A tankless water heater's control mechanism mounted on a blue bathroom wall

Tankless water heaters are known for being energy-efficient, user-friendly, and long-lasting. However, they also usually require a bit of an upfront investment. 

If you’re worried about the initial costs or how much you’ll have to pay to maintain a tankless heater, you’re in the right place.

This post will discuss how much a tankless water heater costs compared to tanked models, how much you should expect to pay for operational and maintenance costs, and whether or not you’ll save money in the long run. 

So continue reading for all you what to know about these energy-efficient home appliances.

How Much Does a Tankless Water Heater Typically Cost?

Tankless water heaters usually cost between $1,000-$2,500 or more. In addition, installation varies from $250-$2,500, depending on the installation time, plumbing requirements, electrical setup, etc. However, tankless water heaters use less than 70% of the energy required by tanked models.

Is a Tankless Water Heater Cheaper?

Tankless models cost several hundred dollars more than water heater tanks. Their installation costs are also much higher than those with tanks. However, you’ll save more money in the long run because they require less energy and fewer repairs and last almost twice as long as water heater tanks.

Remember that you can get a cheap tankless heater that costs less than a high-end tanked water heater. However, you’ll have to deal with slower heating times, not to mention that you might not be able to heat enough water to keep up with your house’s hot water demand.

Another thing to consider is that replacing a tankless water heater with another tankless model will be much cheaper than converting from a water heater tank to a tankless one. 

That’s because there are fewer rewiring, plumbing, and mounting units on the wall. If you choose a like-for-like model, you might even be able to DIY the installation.

A technician services a tankless water heater

The installation can often cost close to the same price as the unit itself. That said, there’s a good chance you’ll get a hefty warranty that protects the unit for years to come. Read on to learn more about installation costs.

How Much Does Tankless Water Heater Installation Cost?

It costs up to $3,500 to install a tankless water heater, but most companies keep their price below $2,500. It’s scarce to find a company that charges more than $2,500 because labor costs are lowered by reduced installation times. However, multiple factors can influence and raise the price.

According to This Old House, the average tankless heater installation costs about $1,200. However, you could spend much less by applying several savings tips. 

Four suggestions for financial relief include:

  1. Remove the water heater tank before getting an installation quote – removing the water heater can take up to an hour. While it might be time-consuming, you’ll save an hour of labor costs. Depending on the company, you might be able to save well over $100 by getting rid of the old heater, wires, and plumbing.
  2. Consider the warranty vs. a DIY installation – many manufacturers void warranties on DIY installations because they want to ensure the appliance was installed correctly. However, knowing what you’re doing can save 100% of the installation costs. Keep in mind that voiding the warranty includes removing manufacturer defect replacements.
  3. Get rid of as much clutter as possible – every bit of debris takes extra labor time, which means more money out of your pocket. Make sure the workspace is as clear of obstacles as possible. Furthermore, ask the quoting technician what you might need to do to make the installation as smooth and quick as possible to reduce costs.
  4. Never get an oversized heater – substantial tankless water heaters won’t save more energy since they require the same amount of fuel (electricity or gas). However, they’ll take more time to install, so you’ll have to spend more on labor charges. Always choose the correct size for the best results.

Installation costs vary widely. Make sure you get multiple quotes from several companies. Getting the right make and model can reduce the installation cost. On the other hand, getting the wrong size can save some money, but you’ll have to pay more in operating costs and maintenance expenses down the road.

Why Are Tankless Water Heaters So Expensive to Install?

Tankless water heaters are expensive to install because they require more parts, potential water tank removal, new electrical wiring, new plumbing, and many other labor charges. Furthermore, they’re much more efficient, a trait that most companies will always charge more for.

Here’s a list of reasons a new tankless water heater installation costs more:

  • The company will likely have to remove the old water heater tank – removing a heavy, bulky water tank can take a while. Also, if there’s water in the tank, the company will likely drain it. Since water weighs eight pounds per gallon, XL-sized water tanks could have over 320 pounds of water (not including the tank’s metal weight).
  • All tankless heaters require different wiring compared to tanked heaters – this incompatibility means all old wires will have to be removed, which takes a lot of time. The installation technicians will also have to wire the new tankless heater to the circuit breaker to ensure circuit protection.
  • You’ll need new plumbing to fit the tankless water heater – tankless heaters often use much thinner plumbing than tanked ones. New high-grade pipes will need to replace the old plumbing. This part of the process is often the most lengthy portion since it can require removing part of the wall.
  • The installation process often changes the water heater’s placement – tanked water heaters can’t be wall-mounted because they’re too heavy. However, almost all tankless models are mounted on the wall. This process affects labor costs and relies on having adequate space.
A tankless water heater installed on a wall
  • Tankless heaters take a lot of time to install and program – these devices are much more advanced than tanked models, which means they take longer to set up—installers have to set the desired maximum and minimum temperature. However, low-end models don’t require too much programming.
  • The installation process gets cheaper after the initial replacement – once your water heater is installed, you won’t have to change any wiring or plumbing for most new models. If you already have a tankless heater, you’ll almost always reduce the installation time, thus lowering labor costs.

