How Much Does It Cost to Install a Tankless Water Heater?

Water heaters are an integral part of the plumbing systems in residential homes and commercial buildings. Increasingly, consumers are turning to tankless water heaters for their many benefits. These types of heaters heat only the water you use, rather than heating and storing water continuously. There are two basic ways you can use one. Some models, known as single point units, install close to the water source and are fairly inexpensive to purchase and install. Whole house units are more costly, but will heat all the water in your home at once.

The average cost for installing a tankless water heater is around $2,500 - $4,500, with the average customer paying $2,808​ for a gas whole house unit.

Tankless Water Heater Installation Costs

Tankless Water Heater Calculator

The cost of installing a tankless water heater can vary greatly depending on the heater model, along with its features and capacities. Solar-powered and propane ¹ tankless heaters, for example, are more costly on average than simple electric heaters. Your current location can also have a big bearing on the price because labor and material costs can be higher or lower in certain states. Enter your zip code into the tankless hot water heater calculator to get estimated average prices for your tankless heater installation, along with high and low estimates.

Tankless Water Heater Calculator

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NATIONAL COSTS

Average Cost

$2,808

Low Cost

$1,057

High Cost

$6,696

See Tankless Water Heater Calculator Breakdown 

Average Cost Project Low-Cost Project High-Cost Project

Cost

Material

240v electric tankless water heater

$923

Labor

Installation of an electric tankless water heater

$134

Materials

150,000 BTU tankless gas water heater

$1,600

Power vent kit

$850

Labor

Installation of a tankless gas water heater and power vent kit

$358

Material

80-gallon passive solar water heater system with pressure-temperature relief valve and a back-up 4,500w electric heating element

$6,290

Labor

Installation of a passive solar water heater system

$406

Total

$1,057

$2,808

$6,696

Whole House vs Single Point Water Heater

There are essentially two types of heaters - single point and whole house. Choosing one or the other will depend on several factors such as price, how large your family is, and more.

Single Point Tankless Water Heater

Single point tankless units can be installed on the interior or exterior of the building near the water use point and no more than 50 ft. from an adjacent power source (typically requiring 220 volts) if using an electric heater. This means that you will need a tankless heater for every water source. For example, if you have two bathrooms and a dishwasher, you will need three units, unless all three locations are fairly close to one another. Each unit price is about $150.

Whole House Tankless Water Heater

Whole house tankless heaters are installed near an exterior wall in order to reach the vent for gas units, but have some flexibility in placement. One unit in this case can handle multiple bathrooms and a dishwasher, even if used at the same time. The key is to purchase a unit that can handle the amount of use your particular home needs. Expect to pay at least $1,000.

It's important to keep in mind the amount of water that can be heated via a tankless system (0.5 to 2 gallons per minute for a single point heater and 5 - 10 gallons per minute for a whole house unit). This is important when considering which system might be right for a building. For example, in a home with multiple people bathing, a washing machine running and perhaps a dishwasher running, all of these items cannot be used together off one unit. You must either install multiple units, or run one water source at a time.

For most single family homes, a whole house water heater will be sufficient, allowing you to have multiple bathers or a washing machine and dishwasher running at once. In some small apartments, however, a single point heater may be sufficient. Both options should be considered to determine which is right for your needs.

What Size Tankless Water Heater Do I Need?

As there are many different sizes of water heaters, buyers will want to procure the right choice for their particular needs. As a single point water heater is only used to heat water for one source, you will almost certainly need multiple units to cover all of the places in your house that use hot water. However, if you are looking at a whole house tankless water heater, there are some things to consider.

This type of water heaters do not hold many gallons of water like a traditional unit does. Because of this major difference, a purchase decision needs to be made based on the flow rate, or the amount of hot water needed at any given time. The calculation is done as gallons per minute, or gpm, and can be made by adding together what appliances will be used at the same time. For example, a dishwasher uses 1.0 to 2.5 gpm and a washing machine uses 1.5 to 3.0 gpm. If you want your heater to be able to run both at the same time, add the highest gpm together for a total of 5.5 gpm. Keep in mind that a hot tub, at 470 gallons, or filling a bathtub, at 27 gallons, will need more hot water at one time.

