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tankless water heater

How Much Does a Tankless Water Heater Installation Cost?

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Although tankless water heater installation costs $1,200–$3,500, it can improve your home’s efficiency and lower energy consumption. Our guide details typical cost factors and offers savings tips.

Author Image Written by Brenda Woods + 1 other Reviewer Icon Reviewed by: Mark Howey Updated 05/07/2024

Tankless water heaters are a great way to increase your home’s efficiency and decrease energy costs. They utilize an on-demand heating system, which is more energy-efficient than traditional water heaters. Depending on the model, tankless water heater installation costs can range from $1,200–$3,500. Our guide to tankless water heater installation covers unit, installation, and annual operating costs plus offers advice on how to maximize your energy savings.

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Typical Price Range: $1,200 – $3,500
tankless water heater
Tankless Water Heaters

Tankless water heaters typically cost between $1,200 and $3,500.

Tank Water Heaters

Storage tank water heaters cost between $820 and $1,290 on average.

A gray furnace near a water heater and surrounded by other silver-colored home equipment in a gray room.
Gas Water Heaters

Gas heaters typically cost between $700 and $2,700.


What Factors Affect Tankless Water Heater Installation Costs?

The national average cost for tankless water heater installation costs is around $2,800. Depending on the type of water heater, the units themselves usually cost between $500 and $2,000, with installation adding another $500–$1,500. Therefore, the overall cost for installation ranges from $1,200–$3,500. However, for large or specialty units, you may pay as much as $6,600 in total costs.

Four main factors influence the cost of a tankless water heater:

Branding plays an important role in the overall price of any home appliance or system. More trusted and premium brands, such as Noritz, tend to charge a bit more than newer brands, such as EcoSmart.
The fuel source of a water heater plays a large role in its pricing. More simple options, such as an electrical tankless water heater, offer lower up-front costs but can result in higher long-term costs. On the other hand, more energy-efficient options, such as solar-powered tankless water heaters, cost more up-front but save you money on energy bills in the long run.
Technicians charge around $50–$150 per hour, depending on the location. Tankless water heater installation takes approximately two to eight hours to complete, based on the heater’s type, fuel source, and location. If your installation requires additional repairs or painting, you can expect additional fees of approximately $200. Labor costs may increase due to additional fees for removing the old heater.
Size determines a large portion of a tankless water heater’s installation costs. The larger the water heater, the higher the price.

How Much Do Tankless Water Heaters Cost by Brand?

Consider the brand of tankless water heater you’re interested in. Not only does brand influence pricing (due to brand reputation and premium components) but the warranties and customer service options it offers may also increase cost. Research each brand thoroughly to ensure the quality and reputation match the pricing.


AO Smith




Bradford White
















Tankless Water Heater Cost by Fuel Type

The first choice you’ll have to make when considering tankless water heaters is the fuel type. Possible fuel choices include the following:

  • Electric tankless water heaters: These are the most popular choice because they’re easy to install and maintain. They’re readily available in small sizes, though you can rarely find electric models large enough to heat water for a home of four bedrooms or more.
  • Natural gas tankless water heaters: Gas models are also popular, though they cost a little more than electric models and require more labor to install. However, they can handle many more gallons of water per minute, making them ideal for large homes and cold weather climates.
  • Oil-fired tankless water heaters: Oil-fired heaters use oil to heat water for your house. These heaters are incredibly efficient and often heat water four times faster than standard electrical tankless water heaters. 
  • Propane fuel: Propane can be used as a fuel source for most tankless water heaters that run on natural gas, though they may require a converter. You can also find units made specifically for propane, which is often the only fuel choice for homeowners in more remote locations.
  • Solar-compatible tankless water heaters: These eco-friendly models are the most expensive to install and maintain, but they have the lowest operating costs because they draw power from the sun, which can lower utility bills. As you might expect, these are most useful in sunny climates.

Keep in mind the following water heater prices apply to the tankless unit only and don’t include installation.






Natural gas






Labor Cost for Installation

While you may be able to set up a point-of-use electric heater by yourself, whole-home and gas-powered units will need to be installed by a licensed plumber. Plumbers are trained to work on water pipes and gas lines, and they’ll be able to hook everything up safely. 