Do Tankless Water Heaters Have Reduced Energy Costs?

Tankless models have reduced energy costs because they demand less fuel. You’ll have lowered utility bills, regardless of if you choose gas-powered or electric. Furthermore, they last a lot longer, meaning you won’t have to replace the unit as often, saving you even more money.

Let’s dive into the numerous reasons tankless water heaters have lowered energy costs.

  • Less gas and electricity demand – tankless water heaters don’t require as much energy, so they don’t cost as much to run. Water heaters are some of the most expensive appliances in most households, but that changes if you get a tankless model.
  • They use their water much more efficiently – according to Major Energy, water heaters require 34% less energy because they use each unit without too much waste. Tanked heaters use energy inefficiently, which is why they feel hot to the touch. It also means you’ll have to spend more money.
  • Tankless water heaters heat water only when required – there’s no need to heat water when it’s not being used, unlike tanked heaters. Not only does this make the tank much quieter during non-operational periods, but it also means you won’t have to spend money when you’re not running hot water.
  • Tankless water heaters don’t run out of hot water – this means they don’t have to heat 40+ gallons of water once it runs out. Unfortunately, tanked models work overtime once the heated water supply is gone. This usage is much worse (and costs more) when you run multiple water sources simultaneously (showers, sinks, etc.).

One of the main reasons people choose tankless water heaters is that they want to lower their utility bills. These eco-friendly heaters are extremely efficient. The only downside is that they cost more, but the incurred savings are more than worth it for most homeowners.

How Much Does Tankless Water Heater Maintenance Cost?

Tankless water heater maintenance usually costs less than $200 per session. Technicians will clean and inspect the unit, repairing loose wires and faulty plumbing. However, you might be able to save money if you have a warranty on your heater. Many of these appliances come with multiyear warranties.

A man with a clipboard planning when to replace his hot water heater. There is a tankless water heater that he's standing next to.

Forbes claims the average tankless heater maintenance trip goes from $45-$200. But, of course, prices depend on location, companies, and many other variables. 

Here’s everything you need to know about tankless water heater maintenance costs.

Annual Water Heater Maintenance

The best way to save on maintenance and repairs is to get annual checkups. Some companies recommend seasonal maintenance, while others suggest getting it before and after summer. Always abide by the brand’s routine maintenance schedule to ensure you get the most out of your tankless water heater.

Minor Repairs Are Better in the Long Run

Interestingly enough, maintaining your tankless heater costs less than spending more on expensive repairs. While you’ll pay a bit yearly, you won’t have to deal with early replacements or spreading part damage. You might have to replace a small part here and there, but you won’t have to get high-cost maintenance too often.

Maintenance Costs Vary

It isn’t easy to pinpoint an exact quote for your tankless water heater’s maintenance because it varies based on these three factors:

  1. The make and model—high-end tankless water heaters have more expensive parts
  2. Whether the company charges by the hour rather than a standard fixed rate
  3. Replacing different parts costs varying amounts of money, so it’s impossible to know how much you’ll have to spend until you get a quote.

Heavy-duty maintenance is few and far between with tankless water heaters. They’re much more durable, reliable, and long-lasting than water heaters with tanks. As a result, most tankless models last several years longer than their tanked counterparts. 

Sticking to a regular maintenance schedule will help your water heater last significantly longer.

A plumber installing a tankless water heater in a bathroom

Is It Cheaper to Run a Gas or Electric Tankless Water Heater?

It’s usually cheaper to run a tankless gas heater because gas costs less than electricity in many locations. However, the best way to know which fuel type is more affordable is to ask your local utility company. Gas tankless water heaters often cost more upfront, though.

Water Heater Leaking Info claims gas tankless water heaters can cost up to $400 less than electric tankless water heaters. Their operational costs are a bit lower than electric models, which means you’ll cover the difference within a couple of years. Both models and fuel sources have better ROIs than water heater tanks.

While tankless gas heaters are typically cheaper to run, you could save more on electric models if you have solar power. It could also be cheaper if you have geothermal energy through heat pumps and other sources.

Final Thoughts

Although you’ll have to spend more on the initial investment, you’ll enjoy long-term savings and better reliability with a tankless water heater. You also won’t have to deal with loud water knocks as you would with a tanked water heater. 

These tankless models come in multiple sizes and fuel types, so choose whichever one suits your home. Best of luck!


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