In addition, you will need to consider the rise of the temperature of the water. Warmer climates will not have as much of a concern with this aspect since the water starts out warm to begin with. Consumers who live in colder areas need to understand that the water will need to rise from a lower temperature.

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Check out this table to figure out the size you need:

Tankless Water Heater Cost by Fueling Method

While there are two main types of water heaters, as we've discussed, there are also varying methods for fueling them.

The following table lists the costs for each type:

Electric Tankless Water Heater Cost

This type is widely available and one of the most popular choices of homeowners. It requires minimal maintenance and it’s environmentally friendly, since it only needs electricity to work. Electric tankless water heater installation costs range anywhere from $450 - $1,000.

Natural Gas Tankless Water Heater Cost

Natural gas tankless water heaters are widely available and perfect for cold climates. The homeowner will not need to buy oil or pay a higher electricity bill. Another advantage is the fact that, unlike oil, it does not produce any smell and it’s safe for the environment. Natural gas water heater installation usually ranges from $450 to $2,000.

Propane Tankless Water Heater Cost

Propane ¹ tankless water heaters can be cheaper both in the initial investment and in maintenance than other options, since propane is cheaper than either oil and electricity. Also, propane water heaters have a longer lifespan than other types and are usually cheaper to repair. The installation of a propane tankless water heater costs around $500 to $1,000.

Oil Tankless Water Heater

Oil tankless water heaters are not available everywhere. They have many advantages, however: they are able to heat large amounts of water, the water is heated faster, and they are energy efficient. This option is a bit more expensive than others, ranging from $1,000 to $3,000.

Solar Tankless Water Heater

Solar water heaters are recommended in sunny areas. They are easy to maintain and they offer quiet operation, but the initial installation and possible repairs are costly. Offsetting the install and repair costs, a major benefit is that they are probably one of the most environmentally-friendly options. The average cost is $2,000-$7,000.

Tankless Water Heater Prices by Brand

As with most appliances, there are a plethora of brands to choose from. Obviously, some are less expensive, while the cost may be prohibitive on others. As always, buyers have to look at all aspects of the decision, not just cost.

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Bosch Tankless Water Heater Cost

Founded in Germany in 1886, Bosch has a history of producing high quality, technologically advanced products. Today, their products are sold in over 150 countries. The tankless water heater from Bosch comes in electric and gas forms. Though dependable, Bosch products are not as highly rated as some of their counterparts, particularly Navien and Rinnai. Bosch prices are $140-$800 for electric models and $1,050-$2,250 for gas models.

Rheem Tankless Water Heater Cost

You have most likely heard of Rheem in regards to air conditioning. The company has been around since 1925 and originated in Emeryville, California. It is the largest manufacturer of water heating products. Their tankless water heater provides continuous hot water, will save you money on your utility bill, and is even available with the EcoNet wi-fi system to remind you about maintenance services, automatic water shut off should a leak occur, and mobile temperature control. Rheem provides gas ($670-$1,950) and electric ($170-$575) models.

Black and Decker Tankless Water Heater

Black and Decker only makes an electric tankless water heater. There are not a lot of reviews online for this product and it is not mentioned in any of the top 10 reviews for tankless water heaters. Since it is only available in electric, the cost is low at $200-$550.

Marey Tankless Water Heater

Founded in 1955 by Mariano Reyes, the company made its start in Puerto Rico, but later expanded to the continental U.S. and all over the world. It is a less expensive product, at $190-$550 for electric and $300-$1,500 for gas. Don’t let the low price tag fool you, however, as these tankless water heaters are quite reliable. You can purchase either gas- or electric-running heaters. The economy size heaters are not recommended for colder climates.

AO Smith Tankless Water Heater Cost

AO Smith features an economy line as well as a pro line. The company only manufacturers gas-powered tankless water heaters. The economy line features several less expensive models that come with only one heat exchange. The pro line has two heat exchangers–one made of commercial copper and the other made of corrosion-resistant stainless steel. All of the water heaters come with a 15-year warranty on the heat exchanger and a 5-year warranty on other parts. AO Smith tankless hot water heater cost is $300-$670.

