How much does a tankless water heater installation cost?

All prices include labor and materials.

The total cost of installing a new tankless water heater depends on labor rates in your area, what type of fuel source you're using, whether or not additional work like electrical or plumbing work is required, and many other factors.

Keep reading to learn more about the various cost factors, and get free price quotes from nearby professionals who install tankless units.

Simply put, a tankless water heater heats up water without having to use a storage tank. Cold water flows through the heater’s heat exchanger, which heats up cold water.

Here are a few important things to remember about tankless water heaters:

• They provide energy-saving benefits. According to the Department of Energy, compared to conventional storage tank water heaters, tankless water heaters can be up to 34% more energy efficient.
• Gas tankless water heaters heat water through a gas line and burners. Gas-fired units can produce higher flow rates of hot water compared to electric tankless water heaters, and they tend to be more efficient. Compared to electric units, they cost more upfront, and you may need a pro to upgrade your gas lines. However, their operating costs tend to be lower.
• Electric tankless water heaters tend to be cheaper than their gas counterparts. However, you may need to factor in the cost to upgrade your home's electrical system when installing one. Consult a water heater professional before you decide on a gas or electric unit.
• A condensing tankless water heater uses a second heat exchanger to loop exhaust back into the system for higher energy efficiency. They can be a bit more expensive than other water heaters, though.

Before selecting a tankless water heater, it's worth chatting with a pro to discuss the installation costs.

All prices include labor and materials.

Tankless hot water heaters (sometimes also called "demand water heaters") can turn a specific amount of cold water into hot water based on a measurement of gallons per minute (GPM). The higher the GPM, the more you may pay in total for your new tankless water heater, as indicated in the table above.

Some households use a high amount of hot water because they have a large family, take multiple showers at once, wash a lot of clothes, frequently do a lot of dishes, and more. If you fall into this category, installing a tankless water heater with a higher GPM capacity may be worth the cost.

Different factors can impact how much it will cost to install or replace a tankless water heater. These factors include but are not limited to:

Labor costs and service fees.

When drafting a quote for your project, a professional will need to factor in the cost of labor. The more complicated the installation, the longer it will take to complete — and the more you'll likely pay for labor.

If you’re removing an existing water heater and replacing it with a new one, that can add to the labor costs as well.

Material and equipment costs.

The type, make, and model of the tankless water heater will also affect how much you'll pay to install one. Generally, tankless water heaters cost more than their storage counterparts.

Gas, electrical, and plumbing considerations.

The cost to run a tankless water heater can vary depending on its energy source. The Department of Energy recommends comparing gas and electricity costs in your area if there’s more than one type of fuel available in your area.

Also, a professional may need to do a little extra work to ensure your home is set up for a new tankless water heater. A pro may need to upgrade your gas lines or electrical system in order to accommodate the new hot water heater.

Permit requirements.

You may need to obtain a permit to install a tankless water heater, depending on where you live. Contact your town or city for information about permit requirements and local water heater installation codes. Your plumber should also be able to help you navigate this process.

You may be able to save money when installing (or replacing) a tankless water heater installation by utilizing these tips:

• Compare estimates. Talk with several tankless water heater installation professionals to get quotes on how much they’d charge for the job. You can choose one that provides a similar service to others you’re considering — but at a fairer price.
• Replace parts instead of the whole water heater. You may also save money by replacing faulty parts, rather than the entire tankless water heater itself. Plus, Energy.gov reports these easily replaceable parts may extend the life of your entire tankless water heater by several years.
• Compare pilot lights. Another factor that could impact the cost of your tankless water heater is how expensive the pilot light is to operate. This can vary from model to model, so you can compare manufacturers to see how much gas the pilot light uses. An intermittent ignition device, which resembles a spark ignition device on natural gas ovens and furnaces, will usually result in a lower cost compared to a standing pilot light.
• Maintain your water heater. Proper tankless water heater maintenance can significantly extend the life of the water heater and maximize efficiency to keep energy costs lower. Consult the manufacturer’s manual for maintenance recommendations. If you need help, a professional water heater installer can ensure proper maintenance, so there's less likely to be accidental damage or mistakes.
• Look for tax credits and incentives. Visit the ENERGY STAR website to find a certified tankless water heater that can help you take advantage of any available tax benefits.

You can attempt to do the job yourself to save money when installing a tankless water heater. However, there are a few things you should know before you attempt to do this project on your own:

• You need to know the rules about permits, inspections, and building codes. Contact your city to find out what the rules are.
• You need carpentry, plumbing, and/or electrical skills, depending on the type of tankless water heater you choose to install. This is not a project for the novice DIY-er.
• You may void your warranty if you DIY. Some tankless water heater manufacturers may void your warranty if you incorrectly install your water heater and it requires repairs (or a replacement) as a result. Read your warranty carefully.
• It’s a dangerous project. Anytime you're working with electricity, gas, and tools, you risk injuring yourself. Make sure you know and follow all of the safety regulations.
• You may end up paying more in the long run. If you make mistakes when installing your water heater, you may need to pay for expensive repairs in the future. The cost to fix those mistakes may be more than the cost to have a professional install the water heater from the start.

Most households need hot water for showering, washing dishes, cleaning, and other necessities. But is a tankless water heater worth the cost, especially when compared to storage water heaters?

Here are a few advantages that may convince you it is:

Long-term energy savings.

Tankless water heaters' lower operating and energy costs can help offset the initial upfront cost.

Energy.gov reports for homes that use fewer than 42 gallons of hot water every day, tankless water heaters can be 24%-34% more energy efficient compared to conventional storage tank water heaters. They can also be 8%-14% more energy efficient for homes that use up to 86 gallons of hot water per day.

Constant comfort.

Tankless water heaters can provide a constant hot water supply, depending on their output. Compared to a storage tank that needs to fill up with hot water first, a tankless water heater provides hot water on demand. That means you can get hot water when you need it as long as the GPM meets your needs.

Less waste and heat loss.

You also don’t waste hot water since it works on demand. Tankless water heaters don’t have standby heat losses that storage water heaters encounter. 

Longer lifespans.

Tankless water heaters typically last longer (20+ years) than conventional storage water heaters (10-15 years). This can make them worth the initially higher cost to purchase one.

Of course, there may be some downsides to installing a tankless hot water heater. For example, some models aren’t able to provide enough hot water for large households that need it in different places all at once. A house may require two or more tankless water heaters to meet supply demands — which will naturally increase costs.

As mentioned earlier, it’s important to note if the tankless water heater has a pilot light. Pilot lights can increase operating costs. But you can avoid this expense by buying a model that has an intermittent ignition device instead.

If you're ready to move on to the next step, it's time to start contacting the pros for free cost estimates. Download the Thumbtack app today so you can start searching for tankless water heater plumbers and installers near you.