Additionally, a plumber will ensure the installation is up to code for factors such as carbon dioxide emissions and thermal regulation. Plumbers typically charge $75–$150 per hour, and installation can take anywhere from two to 10 hours, depending on the job’s complexity and the water heater type.

Tankless Water Heater Installation Labor Cost Breakdown

TypeLabor Costs



Natural gas








Installing a whole-house tankless system may also require additional changes to your home. For example, if you want to install a cabinet to contain the heater or you need additional insulation for pipes that run outdoors, you may want to hire a carpenter or other handyman.

Work times for these projects vary, but professionals usually charge $25–$75 per hour. For large electrical units, you may need an electrician to do some rewiring at a cost of $50–$100 per hour.

Common Sizes for Tankless Water Heaters

Next, you’ll need to decide what size tankless water heater you need. You can choose either a point-of-use unit, which heats water for a single appliance, or a whole-home unit. Single-point units are much smaller and thus less expensive. They’re also more efficient since the hot water doesn’t need to travel as far. However, you’ll need to buy one for each source of water that needs to be heated.

The flow rate of all tankless water heaters can be measured in gallons per minute (GPM) of hot water. Faucets and dishwashers can usually be comfortably heated with a one to two GPM unit, though showerheads and washing machines typically need two to four GPM. When it comes to whole-home units, a small, one-bedroom house may only need a two to three-GPM model, but larger homes will need units of up to 10 GPM.

Tankless Water Heater Costs by Size






1–2 GPM


2–3 GPM


3–4 GPM


5–6 GPM


7–8 GPM


8+ GPM


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What Is the Cost of Tankless Water Heater Conversion?

If you have a traditional tank heater and want to switch to a more energy-efficient tankless model, hire a plumber to convert your system. Conversion costs are about the same as installing a new tankless water heater since you’ll need to have the old system removed, plumbing brought up to code, and new gas and electrical lines retrofitted. This is usually between $1,200 and $3,500 in total.

Costs to Convert Tankless Water Heaters


New heater


Removal/disposal of old tank




New electrical outlet


Upgrade gas lines


Update plumbing


Attic/closet installation


How To Install a Tankless Water Heater

Although installing a whole-home tankless water heater system isn’t a do-it-yourself (DIY) job, it’s still a good idea to know what goes into it so you know what to expect from the professional you hire.

  1. Your installer will turn off the incoming water to the home.
  2. If replacing an old water heater, they will disconnect the unit from the water and power lines, remove it from the home, and dispose of it according to local regulations.
  3. Next, the plumber will determine the best place in the home for the new tankless system and mount it on the wall.
  4. For gas, propane, and oil heaters, it’s important to install either ventilation of metal or PVC pipes. Electric units don’t require venting.
  5. The water line will be connected to the new system by a plumber.
  6. If installing an electric tankless water heater, an electrician will hard-wire it.
  7. For gas units, your installer will hook up the gas supply line. This will likely require an increase in diameter from a standard half-inch diameter pipe to a three-fourths-inch diameter. Once connected, they will ignite the pilot light.
  8. Finally, you will test the hot water on a nearby faucet. The water may take a moment to warm up, as it would with a traditional tank system.

What Are Additional Tankless Water Heater Cost Considerations?

In addition to the four main cost factors listed above, there are some other considerations to be aware of that may influence your total tankless water heater installation cost. Learn more about them in the dropdown tabs below.

If your existing water heater is located in a difficult area to access, you’ll most likely have to pay more for its removal and the installation of a new one. For example, water heaters in an attic or around tight corners will cost more than one sitting in an open basement.

Installing a tankless system may also require additional changes to your home. For example, if you want to install a cabinet to contain the heater or you need additional insulation for pipes that run outdoors, you may want to hire a carpenter or other handyman. Work times for these projects vary, but professionals usually charge $25–$75 per hour. For large electrical units, you may need an electrician to do some rewiring at a cost of $50–$100 per hour.

