The True Cost of Installing a Tankless Water Heater: A Complete Guide!

Out in the market for a new water heater but overwhelmed by the installation costs? You’re not alone! 

As a homeowner, it’s a must to consider not just the upfront costs but also the long-term savings that come with a high-efficiency tankless water heater. But before you make a decision, it’s crucial to understand what goes into the installation cost of a tankless water heater.

A tankless water heater is a highly efficient alternative to a conventional storage tank heater. Unlike traditional heaters that continuously heat water in a tank, tankless units provide hot water on demand, heating only the water you need when you need it. It not only saves energy but also helps to lower your monthly utility bills.

So how much can you expect to pay for installation? The installation cost of a tankless water heater can vary widely depending on several factors, such as the brand and type of unit, labour rates, and the location and accessibility of the installation site.

Understanding these factors will help you make an informed decision and ensure you get the most value for your investment.

Don’t worry; in this blog post, we’ll break down everything you need to know about tankless water heater installation costs so you can make an informed decision for your home.

Get ready to dive into the world of tankless water heaters and learn what you should know before taking the plunge.

Average installation cost for tankless water heaters

The national average cost for installing a tankless water heater is between $800 to $3,500, depending on the type of tankless water heater and location. The fee includes the unit, labour and installation upgrades.

Electric tankless water heater

The cost of electric tankless water heaters is generally $300 to $2,100, whereas its installation costs around $500 to $1,500. 

Gas tankless water heater

For gas tankless water heater sucks in more money from your pocket. You can expect to pay between $950 and $3,900 for a unit while $300 to $2,500 for the installation labour.

Large or special units

Large or speciality units can cost as much as $6,600 or more. Again, costs depend on the model, type, and flow rate.

Generally, the installation cost can vary by location and by the hourly rate of the professional plumber. The typical installation cost alone will run about $500 to $1,500, depending on labour rates that usually vary between $40 to $200 per hour.

Pro tip: Gas models are often eligible for a $300 federal tax credit.

Factors affecting installation cost

Several factors can influence the installation cost of a tankless water heater. Here are the key elements and more details on things that can affect the price:

1. Labour costs: The cost of installation labour can vary based on the complexity of the installation process, the experience and qualifications of the plumber, and the location of the installation site. On average, installation labour can range from $500 to $1,500, with higher costs associated with more complicated installations or specialized units.
2. Brand, type, and flow rate of the unit: The brand, style, and flow rate of the tankless water heater can impact its cost, with higher-end models being more expensive. A high-end gas model can cost upwards of $3,000, while a single-point electric model may average around $200 to $600.
3. Location and accessibility of the Installation site: The accessibility of the installation site can also impact the installation cost. If the installation site is located in an area that is difficult to reach or additional materials or equipment are needed to complete the installation, these factors can drive up the cost.
4. Cost of additional equipment and materials: Additional equipment and materials may be required to complete the installation, including vents, pipes, and electrical connections. These costs can vary based on the type of tankless water heater being installed and the location of the installation site, with prices ranging from $100 to $1,000 or more.

Cost Comparison: Tankless vs storage tank water heaters

The initial installation costs for a tankless water heater are typically more expensive than those for a storage-tank water heater. As for the average price, a tankless water heater installation ranges from $800 to $3,500, while a tank water heater may cost as little as $820, with labour for installation usually costing around $40 to $200 per hour. Check out our detailed on tank vs tankless tech here.

Energy efficiency and cost savings 

As for energy efficiency and cost savings, tankless water heaters can provide cost benefits in the long run. In my industry experience, tankless water heaters are often more expensive upfront. Still, they have a lower cost to operate over the years than storage tank water heaters, as they reduce energy costs by 8% to 34%.

Maintenance costs

The maintenance costs for tankless and storage tank water heaters vary depending on several factors, such as usage, water hardness, and proper maintenance. A tankless water heater generally requires less maintenance but has more complex parts that may need repairs in the future. 

On the other hand, storage tank water heaters have simpler parts. Still, they may require more maintenance due to sediment buildup and corrosion. You should know that regular maintenance and inspection can prolong the lifespan of both types of water heaters and help prevent costly repairs in the future. Learn how you can maintain a tankless water heater here.

Cost-saving measures

Cost-saving measures with tankless water heaters can help homeowners reduce their expenses while still enjoying the benefits of this efficient and convenient appliance. 