Westinghouse Tankless Water Heater

You may have heard of a tiny little company called Westinghouse. Founded in Pittsburgh the same year as Bosch, Westinghouse has been a household name for appliances for over a century. The Westinghouse website boasts of one of its Energy Star tankless water heaters that measures an Energy Factor of up to 0.98. It also provides a stainless steel heat exchanger to protect against corrosion. Westinghouse water heaters come in electric and gas-fired versions. Electric runs $350-$1,650 and gas $875-$2,000.

Ecosmart Tankless Water Heater

Consumers can purchase an Ecosmart tankless water heater in a gas or electric version. They are made by Rheem, but do not offer any wi-fi control or adaptability to wi-fi. They offer both indoor and outdoor units. Professional installation is required to keep the warranty valid. Many of the electric Ecosmart products come with a lifetime warranty on the heat exchangers, while gas models offer a 12-year warranty. All other parts are typically a 5-year warranty. Costs for the gas version range from $695-$1,600 and the electric version ranges from $425-$725.

Takagi Tankless Water Heater Cost

In the appliance market for 70 years, Takagi began manufacturing tankless water heaters about 20 years ago in a joint venture with AO Smith. They make only gas-powered, whole house models, and offer no wi-fi control. However, they do offer a remote with many of their models that can be used to control the temperature set point. The Takagi model is well known for having the lowest rate of mechanical breakdowns in the first decade of use. The Takagi tankless water heater price ranges from $490-$1,225.

Noritz Tankless Water Heater Cost

Noritz has been manufacturing hot water heaters for over six decades. Although the company does manufacture products in the U.S., most of their tankless water heaters are made outside the U.S. This brand only offers  gas or propane ¹ heaters. They do not offer a wi-fi capable product, but you can buy an adapter for $100-$150. Their tankless water heaters are reasonably priced starting at $515-$1,700.

Bradford White Tankless Water Heater Cost

Bradford White tankless water heaters are available in electric ($600-$800) and gas ($1,000-$1,500) models. Bradford White has been in the business of making hot water heaters longer than most companies. They are typically the first choice for subcontractors due to their high-performance, durability, and long life.

Rinnai Tankless Water Heater Cost

Rinnai only makes gas-fired water heaters. Its website boasts that it has the only Canadian Standards Association (CSA) Certified Testing Laboratory and its products are all approved by the American National Standards Institute (ANSI). It also has an in-house 24/7/365 support center which backs all of its products. Rinnai tankless water heaters are highly energy-efficient, Energy Star qualified, and most models feature wi-fi capabilities. Expect to pay about $900-$1,995.

Navien Tankless Water Heater Cost

All Navien tankless water heaters are gas-powered and Energy Star rated. While the company was founded in Japan in 1978, it began producing tankless heaters in 2006. The standard warranty consists of a 15-year warranty on the heat exchange only portion via controlled circulation. If it is uncontrolled/constant circulation, the warranty coverage is only for 5 years. Other parts are covered by a 5-year warranty as well. The cost for a Navien tankless water heater is $1,075-$1,535.

Labor Costs to Install a Tankless Water Heater

The average hourly rate for a plumber to complete the installation process is $45-$150 per hour with an average rate of $85, with installation running two to three hours for an electric heater for a total of $90 to $450 for labor alone. A gas heater may take more time, with labor costing up to $1,200 plus the addition of the gas line for $500. Additional costs include other materials needed for installation (heat pumps ², water pumps ³, pipes, etc.) and the costs associated with permitting. These may add $250 to $500 to the final cost.

If walls need to be opened, you may need to also include the costs of drywall ⁴ 4 and finishing to the job, as much as $200. Most traditional water heaters sit in a closet for easy access; tankless models may need to have an access door added nearby in case of future issues to allow quick repair. This may need to be installed by a carpenter at a rate of $70 per hour, or a handyman at a rate of $100 to $300 for the project.

Cold climate tankless water heaters may require extra labor to install. First off, pipes going into the unit need to be insulated. Also, proper venting is needed for a tankless heater in northern climates with a vent run of at least six feet. The average labor cost for a hot water heater install in cold weather areas is around $400. Total project cost for a cold climate tankless water heater will be about $1400.

