If you’re considering upgrading your hot water system, a tankless water heater is a smart choice for energy efficiency, endless hot water, and long term savings. But one of the most common questions homeowners ask is: “How much does a tankless water heater cost?”
The cost varies depending on the type of unit, installation complexity, and your home’s hot water needs. In this guide, we’ll break down prices for electric and gas models, explore installation factors, and help you decide if a tankless system is the right investment for your home.
Why Tankless Water Heaters Are Popular
Tankless water heaters are gaining popularity because they:
- Heat water on demand instead of storing it
- Provide endless hot water for multiple showers or appliances
- Take up less space than traditional tanks
- Reduce energy bills by 20-30% over time
- Last 20+ years with proper maintenance
Knowing the tankless water heater cost upfront helps you plan your budget and avoid surprises during installation.
Average Tankless Water Heater Cost
The price of a tankless water heater varies depending on fuel type and size:
| Type | Unit Cost | Full Installation |
|---|---|---|
| Electric | $250 – $700 | $500 – $1,200 |
| Gas | $500 – $1,500 | $1,000 – $3,000 |
| Whole-House | $500 – $2,000 | $1,000 – $3,500 |
| Point-of-Use | $150 – $400 | $300 – $700 |
Note: Installation costs include labor, plumbing, gas or electrical upgrades, venting, and permits.
Electric vs Gas Tankless Water Heater Cost
Electric Tankless Water Heater
- Unit price: $250 – $700
- Installation: $500 – $1,200
- Pros: Easier installation, low maintenance, energy-efficient
- Cons: Slower recovery rate, may increase electricity bills
- Best for: Small households or apartments
Gas Tankless Water Heater
- Unit price: $500 – $1,500
- Installation: $1,000 – $3,000
- Pros: Fast recovery, supports larger households, lower monthly fuel costs
- Cons: Higher upfront cost, requires venting and gas line upgrades
- Best for: Homes with multiple bathrooms or high simultaneous water usage
Installation Costs You Need to Know
Professional installation is strongly recommended. Costs vary depending on:
- Labor rates in your area
- Electrical upgrades for electric units
- Gas line upgrades for gas units
- Venting requirements for gas units
- Permits and inspections required by local codes
DIY installation is risky and may void warranties. A professional ensures safety, efficiency, and compliance with building codes.
Factors That Affect Tankless Water Heater Cost
Several factors influence the total cost:
- Hot water demand: Whole-house vs single-point units
- Fuel type: Gas or electric
- Brand & warranty: Premium brands cost more but last longer
- Home plumbing & electrical setup: Older homes may need upgrades
- Location: Labor and permit costs vary by region
Tankless Water Heater vs Traditional Tank: Cost Comparison
| Feature | Traditional Water Heater | Tankless Water Heater |
|---|---|---|
| Unit Cost | $300 – $1,000 | $250 – $1,500 |
| Installation | $300 – $1,500 | $500 – $3,000 |
| Lifespan | 10 -15 years | 20+ years |
| Energy Savings | Moderate | Up to 30% |
| Hot Water Supply | Limited to tank size | Endless hot water |
While tankless systems are more expensive upfront, they save money over time with lower energy bills and longer lifespan.
How to Save Money on a Tankless Water Heater
- Choose the right size: Avoid overspending on units larger than your household needs
- Look for rebates & incentives: Many states or utility companies offer rebates for energy-efficient units
- Bundle unit & installation: Many installers offer discounts for combined purchase and service
- Hire a professional for proper sizing: Avoids underperformance or unnecessary costs
Is a Tankless Water Heater Worth the Cost?
A tankless water heater is a long-term investment:
- Provides endless hot water for your family
- Reduces energy consumption and bills
- Saves space compared to traditional tanks
- Lasts 20 + years with proper maintenance
If your household uses a lot of hot water and you want efficiency and convenience, a tankless water heater is often worth the upfront investment.
Conclusion
The tankless water heater cost ranges from:
- $250 – $1,500 for the unit
- $500 – $3,000 for full installation depending on fuel type, home setup, and location
Choosing the right unit, size, and professional installation ensures you enjoy reliable hot water, energy savings, and long-term comfort. If you’re unsure about your household’s needs, a licensed technician can assess your home, recommend the best tankless unit, and install it safely.