Some ways to save money on a tankless water heater include:

Taking advantage of federal tax credits

Some tankless water heaters meet the criteria for federal tax credits, which can reduce the cost of purchase and installation. Make yourself aware of the eligibility criteria and amount of credit before purchasing a tankless water heater so you can potentially save money.

Shopping around for the best deals

There are many tankless water heater models from different brands, and prices can vary widely. Homeowners can save money by shopping around and comparing prices from various retailers and manufacturers. Check out our best tankless water heaters for cold climates.

Considering DIY installation

If you are handy and have experience with plumbing, you can save money by installing the tankless water heater yourself. However, it’s important to remember that a professional installation is recommended for most tankless water heaters to ensure proper operation, safety, and warranty coverage.

By taking advantage of these cost-saving measures, you can enjoy the benefits of a tankless water heater without breaking the bank. Additionally, the energy efficiency of tankless water heaters can result in long-term cost savings on monthly utility bills.

What to Expect from a professional installation

It’s usually best to have a professional do the job. A professional installation ensures that the unit is installed correctly and safely. 

Here’s what you should expect from a professional installation:

Explanation of the Installation Process

A professional installation begins with thoroughly assessing your home’s hot water needs and existing plumbing. The technician will then explain the installation process and what to expect during the installation. They will also answer any questions about the unit and its operation.

Importance of hiring a licensed professional

Hiring a licensed professional is vital for several reasons. A licensed professional has the knowledge and experience to properly install the unit, ensuring that it operates safely and efficiently. They also have the proper tools and equipment to install the unit correctly. In addition, hiring a licensed professional protects you from any potential liability issues arising from an incorrect installation.

Factors to consider when choosing a professional installation

When selecting a professional to install your tankless water heater, there are several factors to consider. These include the company’s experience and reputation, the technician’s credentials and licensing, the cost of the installation, and the warranty offered. 

It’s essential to research and choose a reputable company with experienced technicians to ensure the best outcome for your tankless water heater installation.

Over to you!

So that’s a wrap. Remember, tankless water heaters tend to have higher upfront costs for installation but can lead to long-term energy efficiency and cost savings. 

On the other hand, storage tank water heaters have lower upfront costs but may be less energy efficient in the long run. Also, tankless delivers an unlimited supply of hot water, which is not the case with tank models.

Considering the installation cost when choosing a tankless water heater is essential, as this can significantly impact the overall cost of ownership. To save on costs, taking advantage of federal tax credits and shopping around for the best deals can be helpful. Only if you have some basic understanding of hand tools, electronics, and plumbing, then consider a DIY installation. Make sure to carefully research the process and determine if it’s the right choice for you. 

Finally, reaching out to professionals for more information and guidance is always a good idea when it comes to complex home improvements like installing a tankless water heater. 

Professional installers can provide expert advice, explain the installation process, and ensure that the job is done correctly the first time around.

FAQs related to tankless water heater

Is it worth it to install a tankless water heater?

The answer to this question depends on several factors, including your hot water needs, the unit’s cost, the installation cost, and the potential for energy savings.

While a tankless water heater is more expensive than a traditional storage water heater or heat pump, it can result in energy savings in the long run and has a longer lifespan of 20 years. 

Besides, you get an infinite stream of hot water with tankless that never runs out. You must know that recovering the initial investment cost can take years.

What are the disadvantages of a tankless water heater?

Tankless water heaters have a higher upfront cost than traditional tank-style heaters, with an average cost three times higher, including installation. It can get super expensive to supply enough hot water for households with high demand (like 3-4 showers running simultaneously).

A tankless water heater may drop water temperature, especially when it’s not sized correctly and multiple water sources are used simultaneously. Check out our detailed guide on sizing tankless water heaters.

They are more expensive to install than traditional water heaters and have a limited hot water flow rate.

Can I install a tankless water heater myself?

Yes, if you have the know-how of basic plumbings and electricals. Otherwise, installing a tankless water heater is not a DIY project and requires professional skills and expertise. Improper installation can lead to problems such as low water pressure, leaks, and even gas explosions. Additionally, some municipalities and states require a licensed professional to install a tankless water heater due to safety and code requirements. Hiring a qualified and licensed plumber is recommended to install a tankless water heater.

How much is the water heater installation fee?

The cost of water heater installation varies depending on several factors such as location, type of water heater, size, and complexity of the installation. On average, installing a conventional tank water heater can cost anywhere from $500 to $1,500. The numbers run anywhere from $1,500 to $3,000 or more for tankless models. It is best to get quotes from licensed plumbers in your area to get an accurate estimate.