Tankless Water Heater Cost: What To Expect And How To Save Money

tankless water heater cost

A tankless water heater is an efficient and convenient way to provide hot water to your home. It heats water on demand and eliminates the need to store large amounts of water in a traditional tank-style water heater. With a tankless water heater, you can save on energy costs, enjoy an endless hot water supply, and benefit from a more eco-friendly home. How much does the tankless water heater cost?

The installation cost of a water heater depends on the type, brand, & flow rate.

The cost of a water heater depends largely on the size and features you choose. Factors such as installation fees, energy efficiency, and warranty coverage can significantly affect the total cost. 

Here we will explore the factors that influence the tankless water heater cost and help you decide if it’s the correct choice for your home.

How Much Does A Tankless Water Heater Cost

A tankless water heater produces hot water on demand by heating water as you open a tap or turn on an appliance. They consume less energy, are less susceptible to leaks, take up less space, and last longer than traditional tank water heaters.

A tankless water heater can solve hot water shortages by heating water. The installation cost of a tankless water heater depends on the brand, type, and flow rate. HomeAdvisor claims that tankless water heater cost between $1,171 to $3,331, with a national average of $2,216.

You need to hire an expert to install a tankless water heater. You need to pay a plumber a flat rate for labor or an hourly fee. Plumbers charge somewhere between $45 and $150 per hour. The ultimate cost for labor usually goes from $100 to $450.

Factors To Consider While Calculating Tankless Water Heater Cost


The cost of a tankless water heater depends on various factors. The price differs from the national average because of the system’s type, single-point or whole-house system, the fuel it uses, system size, the flow rate, accessibility, brand, labor, materials, permits, & additional charges for removing the existing heating system.

  • Single-Point vs. Whole-House System

A professional can install a single-point tankless water heater system near the faucet, appliance, or shower that requires it. Since the water moves on a short distance, less water wastage makes it efficient. These systems are simple to install and cost between $100-300 each.

Single-point water heater systems are standard in homes with multiple toilets and appliances. An electric water heater is installed inside or outside the house & 50 feet away from an adjoining power source. It requires a separate water heater for each source of water. A single-point unit produces 0.5-2 gallons of hot water in a minute.

A whole-house tankless water heater is installed near an exterior wall to vent gas units properly. This system offers hot water for multiple appliances and bathrooms, even when used simultaneously. Whole-house system costs between $450-1,500.

A whole-house system produces 5-10 gallons of hot water in a minute. You can select a tankless water heater by knowing how much hot water your family needs. You can select the correct size from differently-sized units.

If several people are taking showers, doing laundry, & running the dishwasher simultaneously, then some houses require multiple whole-house units.

Some homeowners choose a whole-house tankless water heater with single-point units for specific rooms. Please consult your tankless water heater specialist for the best system for your house.

  • System Size

The cost of a tankless water heater system will vary based on the size. A large electric heater is typically less expensive than a small gas-powered one. An energy-efficient unit will be more costly than a budget brand.

  • Labor, Materials, and Permits

The installation of tankless water heaters costs between $45-150 per hour, depending on the location. The time it takes to install a tankless water heater varies based on water heater type, location, and fuel source, usually ranging from 2 to 8 hours. Opening up walls will increase the overall cost of the project in addition to installation time.

Additional charges of around $200 are for repairs and painting. A carpenter may charge about $70 per hour to install an access door for repairs, or a handyman might charge between $100-300 to do the job.

In colder climates, ventilation and insulation may increase the overall project cost. This can add $400 to the overall project cost. Fuel lines may also affect cost since they require installation in the heating system.

The tankless water heater installation requires a gas connector kit at $20-35, a termination vent kit at $40-100, fittings and mounting hardware for $10-30, a two-piece lead-free brass valve set for $60-110, and piping and insulation on average $10 per foot.

It is important to note that installing a tankless water heating system in your home may require a permit, depending on the building codes in your area. 

Propane-powered heating systems need to be installed by an insured and licensed professional. An expert plumber would know whether your installation project needs a permit.

  • Removal Of The Current Heating System

The price of removing your current water heating system can range from $500 to $1,000, depending on the unit size, its accessibility, and the hourly rate of your contractor. When you receive installation estimates, ensure that the price includes removing and disposing of your current water heater.

  • Type Of System

The installation of a tankless water heater can be costly, depending on the model. Electric, natural gas, propane, and solar are used to fuel tankless water heaters. Every sort has its price range and advantages. A high-end gas heater might cost upwards of $1,500, and a single-point electric model might cost around $150.

  • Fuel Type And Flow Rate

Some homeowners prefer tankless water heaters to run on the same fuel as their heating system. There are several ways to fuel a tankless water heater. Natural gas, propane, electricity, oil, and solar are viable options.

Some water heaters can utilize a variety of fuel types, such as an electric heater paired with a propane furnace. A solar-powered water heater can lower energy expenses but will require a bigger initial investment.