Cost to Replace Water Heater with Tankless

If you have a traditional hot water heater and want to switch to tankless, it will most likely cost you a little extra if you decide to go with a gas powered unit. The cost to add the gas line is somewhat expensive at $500. The cost to install the actual tankless electric water heater is about the same as a traditional water heater at $90-$450, with a gas installation costing about $1,700 including adding the gas line.

Installation Process

Once the type of unit and fuel have been selected, the plumber removes the old system, if existing. The site of the installation will be chosen and prepped. This may include opening some walls or a ceiling, depending on where in your home the pipes run, and where your unit will be located. If using a single point unit, you want the unit fairly close to where the hot water will be used in order to deliver the water in a timely manner. Whole house units have more flexibility. Depending on the unit, a gas line may need to be run to the installation point, or you may need an electrician to upgrade the panel or wire the unit into place. In some cases, new plumbing may be required to accommodate the unit. This can mean that the time range for installation can vary from as little as 2 hours for an electric unit, all the way to up to 7 or 8 hours for a gas unit that requires a new line and updated plumbing.

Benefits of Tankless Water Heaters

If you currently have a standard hot water heater, you may be wondering what the advantages of tankless water heaters are. Some benefits include that tankless units are smaller so they take up less room, an energy savings of up to 50%, on-demand hot water, and they are often longer lasting.

So, what are the disadvantages? The initial cost is usually higher than other options, in a power outage there is no reserve hot water, and it requires annual maintenance to prevent mineral build-up. Also, they may not do well in colder climates as the water is colder to begin with and will take longer to heat up. Additionally, larger homes may require multiple units as there is no water storage in a tankless water heater.

Hybrid Tankless Water Heaters

Hybrid water heaters, which are also called heat pump ² water heaters, are the most expensive type of heater, but are also the most efficient. This type of unit uses up to 63% less energy than a traditional hot water heater. Energy Star states that a family of 4 can save about $330 a year on their electric bill by using a hybrid unit. With a tank to store water, it can function like a traditional water heater during times of high usage, but also doesn’t run continuously and works like a tankless system when you don’t need too much hot water all at once. Using a compressor and coils filled with refrigerant, the hybrid uses the surrounding air to heat the water in the tank. Keep in mind that, due to the need for warm, or at least mild, air surrounding the unit year-round for it to function properly, these are not a good choice if you live in a region with cold winters. The hybrid is not a good replacement for a gas unit since you will have to retrofit the connections, and it is also a large unit requiring a considerable amount of space. Costs run about $1,000-$3,500. One major benefit is that its expected life span is 13 to 15 years.

Cold Climate Tankless Water Heater

In cold climates, with freezing outdoor temperatures, it’s more challenging for the heater to provide the hot water your household needs. Consumers in cold climates will need a natural gas or oil tankless water heater because electric types don’t perform very efficiently in freezing temperatures. Another feature of the tankless water heater is a unit with an increased flow rate. Although most homes use water heaters with flow rates around 4 to 5 gallons per minute, households in northern climates should choose a model with a flow rate of 6.5 to 8.5 gallons per minute. On average, cold climate gas tankless water heaters cost around $800 to $2,000.

Tankless Water Heater Energy Efficiency

There is no doubt that tankless water heaters save energy and this equates to a financial savings for the consumer. But, how much is the customer saving? Is there a difference in savings if I buy an Energy Star heater? And what are the most efficient?

We put together this chart to compare the operation costs for each type to help you make your decision.

Natural Gas Tankless Water Heater Efficiency

Natural gas tankless water heaters are the least expensive option, costing about $200 per year to operate. This type of heater will be powered by a city utility supply. The upfront cost of the heater is higher than electric, but you save money on operating costs.

Propane Tankless Water Heater Efficiency

A propane ¹ tankless water system costs about $350 annually to operate. Propane is a cleaner and more efficient fuel so it is better for the environment. However, most of the heaters do not come as propane out of the box, though they can be adapted to do so.

Traditional Hot Water Heater Efficiency

While purchasing a traditional hot water heater may cost less than its tankless counterpart, the cost of operation is considerably higher. The cost to run a traditional electric hot water heater is $450 yearly, and a traditional gas-powered heater costs $275 yearly.

