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How Much a Tankless Water Heater Costs

By: David Trinh
Last Updated:
Tankless Water Heater Cost

You’ve assessed your options and realized that investing in a tankless water heater is better than sticking with a tank water heater. To come to a final decision, all you need to know now is how much your water heater will really cost.

This is important, as the purchase price of the water heater is just one of several expenses. We will detail everything you need to take into account to calculate the actual price of a water heater from purchase to installation and yearly maintenance.

Tankless Water Heater Cost Comparison Chart

Type of Cost
Tankless Gas Water Heater
Tankless Electric Water Heater
Purchase Cost
$1,000 to $1,200$500 to $700
Installation Cost
$1,750 to $2,000Up to $1,300
Maintenance Cost
$45 to $130 yearly$45 to $130 on occasion
Lifetime Energy Costs* for Condo
Lifetime Energy Costs* for Average Home
Lifetime Energy Costs* for Large Home

*Lifetime energy costs assume that your tankless water heater will last for 20 years.

Tankless Gas Water Heater Cost Breakdown

gas cost breakdown

As you can see from the chart above, there is no clear answer to the question “How much does a tankless water heater cost?” There are some major differences in tankless water heater prices when comparing gas to electric. In addition to the cost of purchase, you need to take into account installation, maintenance, and energy. Plus, the latter differs according to whether you live in a condo, average-size home, or large home.

Let’s take a closer look at each of these costs for a gas tankless water heater.

Prices of Hot Water Heaters (Gas)

For a good-quality gas tankless water heater, you’ll need to pay at least $1,000. For a system with electronic ignition, the cost is closer to $1,200. These models have no pilot light, which means you see even greater energy savings over the long term.

The average Purchase price of a gas tankless heater is $1,000-$1,200

Gas Tankless Water Heater Installation Cost

The cost to install a gas tankless water heater varies significantly according to your current home setup, although it tends to be quite expensive whatever your needs. In all cases, you’ll need to seek the services of a licensed plumber, as the installation is too complex (and potentially dangerous) for DIY.

Below are all of the possible installation tasks you may need to undergo for installing a new gas unit:


For starters, if you want to install your heater indoors, you’ll need to add venting leading to the outdoors. This will stop harmful gases from being released in your house. For the job, you’ll need a category II stainless steel pipe attached with tightly-sealed silicon joints.

Condensate Drain

If you live in a cold climate, or even in an area where winter temperatures drop quite low, you’ll probably want to take steps to stop cold air created by the condensation from traveling through the vent and re-entering your home. This involves installing a condensate drain — which adds another expense to the installation. The condensate drain will remove water from the condensation using a plastic tube. It needs to be routed to a drain in the floor or to a utility sink.

Gas Line

You may also need to install a new gas line to your heater. Again, this is work that only a licensed plumber should carry out.

Gas Meter

Another potential expense is upgrading your gas meter. Before you can install your water heater, you need to ensure that the meter has a large enough capacity to supply the heater with fuel. This is especially important if you will be using other gas appliances at the same time as the heater. You should ask your gas company to confirm the capacity of your meter for you. At the same time, you’ll need to confirm that your gas meter supplies the right amount of manifold pressure.

The good news is that any updates to your gas meter incur only small costs. In fact, sometimes the gas company will charge nothing at all.

Removal of Current Unit

The last related expense before the actual installation of the tankless water heater is the removal of your current unit. Most people are replacing a tank system with a tankless unit. If this is the case for you, expect to pay around $500 for the removal and disposal of your tank. Of course, if you have a new house and have never had a water heater before, this is an installation cost you can eliminate from the total.

Installation of the Unit

Now we come to the installation itself. This is the easiest part. Expect to pay a plumber between $45 and $65 in hourly costs for the fitting of your heater.

Creating a Space for the Heater

There is one final cost — concealing your water heater. Unlike tank water heaters, tankless units are compact. As they take up far less space, there is no need for a full closet. However, you may still like to hide your water heater out of the way. Creating a space with an access door will require a carpenter, who will likely charge about $70 an hour.

Depending on the service required, you can expect to pay between $1,750 and $2,000 for new gas installation.

Maintenance for Gas Tankless Heaters

Another expense you need to take into account is maintenance. This is slightly more expensive for gas tankless heaters than electric, purely because gas heaters need at least annual maintenance whereas electric heaters can go without. The price is also influenced by the cost of a plumber in your area, whether you have hard water, and if your heater is set to a high temperature.