A tankless water heater does not specify how much water it provides, unlike a tank-style heater. A flow rate is what determines the size of a tankless heater. The size of a tankless water heater is the amount of water requirement per minute (GPM).

To calculate GPM, look at what fixtures & appliances are used simultaneously, and add those numbers to determine the maximum gallons per minute required. Here are some common flow rates:

  • Dishwasher – 1.0 to 2.5 GPM
  • Shower – 1.0 to 2.0 GPM
  • Kitchen sink – 3.0 to 9.0 GPM
  • Bathroom sink – 0.5 to 1.5 GPM
  • Washing machine – 1.5 to 3.0 GPM
  • Brand

You can choose from many brands when buying a tankless water heater. Some are less costly, while others are more expensive. Homeowners should consider all the tankless system options rather than the overall cost.

  • Accessibility

The cost of removing an existing water heater and installing a new one will depend on the specific configuration of your home. You will have to pay extra if the water heater is hard to reach.

Additional Costs and Considerations For Tankless Water Heater


When calculating tankless water heater cost, there are additional price factors & considerations. These include structural modifications, insulation, electrical work, gas line installation, a power vent or a direct vent, & condensing vs. non-condensing tankless water heater models.

  • Insulation

Some tankless water heaters can’t be installed in the same location & configuration as a tank-style water heater. A plumber and an electrician may have to develop a new configuration using extra materials like pipes and insulation, costing as much as $10 per foot. Plumbers charge $45-150 per hour to insulate or modify pipes if you live in a cold climate.

  • Structural Modifications

It’s important to note that some homes require structural modifications to install a tankless water heater. If you are installing a tankless water heater in an older home, ask your contractor if building a cabinet for the heater is included in the plumbing or electrical permit.

  • Condensing vs. Non-Condensing

A tankless water heater can be either non-condensing or condensing. 

Condensing tankless units offer a second heat exchanger that captures the excess heat before it escapes to the venting system and then heats the water. This hikes the water heater’s energy efficiency to 90% or more. 

A non-condensing tankless water heater uses a single heat exchanger and vents the exhaust heat outside to achieve an energy efficiency rate of 80%.

  • Electrical Updates

On choosing an electric tankless water heater, you need to update some electrical designs and systems to aid with the voltage requirements of the new water heater.

  • Gas Line Installation

Installing a tankless gas water heater is more time-consuming and complicated than installing a tank model. The gas line that runs to the heater must be custom-fitted to the device. If there is no existing gas line or offshoot where a water heater needs to be installed then a gas line is to be run.

Installing a tankless gas water heater can increase the project cost by as much as $800. Remember that tankless gas water heaters can only be there in specific locations and vented to outside because of their restrictions.

  • Power Vent vs. Direct Vent

All tankless gas water heaters, whether natural gas or propane, must be vented outside. A power vent or direct vent exhaust from the water heater to the outside. A blower or fan draws in the indoor air surrounding the water heater and exhausts it through a vertical or horizontal duct.

A direct vent brings in air from outside through a duct & exhausts through another chamber or duct within the same duct. Small and enclosed spaces are suitable for this venting method. An exterior side wall or roof can vent a tankless water heater.

Tankless Water Heater Cost: Different Types Of Tankless Water Heaters

The price of a water heater depends on the type of tankless water heater. An initial investment in a natural gas or propane water heater will save money in the long run.

Installing an electric water heater is cheaper than a solar-powered one, but the lifetime operating cost depends on the local electricity rate. A solar-powered heater is one of the most costly water heaters to purchase, but it will save money over time because it uses a renewable energy source.

1. Electric Water Heater


Installation of electric tankless water heaters is cheaper than natural gas or propane heaters. They range from $800 to $1,500 because there is no requirement of venting to the outdoors.

A tankless electric water heater is highly energy efficient than a tank-style heater by 20-30%. This type of tankless water heater is famous with homeowners.

Maintaining an electric heater is easier, and it performs well. 

An electric heater may be environmentally friendly because it only requires electricity to run and requires little maintenance, but it is rare to find ones that produce more than 7 or 8 GPM. A tank-style heater may be recommended if you have above-average hot water usage and want an electric heater.

Choose a tankless water heater if you use a different fuel source. You may need to hire an electrician and a plumber for $50 to $100 an hour if you are converting from a natural gas heater.

An electric hybrid water heater might cost more when you first purchase it, but it will heat water faster than a standard model. The hybrid models are only available for up to 8,700 BTUs. They are economical and do not require outside ventilation, although they are technically not tankless water heaters.

Point-of-use electric water heaters can cost between $100 and $300. They are famous because they are easy to install and represent an economical choice for most people. In addition, they are suitable for installation under sinks and near washing machines in small areas.

Small spaces such as boats, campers, and bathrooms can also benefit from point-of-use electric heaters. These heaters are non-corrosive and insulated & heat up quickly using little water.

