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How Much Does It Cost to Install a Tankless Water Heater?

Pro Referral > Home Guides > Plumbing > How Much Does It Cost to Install a Tankless Water Heater?
How Much Does It Cost to Install a Tankless Water Heater?

On this page:

  1. How is the Price of a Tankless Water Heater Installation Estimated?
  2. Is a Tankless Water Heater Right for Me?
  3. What Typically Affects the Cost of Installing a Tankless Water Heater?
  4. How Will My Installation Project Measure Up?
  5. How Should I Prepare for a Water Heater Installation?
  6. Cost Comparisons
  7. Level of Difficulty

A tankless or “on-demand” water heater provides hot water as it is called for, rather than storing it in a tank like a traditional water heater. Tankless models cost more up-front than their tank-style cousins, but can provide flexibility and savings in many settings, so they are a great alternative for some homeowners. There are several factors that will affect the cost of installing a tankless water heater though, so be sure to cover all the details when planning and budgeting for the job.

    tankless water heater installation price

How is the Price of a Tankless Water Heater Installation Estimated?


Installing a tankless water heater is a professional-level job that could involve more than one licensed expert, such as a plumber and an electrician. These experts carry some of the highest labor rates among residential construction trades, and typically bill installation work by the hour or by the unit. In order to provide you with an accurate price estimate, a pro will need to check out the installation site ahead of time to gauge the difficulty of the job. You may be charged a flat rate for the installation of a tankless water heater in a new construction setting, but are more likely to be charged an hourly rate for a retrofit, which has more variables than a first-time water heater installation.



There is a wide price range for tankless water heaters, but in addition to the heater itself your installer will need a number of supplies to complete the installation. The scope of the project will determine what is required, such as pipe, fittings and valves, exhaust ducts and vents, gas supply line and valves, and wire and circuit breakers. The price of these materials is generally much less than the heater itself, but can add a few hundred dollars to the cost of the job, depending on the application.


Is a Tankless Water Heater Right for Me?

Size and Installation Sites

Tankless water heaters are considerably smaller than tank-type models, so if space is at a premium their size could be a great benefit. Rather than taking up the space of a small closet like a large tank heater, on-demand heaters are wall mounted and range in size from the equivalent of a small dictionary to a few shoe boxes. Some models can even be installed outdoors, completely freeing up space that would otherwise be committed to the water heater.


Response Time and Supply

It could take a few seconds for heated water to reach the tap when called for, but a tankless heater warms the water as soon as the valve (or faucet) is opened and keeps heating it until the valve is closed. When using a tank heater, the supply of hot water can be exhausted--leaving you cold when you least expect it--but this isn’t an issue with a tankless model. The farther the heater is from the faucet in use the longer it will tank for hot water to reach the fixture, but once it gets there it will keep on coming.



Depending on your level of hot water usage, tankless water heaters can provide energy savings of 20 percent or more, and some models are eligible for rebates from energy providers. Since tank-type heaters are not constantly maintaining the temperature of stored water, operating one can cost less in many households. Be sure to evaluate your usage when deciding whether to buy an on-demand heater; in some cases it may take multiple heaters to keep up with high demand or simultaneous users, so the high up-front costs may not be offset by energy savings during the lifetime of the devices.


What Typically Affects the Cost of Installing a Tankless Water Heater?


Depending on the amount of work involved in your installation, a big portion of the total price could stem from labor. The cost of labor varies dramatically from place to place, so the cost of living in your area could make the difference between $60 and $150 per hour for a licensed plumber or electrician. If you live in a dense urban or coastal location, the labor end of the job could cost twice as much as in a rural or inland spot.



The weather patterns in your location have some bearing on the practicality and cost of an on-demand water heater; some types may not perform well enough to heat water adequately in a cold-winter climate since they must bring the water temperature up from a lower point before it is delivered to an outlet. If you live in an area where this may be an issue, you may need to install more expensive equipment, such as multiple units or a gas-fired rather than an electric model.



Your usage habits can have a lot of influence on the cost of installing any water heater, since the demands of your household should help determine the capacity of the appliance. With tankless heaters, it may be necessary to install a larger heater or several units to meet the demand of using multiple fixtures or to overcome a long run from a central heater, which will increase the cost of both labor and materials. The number of bathrooms in a home is commonly used to determine the size and number of units required, but be sure to consider your actual usage habits and the location of each fixture when shopping for equipment.