Annual maintenance includes the following:

  • An inspection of the condition of the heater. The plumber will look for cracks and corrosion in gas lines, and signs of leaking.
  • A check to confirm that the heater is combusting fuel correctly. This is essential to prevent your heater from creating carbon monoxide.
  • The cleaning of limescale (you can actually do this yourself).

If your area has particularly hard water, minerals like calcium and magnesium start to build up in the heat exchanger. This stops water from flowing in places. Your heater will need to work harder to continue producing hot water, which you’ll notice by higher utility bills. It can also cause permanent damage to the heat exchanger — this can mean you need to replace either just the heat exchanger or the whole unit earlier than otherwise. You can prevent the problems caused by hard water damage by descaling your heater twice a year.

In the case that your heater is set to a high temperature, you are again at a risk for limescale building up fast. This is because chemicals in water dissolve quicker when the temperature is higher. The faster they dissolve, the quicker the limescale builds up on heating elements.

You’ll be able to check the temperature of your water heater by looking at the thermostat. If it is under 120 degrees Fahrenheit, the temperature is unlikely to cause any problems — you can manage with just one limescale cleaning a year. However, if the temperature is higher, you will need to clean your heater twice a year.

When these two factors are combined (hard water and high temperature), the risk of limescale buildup is greater still. Make sure you never skip a biannual cleaning.

If you want to save money, it is worthwhile learning how to clear your heater of limescale yourself. This easy to do, and all you’ll need is some undiluted white vinegar. Just make sure that you follow the instructions in your manufacturer’s manual to stay safe, as every model of tankless water heater requires a slightly different procedure.

Overall, you can estimate yearly maintenance costs to be around $45 to $130

Electric Tankless Water Heater Cost

electric cost

Now that we’ve covered all the costs of purchasing, installing, and maintaining a gas tankless water heater, let’s look at how much does an on-demand water heater costs when it’s electric. As the expenses are very different from those of a gas tankless heater, the answer may influence your decision as to what type of heater you buy.

For instance, if you are seeking the best price on hot water heaters, you may be immediately attracted to an electric tankless heater, as upfront costs are much lower. Maintenance costs are also lower, but operating costs are quite a bit higher, adding to the expense over the long term.

Cost to Purchase an Electric Water Heater

Electric tankless heaters are relatively cheap to purchase. For the same quality as a gas tankless heater costing $1,000, you can pay just $500 for an electric tankless heater. If you want a top-of-the-range heater, there’s no need to pay more than $700.

The average purchase price for an electric tankless heater is $500-$700

Electric Tankless Water Heater Installation Cost

Installing an electric tankless heater is also less complex and less expensive than a gas tankless heater. There’s no need for venting, a condensate drain, or a gas line, nor will you need to update your gas meter.

Below are all of the possible installation tasks you may need to undergo for installing a new electric unit:

Plugging or Wiring

You will need to plug your heater to 240-volt power, though. Most of the time, homeowners just plug the heater to an outlet. If this is the case, it may be possible to install the electric water heater yourself.

Alternatively, you may need to wire the electric heater directly to your service panel. Unless you have ample experience in this kind of task, you’ll need to hire an electrician. You’ll need to install a subpanel next to your heater. This has its own circuit breakers to disconnect the power from the water heater. The wiring needs to run to this subpanel and from the subpanel to the water heater.

In some cases, simply wiring a water heater to your current system is insufficient. It is possible that you’ll need to update your electrical system or its configuration. This will add to the costs of installation — an electrician will likely charge between $65 and $85 an hour.

Remove the Current System

Finally, as with a gas water heater, you’ll need to pay a plumber to remove your current system (if you have one) and you may want to ask a carpenter to create a space for the heater.

You can expect to pay up to $1,300 for the installation of an electric water heater.

Maintenance for Electric Tankless Heaters

As mentioned above, water heater maintenance is similar for electric heaters as for gas tankless heaters. The difference is that you don’t need maintenance every year, only on occasion, and the plumber will check the electrical connection rather than gas lines and fuel combustion. You’ll likely pay between $45 and $130 for the inspection. The amount will depend on your plumber’s fees and whether the maintenance takes one or two hours.

