Making the switch to a tankless water heater is an excellent choice for homeowners upgrading their heating systems. These innovative on-demand water heaters deliver endless hot water, reduce energy costs, and free up space in your home.
However, the cost of tankless water heater systems varies significantly based on factors such as unit type, installation complexity, flow rate, and energy efficiency. Understanding the common variables can help you budget effectively and choose the best system.
In this guide, we’ll break down the cost of a tankless water heater, explore key pricing factors, and explain why this upgrade is a worthwhile investment for long-term energy savings and home comfort.
The Basic Costs of a Tankless Water Heater
When budgeting for a tankless water heater, it’s essential to account for both the upfront purchase price and the labor required for installation. Below is a breakdown of the average cost of different systems and potential additional expenses you might encounter.
Cost Range for Different Types of Tankless Water Heaters
Electric Tankless Water Heaters
- Cost: $230–$800 (most budget-friendly option)
- Best For: Small households, single-point installations (like bathroom sinks), or homes without gas lines.
- Why Choose Electric? Electric heaters are easy to install and have lower labor costs, though they may not always provide enough hot water for larger homes.
Gas-Powered Tankless Water Heaters
- Cost: $500–$2,300 (varies by size, brand, and model)
- Best For: Medium to large households needing higher water output.
- Additional Considerations: Requires proper venting and possible gas line upgrades ($300–$1,000). Gas units offer more power but require regular maintenance to prevent buildup and ensure efficiency.
Solar Tankless Water Heaters
- Cost: Over $5,000 (includes equipment and installation)
- Best For: Eco-conscious homeowners in sunny climates seeking long-term energy savings.
- Why Choose Solar? It has the highest energy efficiency but requires a significant upfront investment. May need a backup system for cloudy days.
Labor and Installation Expenses Breakdown
Professional Labor Costs
- Licensed plumber or electrician fees: $500–$3,000, depending on installation complexity.
- Homes requiring plumbing or electrical upgrades will face higher expenses due to adjustments to accommodate the fuel type or infrastructure.
Installation Variables
- Homes with pre-existing compatible gas or electrical lines typically have lower installation costs.
- Additional modifications, such as venting or pipe insulation, can add $40–$280 to the total expense. Hard water areas may also require a descaling system to prevent long-term damage to your new tankless water heater.
Factors Influencing the Cost of Tankless Water Heaters
Several factors affect the total cost of installing a tankless water heater, from the type of system you choose to the complexity of the installation. Understanding these variables can help you make an informed decision and estimate your budget accurately.
1. Type of Tankless Water Heater
The type of system you choose will heavily impact the price. Electric tankless water heaters are typically more affordable upfront, with prices ranging from $230 to $800. At the same time, gas models can cost up to $2,300 due to the need for venting and gas line modifications. Solar heaters are an eco-friendly option for homes in sunny climates, though they come with a higher price tag, often exceeding $5,000.
2. Size and Capacity
The size of your system is measured by gallons per minute (GPM), which determines how much hot water it can produce at once. Smaller units with a 2–5 GPM output are ideal for small households, while larger homes may require up to 10 GPM units. Systems with higher capacity typically cost more, but they ensure consistent hot water on demand for every tap and shower in your home.
3. Efficiency and Technology
Modern high-efficiency heaters, like condensing tankless systems, are designed to reduce energy consumption by capturing and reusing heat. These systems are more expensive upfront but deliver long-term savings. In contrast, non-condensing units have lower initial costs but may require additional venting, which adds to the installation price.
4. Installation Complexity
The labor required to install a tankless heater depends on your home’s infrastructure. Homes with existing gas lines or electrical systems suited for a new unit will incur lower costs. However, the price can rise significantly if modifications like plumbing upgrades or electrical rewiring are needed.
Additional Costs to Keep in Mind
Installing a tankless heater often involves additional expenses. Permit fees, vent kits, and hardware can add an extra $40 to $280 to your project. Moreover, some systems may require piping upgrades or insulation to maximize efficiency.
Regular water heater maintenance, such as descaling, also helps extend the unit’s lifespan. This ensures you get the most value from your investment and avoids premature water heater replacement.
Long-Term Savings with Tankless Water Heaters
Although tankless water heaters have higher upfront costs than traditional storage tanks, they deliver substantial savings over time:
- Energy efficiency: Reduces utility bills by up to 30% by heating water only when needed.
- Durability: Most units last over 20 years, compared to 10–15 years for conventional heaters.
- Rebates and tax credits: ENERGY STAR-certified models may qualify for federal tax credits and local incentives, further reducing costs.
Is a Tankless Water Heater Worth the Cost?
A tankless heater is an excellent investment for homeowners who prioritize energy savings, long-term reliability, and eco-friendly water heating. While the upfront cost is higher, the benefits—including reduced energy bills, lower operating costs, consistent performance, and space-saving design—make it a valuable upgrade.
With potential tax credits, energy savings, and a lifespan exceeding 20 years, tankless systems provide both immediate and long-term financial benefits.
Choosing the Right Tankless Water Heater
When selecting a tankless system, consider:
- Household hot water needs (number of bathrooms, faucets, and simultaneous appliance usage)
- Budget and potential plumbing or electrical upgrades
- Energy efficiency goals (look for ENERGY STAR-certified models like EcoSmart).
Why Consult a Professional?
A licensed plumber can:
- Recommend the best system with a strong warranty for your home’s needs.
- Ensure proper installation to prevent leaks or inefficiencies.
- Identify necessary upgrades, such as adjustments to your water supply or water temperature settings for a seamless installation process.
By partnering with trusted professionals who specialize in tankless water heater installation and repair, you’ll enjoy peace of mind knowing your system is correctly sized, safely installed, and optimized for maximum savings and comfort.
Experience the Best with American Home Water & Air
With over 35 years of experience, American Home Water & Air is Phoenix’s trusted heating, cooling, and plumbing solutions provider. We specialize in tankless water heater installation, offering transparent pricing, expert guidance, and tailored solutions for your home. Our licensed technicians ensure every system is installed to the highest standards, providing reliable hot water and long-term savings.
Whether you’re upgrading to an energy-efficient water heater or need a fast and professional installation, we’re here to help. Contact American Home Water & Air today to schedule your consultation and discover why homeowners in Phoenix trust us for all their plumbing needs.
