How much does it cost to install a water heater?

A water heater is an important aspect of a home that lasts 10-15 years, not only for the comfort and amenities, but also because it is a major source for energy use. There are many options available when choosing a water heater, and every aspect affects the price.

On average, installing a water heater costs $600-$800, with the average customer paying $700 to install a whole-house tank water heater for a 1,500 square foot home for 3-4 people.

Water heater costs

Tank vs tankless systems

Tankless (or “instant” or “on-demand”) systems are often considered to be much more energy efficient because they only heat water as it is needed. However, many homeowners and consumer groups argue that tankless systems aren’t as great as they are often billed to be, especially since comparing the efficiency of the two styles is near impossible. Tankless heaters also tend to be much more expensive ($600 installed for a tank system and $2,500 installed for a tankless system) and can be more difficult to service. The energy savings average $70-$80 a year, but it still takes decades to make up the difference in the initial cost. Tankless heaters aren’t good for bigger families or for people who like to use water for multiple purposes at the same time, like washing dishes while doing the laundry.

Tank water heaters have a larger reserve of hot water, meaning you can use it for multiple tasks at once, like taking a shower and washing dishes. They are much less expensive to install and maintain, although they do end up costing more each year in energy costs. Tank water heaters also tend to provide hot water more quickly than tankless systems. On average, a 30 gallon heater is good for a household of 1-2 people, a 40 gallon heater is good for 2-3 people, and a 50 gallon heater is good for 3-4 people. For a household of five or more people, an 80-gallon electric system or a 50-gallon natural gas or propane ¹ system should be sufficient.

System size

Whole house systems require more power and a larger space to operate. They also tend to be more expensive than single point systems, although that cost is used to provide hot water to the entire house. A 1,500 square foot home system averages $600-$800.

Historically, single point systems were for tankless systems, although there are more options now. Single point systems tend to be more efficient because the water doesn’t have to travel as far before reaching its destination, giving it a smaller chance of heating unnecessary water and water losing its heat as it travels through long pipes. Single point systems are smaller and less expensive, as low as $200-$400.

Location

There is always a risk of a water heater leaking, which makes its location even more important. A water heater should be placed somewhere it won’t cause major damage if it leaks, such as a storage room or garage. Water heaters need to be accessible for maintenance and should have 12-18 inches clearance on all sides.

Labor

Plumbers typically charge $45-$150 per hour and can typically install a water heater in a day (6-8 labor hours), for a total labor cost of $270-$520. Water heaters that are difficult to access or that are in tight enclosures can take an extra 2-3 hours ($90-$195) to install.

Types

It’s important that you identify the best type of water heater for your home’s system and buying budget. Some of the options include the following:

• Natural gas is one of the two most popular fuel sources (aside from electric), but it tends to be less expensive to operate than electric heaters. However, natural gas isn’t available in all areas. A 40-gallon natural gas water heater averages $500-$700.
• Propane ¹ water heaters use propane ¹ fuel, which is available in most locations. However, these systems mean that homeowners must always have propane ¹ in stock, which can be expensive and take up lots of space. A 40-gallon propane ¹ water heater averages $700-$900.
• Solar water systems use power from the sun to heat water. Solar water heaters are efficient because they only heat the water that is needed. These systems tend to be more expensive ($6,000-$17,000 installed), especially for the premium water heaters that can be used in any climate. Solar heaters are occasionally eligible for government or manufacturer rebates.
• Electric water heaters are common and can be used anywhere electricity is available. It isn’t the most efficient fuel source, but it is readily available and reliable. A 40-gallon electric system averages $350-$550.

Enhancement and improvement costs

Back up hot water system

Homes with solar water heaters may need a backup hot water system for when the solar system can’t get enough sunlight to work. On average, a standard backup system averages $200-$300.

Flat plate solar collectors

Flat plate solar collectors collect more heat and are a good option for larger heating projects, such as heating swimming pools. They start at around $7,000.

Energy-efficient water heaters

Energy-efficient water heaters come in a variety of types and styles. On average, a water heater with an energy-efficient label costs 10%-20% more.

Replacing and resealing vents

If you have a gas water heater, it is necessary to vent the system. There are a variety of vents that you can choose, depending on the configuration and type of heater you are using. If you have a sealed-combustion unit, such as in a tiny home or trailer, it does not vent to the outdoors; all other types will vent outside and require sealing to prevent energy loss and inflated utility bills. Replacing and resealing the vents is commonly done by plumbers at a cost of $45-$150, per hour, and takes about one hour to fully install a single vent. The vents cost an average of $30 at most home improvement venues, though your plumber will typically bring along and charge for this part.

Additional considerations and costs

• Permits. In many places, permits are required for a new water heater, especially if you are changing the type of system. Check with your contractor or plumber for information specific to your area.
• Saving tips. Many homeowners save money by purchasing the water heater on their own before installing it instead of purchasing a package deal of the water heater and installation services.
• Disposal. Removing and disposing of an old water heater can add up to $500 to the overall cost.
• Warranty. Most water heaters come with a warranty that averages 8-12 years in length.
• Pipes. Water heater pipes average $8-$10 per linear foot, although old piping may still be compatible in many cases.
• Reducers. When replacing an existing vent, you may find that the opening to the outside is not the size you need for your new vent. Try to find and purchase vents that are similar in size, when possible, and know that when there is a subtle difference (an inch or less), you may use a ‘reducer’ with some aluminum tape and sheet-rock screws to seal the gap. The installation of these reducers is usually included in the labor costs for your new hot water heater, and the reducer itself is cheap, around $5 each.
• Power vents. If you do not vent your system to the outdoors, you may choose an electrical fan-style vent, called a power vent. Power-venting your hot water heater costs at least $500 more, half of which is materials and approximately $300 more for labor costs from an electrician.

Remodeling Terms Cheat Sheet

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