, saving money on energy bills in the long-term.
What Is a Tankless Water Heater and How Does It Work?
A tankless heater is one that has no tank. Instead of heating up water and storing it for use, tankless heaters simply heat the water on-demand, as needed.
That’s a big advantage, as it makes these heaters much more energy efficient compared to tank heaters, but also has some limitations.
In a tankless model, when a hot water faucet is switched on, the cold water passes through a heat exchange unit. There, a heater of some kind, like a gas burner or coiled electric element, rapidly warms the water.
Average Total Cost of a Tankless Water Heater
The total cost of a tankless water heater installation varies widely, depending on a wide range of factors (which we’ll explore in greater detail below).
On average, homeowners can expect to pay anywhere from $1,000 to $3,300 for their new tankless heaters to be installed.
However, there are examples of some heater installations costing above and below this range.
| System Type | Cost |
|---|---|
| Single Point | $300-$750 |
| Whole House | $1,000-$3,300 |
| Fuel Type | |
| Electricity | $750-$1,750 |
| Propane | $1,000-$2,000 |
| Natural Gas | $1,000-$2,500 |
| Oil | $1,500-$3,000 |
| Solar | $2,000-$6,000 |
| Size | |
| 1 – 2 GPM | $500-$1,000 |
| 3 – 4 GPM | $750-$1,500 |
| 5 – 6 GPM | $1,000-$2,000 |
| 7 – 8 GPM | $1,250-$3,000 |
| 8+ GPM | $1,500-$4,000 |
| Brand | |
| EcoSmart | $750-$2,500 |
| Bosch | $750-$3,000 |
| Rheem | $1,000-$3,000 |
| Rinnai | $1,250-$3,500 |
| Navien | $1,500-$3,500 |
The cost of the heaters themselves can be as low as $100 for the simplest single-point models, or as high as $6,000 for the biggest and best solar heaters.
Most people will spend around $500 to $1,500 on their heater. Then, you have to add on the price of installation, which can be anywhere from $500 to $1,800, on average.
Did you know? Tankless water heaters tend to be more expensive than traditional tank models since they’re more complicated.
They have additional interior components and mechanisms to heat up the water, leading to a higher total price. They also last way longer than tank models, on average, so the extra cost evens out for most homeowners in the end.
Tankless Water Heater Cost by System Type
There are two main types of tankless water heaters: single point and whole house. Single point, or point-of-use units are attached to just one water fixture or appliance, like a shower, while whole house systems provide warm water for the entire home.
Single Point Tankless Water Heater
Single point tankless heaters are much cheaper than whole house systems. They’re often sold in packs of three, but it’s also possible to buy them individually.
Each one needs to be fitted to a specific fixture or appliance and will only provide water for that fixture.
Since these units are so easy for professionals to install, the average costs are low, ranging from $300 to $750.
They’re also cheaper to fix or replace, and a single heater going out means you’ll still get hot water in the rest of the house.
Whole House Tankless Water Heater
Most homeowners will opt for whole house units, rather than single point systems. A whole house heater is exactly what it sounds like, providing hot water for the entire home similarly to a traditional tank heater installation.
They’re much bigger and more powerful than single point systems, and they also require more effort to install.
This leads to higher average installation costs, ranging from $1,000 to $3,300.
Cost of a Tankless Water Heater by Fuel Type
The type of fuel you choose to power up your tankless heater will have a big impact on its final price.
There are multiple options to choose from, with some tankless heaters simply being powered by electricity and others needing a steady supply of propane, natural gas, or oil.
There are also solar-powered tankless heaters for highly sustainable homes. They tend to have the lowest running costs, but the highest installation costs.
Electricity
Many people favor electric tankless heaters due to their easy installation and low running costs. On average, homeowners will spend between $750 and $1,750 for this type of heater, which includes both the material and labor costs.
Propane
Propane heaters are popular choices for those living in remote and rural areas. The average cost of this kind of heater installation ranges from $1,000 to $2,000.
Natural Gas
Natural gas heaters cost a little more compared to their electric counterparts and tend to take a bit more time and money to install. But they’re usually more capable of heating larger homes. Average rates range from $1,000 to $2,500.
Oil
Oil heaters actually use a combination of oil and electricity to heat up a home s water supply.
They’re very quick and efficient, able to heat water to high temperatures much more quickly than other models, like electric heaters, for instance. Average prices range from $1,500 to $3,000.
Solar
Finally, we have solar models, which are the most expensive of the lot. They are connected to the solar panels installed on the property to soak up the sun’s rays and use that energy to heat the water.
They’re the most efficient and sustainable choice, but can cost a lot, averaging between $2,000 and $6,000.
Did you know? Electric heaters are statistically the most popular in the U.S. This is primarily due to their easy set-up, low installation costs, and minimal maintenance. Plus, unlike gas heaters, they don’t need any vents.
Tankless Water Heater Installation Cost by Size
Tankless water heaters are also available in a range of sizes, and they’re usually measured according to how many gallons of water they can heat per minute.
The simplest models may only be able to heat a gallon or two of water a minute, while bigger systems can provide five, six, seven, or more gallons.