How Will My Installation Project Measure Up?

Number of Units

If it will take multiple on-demand water heaters to meet the needs of your household, the total installation costs will increase with the number of units. In most cases, both materials and labor costs will increase incrementally, rather than proportionately since there are similar requirements for each installation site. That is, it isn’t usually easier or faster to install a second or third water heater after installing the first.



As with just about any plumbing project, accessibility is significant in determining the difficulty of the job. The location of each heater, any units that are being replaced, and the complexity of installing ventilation ducting (if required) can all have bearing on how long the job takes. If your installation requires a plumber or electrician to do a lot of work in a crawlspace, cabinet, or small closet it will probably cost more than if the work can be done from an upright position with plenty of elbow room.


Preparation or Conversion

The amount of work involved in getting your site ready to connect a tankless water heater will be an important detail in pricing the job. Installing a system like this in a new construction setting where there have never been any other connections is usually the most straightforward option. If your new tankless water heater is replacing an existing water heater, some modifications will be needed to the plumbing, as well as an upgrade of the gas line and ventilation duct for gas models and wiring changes for electric heaters.


How Should I Prepare for a Water Heater Installation?

Comparison Shop

Do your homework to choose the right water heater for your application and to get competitive pricing for the installation. Be sure to get multiple estimates and recommendations so you can confidently choose a water heater set up that will deliver the performance you are looking for. Be sure to consider your own level of hot water usage as well as the potential usage from a growing family, occasional house guests, and even future owners. Don’t forget to factor in energy costs when choosing a fuel option, since that is an important detail is determining the overall cost-effectiveness of converting from a tank-type system to an on-demand one.


Hire Right

The features and scope of your installation will define just what type of pros will need to be involved to get the job done, but in any case it is important to hire contractors who are properly licensed and insured, and who will secure any permits that are required. Your project will certainly call for the services of a plumber, but a gas technician or electrician could also be needed depending on the requirements of the job. If yours is a complex or large-scale project, it may simplify matters to hire a general or remodeling contractor who can coordinate the whole thing.


Cost Comparisons

Low Average High
$800 - $1,800 $1,100 - $3,200 $2,600 - $4,300

Every installation and conversion scenario is unique, but comparing yours to a few examples may help you anticipate the cost for your project. In our examples, electric tank-style water heaters are being replaced by tankless models.

Simple Swap-Out: $800 - $1,800

  • • Water Heater: When an electric on-demand water heater meets the needs of the home, it typically makes for the simplest and most economical replacement scenario, with a whole-house heater ranging from about $400 to $1,200.
  • • Site Modifications: In a scenario like this, minimal changes are needed for plumbing accommodations and electrical upgrades, making the installation a pretty straightforward job.
  • • Scale of the Job: Since a single unit is installed, the project can be completed in about a half-day, keeping labor charges to a minimum of $300 to $600.

Typical Conversion: $1,100 - $3,200

  • • Water Heater: For better performance and efficiency, a whole-house gas water heater is chosen here, bringing equipment costs to $500 to $1,800.
  • • Site Modifications: Switching from electric to gas calls for quite a bit of work, including the installation of gas line, venting, and a standard electrical outlet at the site.
  • • Scale of the Job: Limiting the job to a single appliance makes it relatively simple, but the extra work involved in converting to gas increases labor costs to a range of $800 to $1,400.

Total Overhaul: $2,600 - $4,300

  • • Water Heater: To ensure convenience and performance, this installation includes a large gas heater to replace the electric tank, as well as electric point-of-use heaters installed in the kitchen and master bathroom. The added equipment raises materials costs to $1,600 to $2,600.
  • • Site Modifications: The site of the gas tankless heater requires significant modifications to allow for gas supply and ventilation, and the two electric units call for wiring accommodations.
  • • Scale of the Job: The conversion to gas and multiple sites involved in this installation make it a fairly complex job that will involve an electrician. The work could span a few days and bring labor costs of $800 to $1,600.

Level of Difficulty

Installing a tankless water heater requires advanced skills and, in most places, a license to work with electricity, gas, and plumbing. Because of the nature of the job, it isn’t a very DIY-friendly project to take on, but there may be a few things you can do to help keep costs down. If your installation is a replacement, disconnecting, removing, and disposing of your old water heater could save you up to a couple of hundred dollars on labor costs, depending on your plumber’s rates and the typical disposal fee in your area.

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