Condensing tankless water heaters tend to have a higher up-front cost, but they offer extra energy savings by recapturing and using the exhaust heat in a second heat exchanger. Non-condensing units have only one heat exchanger and are about 17% less efficient.

Tankless models are more affected by mineral buildup than tank water heaters, so if you live in an area with hard water, you’ll want to install a whole-home water softener system if you don’t already have one. Learn more about the cost of water softener systems.

Tankless water heaters can be designed for indoors or outdoors. Outdoor units save space and require fewer alterations to walls, but any outdoor water pipes must be carefully insulated and may be less efficient in cold climates.

Tankless water heater installation uses a gas connector kit, which costs $20–$40, and a termination vent kit, which costs $40–$100. In addition, you’ll be charged for mounting hardware and fittings, as well as a two-piece brass valve set—all of which can reach up to $175. Any piping and required insulation tend to cost around $10 per foot.

Most local building codes require technicians to get a permit to install a tankless water heating system in your home. These permits come with additional fees and vary by location.

Energy Star-rated gas or propane tankless water heaters with an energy factor of 0.95 or better qualify for a 30% tax credit for the project’s cost, or a maximum $600 federal tax credit. You may also be eligible for state tax credits or rebates.

All gas- and propane-powered heaters must vent exhaust. This can happen through a direct vent, which pulls cool air inside and sends heat exhaust back outside through a vertical pipe or chimney.

Alternatively, a power vent system draws air from indoors and uses a fan to push exhaust through a horizontal pipe. Power vent water heaters have a little more flexibility as to where in the home they can be installed, but they won’t work during power outages.

What is the Yearly Cost to Operate a Tankless Water Heater?

A tankless water heater’s efficiency and price will depend on several factors, such as fuel source, water usage, and local climate. The more hot water you use, the more it will cost to heat. Additionally, if you use multiple appliances at a time—for example, showering while you run the dishwasher—it increases your home’s peak flow rate and demands more of the tankless system.

Homeowners in cold climates may need a tankless unit rated for a higher BTU to compensate for the lower water temperature as it enters the system. The colder the groundwater, the more energy is needed to heat it. For example, groundwater in Southern and Gulf states is usually around 72 degrees and takes 400 BTU to heat to 120 degrees Fahrenheit. However, groundwater across most Mid-Atlantic, Midwestern, and Pacific states is around 52 degrees Fahrenheit, which takes 466 BTU to heat to 120 degrees Fahrenheit.

Overall, the most predictable variation in cost is due to fuel type. Here are some average operating costs for the major types of tankless water heaters. Unfortunately, due to the rarity of oil-fired tankless water heaters, there’s not much information available about operating costs.

FuelMonthly Operating CostAnnual Operating Cost




Natural gas









Pros and Cons of Tankless Water Heaters

Most homeowners are more familiar with traditional tank water heaters and may wonder whether the extra up-front cost to install a tankless model is worth it. Here are some of the key benefits and drawbacks of converting to a tankless water heater system.

Tankless heaters are anywhere from 8%–34% more energy-efficient, according to the U.S. Department of Energy.
This heater type is safer than traditional tanks, which can leak, rust, or harbor bacteria.
A tankless system usually has a longer lifespan than a traditional system: 15–20 years, as opposed to eight to 12 years.
Tankless systems cost more and are more expensive to install and maintain than traditional units.
If there’s buildup in pipes or small clogs, the automatic shutoff may cut off hot water.

How To Save Money on Tankless Water Heaters

Once you’ve purchased your new tankless water heater, there are several ways to maximize your savings. You shouldn’t cut costs by attempting to install a gas-powered tankless system yourself or by hiring a cheap contractor with little experience.