Naturally, the bigger and more powerful units have higher price tags attached. You can find small and simple heaters that can give you a gallon or two of water per minute for around $500 to $1,000, installed.
Meanwhile, at the other end of the spectrum, high-powered units with more than eight gallons a minute can cost between $1,500 and $4,000.
Cost of a Tankless Water Heater by Brand
Many different brands make tankless water heaters. Some are relatively low-cost, while others are more upmarket, with higher unit prices. Here are some examples of popular, trusted brands.
EcoSmart
EcoSmart is a U.S. brand partnered with some of the top retailers in the country like Amazon and Home Depot. It produces simple and sustainable tankless heaters, with average installation costs between $750 and $2,500.
Bosch
Bosch is a German technology company that produces a wide range of home appliances and devices, including tankless water heaters.
Bosch models are known for their reliability, and this brand makes a very broad range of options to suit homeowners with varying budgets. Costs range from $750 all the way up to $3,000, on average.
Rheem
Rheem is an American company that specifically focuses on the design and manufacturer of water heaters, along with HVAC systems.
It tends to produce quite high-end tankless heaters, with fast heating speeds and high amounts of water heated each minute. Average costs for this brand range from $1,000 to $3,000.
Rinnai
Rinnai is a Japanese brand that makes some of the world’s finest tankless water heaters, with a big focus on gas-powered models.
It’s one of the biggest gas appliance manufacturers in all of Asia and has a strong reputation for long-lasting, high quality heaters. Average costs with this brand vary from $1,250 to $3,500.
Navien
Navien is a South Korean manufacturer of boilers and water heaters. It makes a wide range of tankless models with plenty of focus on power and performance.
Those looking for the absolute best tankless heaters should certainly consider this brand, but it does have higher prices than most, with average rates between $1,500 and $3,500.
Additional Cost Factors for Installing A Tankless Water Heater
Along with the various cost factors listed above, several other issues may impact the final spend for your tankless water heater installation.
Factor 1 – Price of Permits
Depending on the nature and location of your property, you might require a permit to get a tankless water heater installed.
This can add an additional fee to the final bill, and it can also make the whole process take a little longer. Professional plumbers in your area should be able to tell you if a permit is needed or not.
Factor 2 – Accessibility
If the water heater is in a tricky, hard-to-access spot, that can make the installation process a bit harder. The plumber will need to spend more time getting access to the heater and removing the old one before fitting the new one in place.
Factor 3 – Fuel or Energy Availability
Additionally, the type of the water heater you can get for the house fuel-wise largely depends on the existing installations and conditions.
If the house doesn’t have a propane or gas line, installing one just to get a cheaper tankless heater will be more costly (usually up to $1,000) than getting an electric model.
Similarly, a solar heater might not work optimally in all climates and can easily end up plugged into the grid most of the time.
Even an electric heater might require additional electrical work to install if the house has an outdated electrical network. An electrician might charge around $50 per hour to rewire the network, but more complex solutions will cost extra.
Did you know? Those who live in very remote areas also usually have to pay a premium for labor. This is because it takes more time (and fuel) for workers to get to your home and carry out the work.
Factor 4 – Removal of the Existing System
Often, installation of a new tankless heater begins with the removal of the old one. Getting rid of an old heater system can easily cost up to $500, if not more in some cases.
Plus, there can be disposal fees if you want your workers to take the unit away for you.
Tankless Water Heater Pros and Cons
By this point, you might be wondering “Is a tankless water heater right for me?” Well, to answer that, it’s important to take a look at the main pros and cons of these systems. They certainly have many well-known advantages, but there are some downsides, too.
What Are the Advantages of a Tankless Water Heater?
Efficient – Tankless water heaters are far more energy efficient than traditional tank models. This is all thanks to the fact that they only heat water when it’s actually needed. In contrast, tank models sometimes reheat many gallons of water repeatedly.
Compact – Plenty of people wish they had more space in their properties, and one way to make a home feel a little larger is to switch to a tankless heater. These units are far more compact, taking up less space inside the home.
Long-lasting – Tankless water heaters can easily last up to 20 years, with only minimal maintenance required. The main issue with tank heaters is that holding water inside the tank can corrode the internal components, which tankless heaters mostly avoid. That’s a big contrast to the average tank heater, which usually needs replacing after just 10 years.
What Are the Disadvantages of Tankless Water Heaters?
Pricey – You’ll often pay more initially for a tankless water heater compared to a tank model. Both the heater costs and the labor costs tend to be higher, and more powerful models can be exceptionally expensive.
Limited flow rates – Another downside with tankless models is that they can’t always provide the same flow of hot water as tank heaters.
With a tank, there’s always a big supply of hot water ready to go. Tankless models can only heat a certain amount of water at a time, and that may not always be enough to suit your family’s needs.
More affected by power outages – A downside of a tankless heater is that if your power goes out, the unit will stop working, leaving your whole home without hot water until you get electricity back.
While this might be obvious for electric-only models, the same principle applies to gas, propane, and oil heaters, since they require a bit of electricity to start up the heating element.
