If you are considering upgrading your water heating system, switching to a tankless water heater can be an excellent option. While tankless water heaters provide energy savings, constant hot water, and space-saving designs, they come with a higher upfront cost compared to traditional water heaters.
Understanding the factors influencing installation costs will help you make an informed decision and budget accordingly. In this blog, we’ll look into the cost of installing a tankless water heater. We explain what you can expect to pay depending on the unit, fuel type, labor costs, and additional expenses.
Tankless Water Heater Installation: An Overview
The cost of installing a tankless water heater in the US can range anywhere from $1,000 to $5,500. This depends on various factors like the size of the unit, the type of fuel it uses, and the complexity of the installation. The installation process involves more than just the unit itself—additional costs like labor, structural modifications, and the removal of an old water heater can quickly add up. On average, homeowners spend around $3,000 to have a tankless water heater installed. Higher-end models and more complex installations can potentially reach up to $6,600.
Key Factors Affecting Installation Costs
Several factors directly impact the overall cost of installing a tankless water heater. These include:
- Fuel Type: One of the most significant factors affecting the cost of installation is the type of fuel the unit uses. Tankless water heaters are available in electric, natural gas, propane, oil, and solar-powered options. Each of these fuel types comes with its own price range for both the unit and the installation.
- Electric Tankless Water Heaters: These are the most affordable to install, with prices ranging from $500 to $1,500. They are relatively simple to install and require fewer modifications compared to gas units. They are a popular choice for smaller homes.
- Natural Gas Tankless Water Heaters: These units cost more to install, typically ranging from $750 to $2,000. They offer higher capacity and lower operating costs in the long run. However, natural gas units require venting and potentially a gas line upgrade which adds to the installation cost.
- Propane Tankless Water Heaters: Propane heaters are an option for homes without access to natural gas. Installation costs are similar to natural gas units, ranging from $500 to $2,000. Like gas units, they require venting.
- Oil and Solar-Powered Units: Oil units range from $1,000 to $3,000. Solar systems are the most expensive to install, with costs ranging from $1,500 to $4,000. Solar units require solar panel installation. This further drives up costs but provides significant long-term energy savings.
- Unit Size and Capacity: The size of the tankless water heater is determined by its capacity in gallons per minute (GPM). This indicates how much hot water the unit can provide at once. Smaller units made for point-of-use (for a single appliance or faucet) are more affordable. These typically cost between $150 and $500.
Whole-home systems are capable of providing hot water to multiple appliances and bathrooms. They can range from $500 to $2,000 depending on the GPM. It’s essential to calculate your household's hot water demand by considering the number of bathrooms and appliances that may use hot water simultaneously. The higher the demand, the larger and more expensive the unit you’ll need.
- Brand and Model: The brand you choose also significantly affects the cost of both the unit and the installation. Premium brands like Rinnai, Navien, and Noritz offer high-end models with advanced features but come with a higher price tag. More budget-friendly options include brands like Rheem, Bosch, and EcoSmart for reliable performance at a lower cost.
For example, Rheem units may cost anywhere from $370 to $2,000. Whereas, high-end brands like Navien and Noritz can range from $1,000 to $2,600. It’s essential to choose a brand that balances cost, quality, and your household’s hot water needs.
- Labor and Installation Complexity: Labor is another significant component of the overall cost. On average, labor costs for installing a tankless water heater range from $500 to $2,000. This can vary based on your location, the plumber’s rates, and the complexity of the installation.
Electric tankless heaters are easier and cheaper to install compared to gas models. They may require new venting or modifications to existing gas lines. Installing a gas-powered system typically incurs higher labor costs due to the need for additional safety precautions and venting.
- Electric Tankless Water Heaters: Labor costs typically range from $150 to $1,000.
- Gas, Propane, and Oil Systems: Labor costs can range from $900 to $2,000 due to the need for gas line adjustments and venting.
Additional Expenses to Consider
- Permits and Inspection Fees: Depending on local building codes, you may need to obtain permits for installing a tankless water heater. These permit fees typically range from $100 to $300 but can vary by location. In addition, some municipalities require an inspection after the installation is complete to maintain compliance with safety standards.
- Removal of Old Water Heater: If you are replacing an existing water heater, you will need to factor in the cost of removing and disposing of the old unit. The cost for this service typically ranges from $500 to $1,000. This depends on the removal and disposal fees in your area.
- Modifications to Plumbing and Electrical Systems: Depending on your home’s infrastructure, installing a tankless water heater may require upgrades to your plumbing or electrical systems. For instance, electric models may require an electrical panel upgrade. Gas units might need new gas lines or additional venting. These modifications can add between $500 and $1,500 to the overall installation cost.
- Accessories and Materials: Additional materials such as gas connectors, termination vent kits, mounting brackets, fittings, and insulation for pipes may be required during the installation process. These materials can add up to $175 or more, depending on the specifics of your installation.
The Benefits of Installing a Tankless Water Heater
Despite the higher upfront costs, tankless water heaters offer several benefits that make them an attractive long-term investment.
- Energy Efficiency: Unlike traditional tank-style water heaters that constantly heat and store water, tankless systems only heat water when it’s needed. This reduces energy consumption and can lead to lower utility bills over time. Tankless water heaters can reduce energy use by 30-50% depending on the size of the household and usage patterns.
- Unlimited Hot Water: One of the most significant advantages of a tankless system is the continuous supply of hot water. You won’t have to worry about running out of hot water during showers or when multiple appliances are in use simultaneously.
- Longer Lifespan: Tankless water heaters typically last longer than traditional water heaters. While a tank-style heater may last 10-15 years, a tankless model can last over 20 years with proper maintenance. This reduces the need for replacement and lowers long-term costs.
- Space-Saving Design: Tankless water heaters are compact and can be mounted on walls, freeing up valuable floor space in your home. This is especially beneficial for smaller homes or apartments where space is limited.
- Environmental Impact: Tankless systems are environmentally friendly due to their lower energy consumption and reduced greenhouse gas emissions. Solar-powered units offer the most eco-friendly solution by utilizing renewable energy to heat your water.
Is a Tankless Water Heater Right for You?
Deciding whether to install a tankless water heater depends on several factors, including your household’s hot water demand, budget, and long-term goals. While the initial cost of a tankless water heater is higher, the energy savings, unlimited hot water, and longer lifespan make it a worthwhile investment for many homeowners.
To make the right choice, consult with a licensed plumber to evaluate your home’s infrastructure, hot water needs, and installation requirements. They can help you determine the appropriate unit size, fuel type, and installation method. Their experience will guarantee your new tankless water heater meets your expectations and fits within your budget.
With Water Heaters Now, you’ll receive guidance on selecting the perfect tankless water heater for your home. This comes along with transparent pricing, exceptional service, and a worry-free installation process. We take pride in providing top-quality water heaters manufactured in the USA, backed by industry-leading warranties.
Whether you’re converting from a traditional tank system or upgrading your current unit, we promise your new tankless water heater delivers the energy efficiency, comfort, and reliability you expect. Let Water Heaters Now handle the installation so you can enjoy the benefits of unlimited hot water and long-term savings. Contact us today to schedule your consultation or same-day service!