Instead, focus on the following tips to help you get the most out of your new system:

  • Limit usage: Whole-home units are more efficient when fewer sources need them at the same time, so wait until you’re done showering to do laundry.
  • Perform annual maintenance: Have a plumber or heating contractor perform annual maintenance on your tankless system. This will keep it working at peak efficiency and make it last its full life span.
  • Purchase a home warranty: A home warranty that covers vital home systems will almost always cover water heaters. Many cover tankless water heaters as well, meaning that the contract will cover the cost of repairs to units that break down due to wear-and-tear damage. Many tankless water heaters come with generous warranties of their own, so check for coverage before purchasing another plan.
  • Reduce hot water usage: Anything you can do to reduce hot water usage will directly reduce the cost of operating a tankless water heater. This includes using low-flow and water-saving fixtures and washing clothes in cold water whenever possible.
  • Use rebates: Take advantage of rebates on condensing tankless water heaters, which will offer more energy usage savings over time.

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Is a Tankless Water Heater Worth It?

To determine if a tankless water heater is worth it, we’ve compared the two most common types, natural gas, and electric, with traditional tank water heaters over the first decade of ownership. Keep in mind that a tank water heater may need to be replaced after 10 years.

Tankless Water Heater Costs over Time vs. Tank Water Heaters

Tank TypeUnit CostInstallationAnnual Operating CostTotal First Year CostsCost over Ten Years

Electric tank






Electric tankless






Gas tank






Gas tankless






Tankless vs. Tank Water Heater

There are specific situations that determine if your home is ideal for a tankless water heater instead of a standard water heater. Tankless water heater installation costs are usually worth it if:

  • Your home is already powered by natural gas.
  • You live in a climate with warm groundwater and/or less water heating needs.
  • You can afford the up-front costs of materials and labor.
  • Living an eco-friendly and energy-efficient lifestyle is a priority to you.
  • Your home doesn’t have room for a large water storage tank.

On the other hand, you might be better off with a standard water heater with a tank if:

  • Your current home improvement budget is limited.
  • Your home is powered by electricity, and you have large water usage needs. (However, you can still use point-of-use units.)
  • You live in a cold climate and have heavy water usage needs.

Tankless Water Heater Installation: DIY vs. Professional

It bears repeating: Don’t try to install a gas-powered or whole-home tankless water heater yourself. Although these systems are very safe when professionally installed, they usually have complex requirements to vent heat and carbon monoxide, and getting this wrong could void your warranty or put you or your family’s safety at risk. However, point-of-use electrical units can usually be installed simply by plugging them in and hooking up the water lines. 

Since installation is so important to water heater operation and safety, make sure you choose a qualified contractor. Here are some tips for finding an installer that you can trust:
For gas-powered tankless water heaters, you need to hire a licensed plumber. Also, make sure the plumbing company is bonded and insured.
Call at least three contractors for estimates, and ask whether they have experience installing these units.
Look up potential contractors on the Better Business Bureau (BBB) website and read customer reviews.
Get all necessary documents in order before the work begins: a written estimate, contract, and any applicable warranties.

Our Conclusion

Although tankless water heaters cost more to buy and install, they’ll save you energy and money in the long run. It’s important to get a professional you trust to install your unit. However, that doesn’t mean they’re right for every home. Review your options and plan out the long-term costs before making a decision. To connect with a local plumber, fill out this simple form or enter your ZIP code below.

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Typical Price Range: $1,200 – $3,500

FAQ About Tankless Water Heater Installation Cost

How much does it cost to switch to a tankless water heater?

The cost to switch to a tankless water heater system is about the same as having one installed: an average of $2,800 with a range between $1,200 and $2,500.

What is the downside of a tankless water heater?

Most homeowners find that the main downside of a tankless water heater is the greater purchase and installation price compared to traditional models. However, the overall operating costs of tankless systems are lower.

How much does it cost to put in a tankless hot water heater?

It costs an average of $2,800 to put in a tankless water heater. However, prices will vary greatly by the size and brand of the heater and how it’s powered.

Are tankless water heaters more efficient?

Yes, tankless water heaters are more efficient than traditional hot water heaters. According to the Department of Energy, tankless heaters are 8%–14% more efficient for homes that use a lot of hot water and 24%–34% more efficient for homes that use 41 gallons a day or less.

Why is a tankless water heater a good idea?

Tankless water heaters are a good idea because they’re energy-efficient, safer, and longer-lasting than traditional tank water heaters. They can also produce a continuous supply of hot water.

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