You will need annual maintenance if, like with a gas tankless heater, you live in an area where the water is especially hard or you will be setting your heater to a high temperature. Again, you can avoid this and reduce expenses by carrying out the limescale cleaning yourself.

Maintenance costs will average around $45 to $130 for occasional inspection

Do Tankless Water Heaters Save Money?


No matter if you choose a gas or electric tankless heater, you will save money compared to purchasing a tank water heater. For one thing, since tankless heaters often last up to twice as long as tank models, it will be much longer before you need to pay for a replacement.

Installation costs for a tank water heater tend to be lower, as there is no need to prepare your home — or at least not to the same extent. However, since you will need to replace your heater much earlier, you’ll end up ultimately spending around the same amount.

Furthermore, operating costs tend to be lower with both electric and gas tankless water heaters compared to their tank counterparts. There are also reduced maintenance costs associated with tankless heaters. This is especially true at the end of a tank water heater’s lifespan. Tank heaters often start to corrode and may leak water. The cleanup can incur significant costs.

Tankless Gas Water Heater Costs Compared to Tank Gas Heater Costs

The best way to calculate how much are water heaters — tank compared to tankless —  is to consider how much they cost to run. A gas tankless heater is the cheapest of all types of water heaters in this regard.

As you saw in the chart above, exactly how much you’ll pay will depend on the size of your home. Assuming that a tankless gas water heater has a lifespan of 20 years, you’ll pay $1,400 in lifetime energy costs if you live in a condo, $1,600 for an average home, and $1,900 for a large home. In comparison, tank water heaters with a lifespan of 13 years cost $1,400 in lifetime energy costs for a condo, $1,650 for an average home, and $1,900 for a large home.

In other words, you pay almost the same amount in energy costs for a gas tankless heater over 20 years as you do for a gas tank heater over just 13 years.

Tankless Electric Water Heater Prices Compared to Tank Electric Heater Prices

Next, let’s look at the same for an electric tankless heater compared to an electric tank heater. It is much less expensive to use an electric tankless water heater than a tank unit. Instead of requiring a constant supply of electricity to keep the tank full of hot water, you only heat water when it is needed.

You can expect to pay $2,700 in a condo, $3,300 in an average home, and $3,800 in a large home in lifetime energy costs. This assumes a lifespan of 20 years, but there is a good chance that your water heater will last longer. For an electric tank water heater with a lifespan of 13 years (many don’t even last that long), you can expect to pay $2,500 for a condo, $3,000 for an average-size house, and $3,500 for a large house in lifetime operating costs.

Which Type of Heater Is the Best Investment in the Long Run?

rising costs

Which type of tankless heater — gas or electric — is the best investment for you will depend on what you’re looking for. If you plan to stay in your house for many years, a gas heater may end up being the less-expensive option, but only if it is possible to carry out all the necessary installation. Alternatively, if you want to spend less now and may leave your home in a few years, you’ll likely spend less on an electric tankless heater if it is suitable to cover your hot water demands.

If you need to heat a large house and would prefer electric, you should consider point-of-use heaters. These provide hot water to a single source, such as a bathroom, the dishwasher, or the washing machine. Each point-of-use heater is cheaper to purchase and install than a whole-house gas unit. However, the total costs may be higher, especially when you add in operating costs.

The bottom line is electric tankless is usually a good investment if your home has smaller water demands or if you plan to stay in the home for a shorter duration, while a gas tankless unit is usually best for homes with larger water demands or if you plan to stay in the home for a longer duration.

Are Tankless Water Heaters Worth It?

By now, it should be clear that tankless water heaters are definitely worthwhile. Whether you decide to go with gas or electric will depend on how much you are looking to spend upfront, how much you want to spend over the course of your heater’s lifetime, your water needs, and whether it is reasonable to install a gas heater (due to the installation requirements). Whatever the case, it is going to be more convenient and less expensive than sticking with a traditional tank water heater.

Before making a purchasing decision, be sure to check our review of the best instant hot water heaters on the market!

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David Trinh
David is an expert in all things plumbing, heating, cooling, and water treatment. He got his start in the plumbing business working on fixing all types of home improvement issues including water leaks, broken toilets, appliance installation, and more. Over time, he learned a ton about installing and choosing the correct water treatment products for homeowners.

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