Electric Tankless Water Heater Efficiency

If you buy an electric tankless water heater, the upfront cost is generally lower, but the overall savings is also lower. An electric unit will cost you around three times as much as a gas unit at a cost of $600 per year to operate. Installation may be less for an electric unit because gas and propane require fuel lines.

Tankless Water Heater Maintenance

Tankless water heaters are sometimes referred to as maintenance-free. However, that isn’t really the case, particularly if you have hard water ⁵. Hard water is packed with minerals that can cause a build-up in the tank, leading to clogged passageways. Even without hard water, build-up can occur so it is advisable to do a descaling yearly. Those with hard water or if the temperature is kept high on your system, should consider doing maintenance every 6 months. Without proper care, your system has to work harder and your utility bills will be higher. It is a procedure that can be done by the homeowner, but if done incorrectly can lead to damage to the heating elements. A repair of this type would not be covered under a warranty so it may be best left to a professional. Periodic water heater maintenance is recommended by the Department of Energy and procedures will vary greatly based on the manufacturer's recommendations, but expect to pay standard hourly plumber fees of $45-$65 an hour for water heater maintenance, with most maintenance taking 1 to 2 hours for a yearly total of $45 to $130.

Tankless vs. Tank Water Heaters

Tankless water heaters are a newer concept than a tank water heater. Tank water heaters have been around for about 120 years. Depending on your needs, a regular water heater is generally less expensive than a tankless one, but the tankless unit will generate savings over time. Traditional hot water heaters are larger, take up more space, and as they grow older, are prone to leaks that can do a lot of damage if not caught quickly. Just imagine a 30-50 gallon hot water heater springing a leak while you are away from home for the weekend–you could come home to a flooded house! Tankless water heaters do not store water, but rather heat it up on demand so a water leak isn’t nearly as big a deal.

However, in power outage situations, a traditional hot water heater will store heated water for several hours or days, while a tankless water heater will not work at all and cold showers will ensue. Also, they do not work as well with hard water ⁵. If you have hard water, you will need to clean your system regularly to avoid calcium build-up. If the unit isn’t serviced regularly, it will not work as efficiently or last nearly as long as it could.

Additional Considerations and Costs

• Additional materials: some of the tankless systems will also be incompatible with the location and setup of older storage tank models. This may require reconfiguration and additional materials such as insulation and piping, which retails for around $10 per foot ⁶.
• Configuration of water heater: some electrical systems and configurations may need to be updated to accommodate the voltage requirements of the new electric tankless system. While not always required, this is a potential cost that must factor in cost of materials plus that of an electrician ($40-$100 per hour).
• Removal of current system: another issue to consider is that the removal and disposal costs of your current water heater, which can be upwards of $500 dollars, based on your area.
• DIY: there are many reasons the installation of a tankless hot water heater is not considered a do-it-yourself project for the average homeowner. For example, the high voltage of the unit (240 volts), possibility of gas lines for propane ¹ powered systems and the required permitting in some jurisdictions will all require the expertise of a licensed and insured professional.
• Permitting: all jurisdictions are different. Considering the code regulations for different cities, towns, counties and municipalities, permits may be required to start this project. Many jurisdictions consider new water heater installation and replacement water heater installation a different type of job (i.e., a permit may be required for one, but not the other). This should be taken into consideration to ensure the project remains above board.
• Energy and costs savings: according to the Chicago Tribune, the average annual cost savings of a tankless water heater compared to a traditional tank storage is roughly $116 a year. Tankless water heaters are also objectively more energy efficient than traditional storage water heater units.
• Lifespan. Another important aspect to factor in is the expected lifespan of the unit. While traditional water heaters will typically have a lifespan of anywhere between ten and fifteen years, most tankless units can be expected to be in use for over twenty years.

Remodeling Terms Cheat Sheet

¹ Propane: A hydrocarbon gas used as a common fuel source

³ Pumps: A device used to move air, liquid, or gas by mechanical means

⁴ Drywall: Type of plasterboard, commonly used to build walls and ceilings, composed of gypsum that is layered between sheets of heavy paper

⁶ Foot: A support for the foundation of a house that also helps prevent settling. It is typically made of concrete reinforced with rebar, but can also be made of masonry or brick. It is usually built under a heavier part of the house like a wall or column, to distribute the weight of the house over a larger area.