Cost of Tankless Water Heater vs. Storage Tank
Tankless water heaters are significantly more expensive to buy and install than tank models. The average price to have a tank heater installed ranges from $700 to $1,300.
A part of this cost is absorbed by lower monthly utility bills, but it can take a few years until they even out.
Cost of Tankless Water Heater vs. Hybrid
Compared to hybrid heaters, tankless water heaters cost more or less the same. Average prices for hybrid systems range from $1,000 to $3,500.
Hybrid water heaters have additional installation considerations but can end up being cheaper to run in warmer climates.
Tankless Water Heater Cost vs. Boiler
Combination boilers, which are similar to tank heaters but provide both hot water and heating for the whole home, can cost anywhere from $2,000 to $11,000. Some will be more expensive than tankless models, while others will work out cheaper.
Did you know? According to the U.S. Department of Energy, tankless heaters are around 24 to 34% more efficient than storage tanks for the average household.
Who Should Install a Tankless Water Heater?
If your old tank heater is nearing the end of its life, you may want to consider making the upgrade to a tankless model.
It’ll cost more in installation fees, but save you more money in the long run in terms of its energy usage. These heaters are also ideal for homes that may not have the space for a full tank heater, as well as people who want a more sustainable and efficient heating system.
When to Replace a Tankless Water Heater?
Tankless water heaters typically last 15 to 20 years before needing replacement. With care and maintenance, they may even last longer than that.
It’s best to call in a plumber for annual check-ups to see how your system is doing and whether or not it might need replacing soon.
What Is the Cost of Switching to a Tankless Water Heater?
It typically costs anywhere from $100 to $500 to get rid of an old tank heater. So you’ll have to add that fee onto the cost of your installation, which should usually be between $1,000 to $3,300, giving you a grand total of between $1,100 and $3,800, on average.
Who Makes the Best Tankless Water Heaters?
There are plenty of trusted, high quality tankless water heater brands. EcoSmart is a fine choice for most people, with Bosch, Rheem, Rinnai, and Navien also standing out as some of the top options.
Is One Tankless Water Heater Enough For a Whole House?
It depends on the size of the house and, more importantly, how much water the household uses. But, usually, it’s possible to find a whole house heater that can meet your needs, although you may have to pay extra if you have a large family with lots of people needing the hot water all at once.
Can a Tankless Water Heater Run Out of Hot Water?
No, it’s not really possible to run out of hot water with a tankless model, unless it breaks down or loses power somehow.
The only problem you might have is that the flow rate will be quite low if you have lots of faucets or multiple showers needing to use the hot water at the same time.
Can a Tankless Water Heater Cause Low Water Pressure?
Yes, if the demands of the house are too great for the system, it will lead to a reduced flow rate. This is because the heater won’t be able to produce enough hot water to meet the home’s needs.
Can a Tankless Water Heater Be Installed Outside?
Yes, it is possible to install tankless models both outside and inside the home.
Pro Tip: Installing a heater outside the home can be a useful way to save space if you live in a little home.
However, the installation process will usually be trickier, and it’s best to call in an experienced professional to get the job done.
Can a Tankless Water Heater Run on Propane?
Yes, propane tankless heaters exist and are popular choices for those living in rural areas or those with easy access to affordable propane tanks.
Does a Tankless Water Heater Require Vents?
Not all of them. Gas models will need ventilation, but electric models don’t require any vents.
Does a Tankless Water Heaters Increase Electric Bill?
They shouldn’t. In fact, a tankless model should actually reduce a home’s energy bills, as it’s more efficient and cost-effective than a tank heater.
Why Are Tankless Water Heaters So Expensive to Install?
This is mainly due to the fact that they have more complex interior components and mechanisms compared to tank heaters, leading to higher manufacturing costs which are passed on to the consumer.
Additionally, tankless heaters typically require modifying an existing utility grid, which spikes the installation cost depending on the project complexity.
Does a Tankless Water Heater Add Value to a Home?
Yes, a tankless heater can add some value to your property, but it depends on the age and condition. Old heaters which need replacing soon won’t impact the value too much, but relatively new and high quality systems can help you get a better price when selling.
Is a Tankless Water Heater More Efficient?
Yes, they’re more efficient than tank models since they only heat water when it is required.
Is a Tankless Water Heater Worth the Cost?
For a lot of people, yes. They can save money in the long-term with their energy-saving benefits and also help homeowners save space and get hot water on-demand, as needed.
Consider the Upgrade to a Tankless Heater
Tank heaters are slowly being phased out in favor of tankless models, and it’s easy to see why.
Tankless heaters offer a myriad of useful and important benefits, particularly in today’s world with high energy prices and an increased focus on sustainable, efficient living.
For homeowners who want to cut down the cost of energy bills and enjoy warm water whenever they like, a tankless heater could be the perfect solution.
Of course, there are also some downsides to take into account, like the high installation cost. For those on strict and limited budgets, that high price tag might simply be too much.
But there are cheap units out there, and if you can cover the initial costs, a tankless heater can certainly pay for itself in the long run.