2. Natural Gas or Propane Water Heater


Installing a natural gas or propane water heater can cost between $1,000 and $1,500. These popular heaters work well in cold environments, particularly in northern climates. The average expense of running a natural gas water heater is $200 per year (assuming a utility connection).

A tankless gas water heating system can provide up to 15 to 20 GPM (greater than electric heaters). Gas heaters are perfect for large families, cold climates, and those with high hot water consumption.

A propane tankless water heater cost $350 per year, slightly more expensive than a natural gas heater. It is considered a more efficient fuel than natural gas.

It’s an excellent choice for those who don’t have access to a natural gas line or those with high electricity bills, provided that they want to keep costs down. Propane heaters are usually cheaper than natural gas but less expensive than electric or oil-fired water heaters.

3. Solar Water Heater


A solar, tankless water heater can range from $1,700 to $5,000, but the price can go as high as $13,000. A solar water heater can reduce water heating costs by 50-80%, and it qualifies for a 30% tax credit. These water heaters are recommended for sunny locations.

They are simple to keep up and operate quietly, but installation and repairs are expensive. Once the solar water heater is up & running, it runs on the sun’s energy and has no energy costs.

Tankless Water Heater Cost: DIY vs. Professional

A tankless water heater is a complex DIY project. Installing a tankless water heater requires a lot of work and may require new electrical wiring, gas lines, pipes, fittings, or drywall.

It is important to note that some areas require a qualified and licensed professional. California codes include carbon monoxide emissions, venting, thermal resistance, and location-specific seismic regulations.

It is essential to hire an experienced plumber to ensure that a tankless water heater is installed correctly and meets all local requirements and codes.

How To Save Money On Tankless Water Heater

A tankless water heater can be costly, and the additional expenses involved in the project can quickly pile up. Saving money on tankless water heater cost is possible by installing an affordable water heater, but there are many ways to save without sacrificing quality: 

  • Tax credit benefit: If you choose a solar-powered tankless water heater, the government provides you with a 30% tax credit.
  • Fuel type: Choosing between propane, natural gas, or solar-powered water heater will impact the project’s overall cost. Some fuels are more costly upfront but save money in the long run. Consider your options and pick the type of tankless water heater that best suits your home.
  • Rebates: Condensing tankless water heaters are qualified for rebates through the Energy Star program and are more efficient than traditional options. A rebate is typically sufficient to compensate for the cost difference between a condensing unit and a non-condensing one. A water heater expert can tell you about manufacturer rebates.
  • Get multiple estimates: Compare installation costs by getting 3 estimates from reputable plumbers in your area.

Questions To Ask About Tankless Water Heaters

You need to ask the right questions about water heater costs. This can reduce miscommunication, save money, and get the desired results. Here are some questions that you require to ask the tankless water heater professional: 

  • Who will install the tankless water heater?
  • What are the brands of tankless water heaters?
  • How will you remove and dispose of the current water heater?
  • What type of warranty do you offer?
  • Are you licensed and insured?
  • What size tank do I need?
  • How long will the installation take?
  • Do I need to schedule maintenance appointments?

FAQs (Frequently Asked Questions) On Tankless Water Heater Cost

1. What is the disadvantage of a tankless water heater?

The biggest drawback of tankless water heaters is the substantial up-front cost. Tankless water heaters are twice as expensive as conventional storage tanks.

2. Is a tankless water heater worth the cost?

The U.S. Dept of Energy reports that a tankless water heater is more efficient & consumes less energy than a conventional water heater, saving $25 to $107 annually. If your hot water usage is low (i.e., less than 41 gallons/day), a tankless water heater will be 24-34% more efficient.

3. How much does it cost to switch to a tankless water heater?

Installing a tankless water heater typically costs between $4,500 and $6,500, averaging around $5,500 (including the water heater, warranty, and tune-ups). Without the unit, installation costs between $1,800 and $3,500, averaging around $2,650.

4. What are the most common problems with tankless water heaters?

Here are the most common problems with tankless water heaters: 

  • System overload
  • Air supply or Exhaust blockage
  • Flame failure
  • Mineral buildup
  • Cold water sandwich
  • Ignition failure.

Summary: Tankless Water Heater Cost


A tankless water heater cost between $1,171 to $3,331, with a national average of $2,216. The installation cost of a water heater depends on the brand, type, and flow rate.

You need to hire an expert to install a tankless water heater. Plumbers charge somewhere between $45 and $150 per hour. The ultimate cost for labor usually goes from $100 to $450.

Installation of electric tankless water heaters is cheaper than natural gas or propane heaters. They range from $800 to $1,500. Installing a natural gas or propane water heater can cost between $1,000 and $1,500. On the other hand, a solar tankless water heater can range from $1,700 to $5,000, but the price can go as high as $13,000.

I hope this article on tankless water heater cost sounds helpful!

Read More

How Long Does A Water Heater Take To Heat Up? Complete Guide

How To Install A Water Softener?

Ultimate Guide For Water Softener Maintenance

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top