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How Much Does It Cost to Install a Tankless Water Heater in 2023

Fact checked by Stephen Conklin

how much does it cost to install a tankless water heater

Tankless water heaters offer high energy efficiency, long-term savings, and unparalleled convenience for modern families. But, do you know how much does it cost to install a tankless water heater?

To answer your question: tankless water heating systems can cost families anywhere between $1200 and $3500. This includes the price for the heater itself and labor cost.

Keep reading to learn different parameters to save enough money for your next home improvement project – installing a tankless water heater.

Table of Contents

How Much Should I Budget to Install a Tankless Water Heater?


Installing a tankless water heater can cost homeowners $1,200 (minimum) to $3,500, with the national average pegged at $2,800. However, should you pick high-end systems with a complicated installation process, you might have to pay up to $13,000, which is usually the maximum limit.

However, the overall cost varies according to fuel type, capacity, and tankless water heater brand. Let us explore these factors.

1. According to Fuel Type

Although gas-powered (natural gas) and electric tankless water heaters are common, propane and solar-powered versions are also available as alternatives.

Natural gas units are slightly more expensive than electric versions and better suited for large households in colder regions. Gas-powered units can also accommodate propane, provided you use an appropriate adaptor.

If you are into eco-friendly solutions, solar-powered heaters are the best. Although very costly to install, solar units are more economical to operate.

Here is how they stack up.

Tankless water heater type according to fuel source Price per water heater
Electric $170-$800
Gas $230-$2300
Propane $195-$2200
Solar $1500-$4000

2. According to Capacity or Size

Tankless water heaters also vary in price based on how much hot water they can deliver per minute (gallons per minute or GPM). The greater the water heater’s capacity, the more expensive it is.

3. According to Brand


Some tankless water heater brands are more expensive than others. We arranged the following brands from the most affordable to the most expensive.

Leading tankless water heater brands Price range
Rheem $370 to $3500
Stiebel Eltron $179 to $849
EcoSmart $170 to $1600
Rinnai $500 to $1700
EccoTemp $350 to $650
Camplux $140 to $360
Noritz $700 to $2600
Navien $2300 to $3400
Bosch $1500 to $2400
AO Smith $600 to $3500

How Much Should I Pay for Labor to Install a Tankless Water Heater?


The labor cost to install water heater ranges from $150 to $4,000, based on several factors like the appliance type. The following table illustrates the price variation.

Tankless water heater type according to fuel source Installation cost
Electric tankless water heaters $800 – $1500
Gas tankless water heaters $1000 – $1500
Propane tankless water heaters $1000 – $1500
Solar tankless water heaters $1800 – $6000
Plumbers setting up a tankless water heater often charges an hourly rate ranging from $75 to $150. You can expect the overall installation cost to increase the longer the plumber takes to set up the system.

Seasoned plumbers can finish an uncomplicated tankless water heater installation within two hours. However, extensive residential modifications and plumber inexperience might extend the work hour to ten.

In addition to labor, you may also have to pay for the supply cost. For instance, you’ll usually need to cover the price for pipes, which cost $3 per foot, and pressure valves, which can set you back $100-$200 apiece.

How Much Does It Cost to Convert from a Storage Tank Water Heater to a Tankless System?


Replacing a storage tank water heater with a tankless system costs slightly more than setting up a brand-new one. The following is a breakdown of the cost to replace water heater with tankless units.

Activity Unit price
Replacement cost (new tankless water heater) $170-$4000 (depending on fuel source)
Old water heater removal and disposal $100-$500
Electrical work $200-$500
Plumbing work $350-$1900
Gas supply work $275-$825
Carpentry work $200-$2900
Installation permits $50-$400
TOTAL $1345-$11025

Do Tankless Water Heater Installation Costs Vary Across States?


Tankless water heater installation costs vary across states.

For example, a tankless water heater installation in California can range from $2,500 to $7,500, which is higher than the national average. Meanwhile, New Yorkers can spend $2,200 to $5,000 installing a tankless water heater.

On the other hand, Montana residents can enjoy more affordable tankless water heater installation costs, averaging $979 but can go as cheap as $451 or as expensive as $1,508.

Factors that Affect the Cost to Install a Tankless Water Heater


The following factors can also impact the final tankless water heater price installed in your home, alongside water heater brand, capacity, and power source.

  • Location: Outdoor tankless water heaters are less expensive to install because they require minimal modifications. However, installation costs might increase due to insulation requirements.
  • Venting requirements: All gas tankless water heaters require a vent exhaust system. Direct vents are less expensive than power vents, although the latter is more flexible.
  • Hard water levels: Limescale formation is a water heater’s number one enemy. Hence, families living in areas with very hard water must also install a water softener, which can increase the overall cost of tankless water heater installation.
  • Installation permits: Tankless water heaters require the appropriate permits for installation, which could increase the overall installation cost.Heat exchanger number: Tankless water heaters with two heat exchangers (condensing type) are more expensive but are 17% more efficient than non-condensing tankless water heaters (only a single heat exchanger).

How to Install a Tankless Water Heater?


Although seasoned DIYers with extensive experience in electrical or gas supply systems can install a tankless water heater, experts recommend a professional plumber. Moreover, brands also advise buyers to install the system professionally to avoid voiding the warranty.

Installing a tankless water heater involves the following steps.

  1. Turn off the main water supply shutoff valve.
  2. Choose the best possible location for the tankless water heater.
  3. Mount the tankless water heater on the wall and secure it with the appropriate hardware.
  4. Install ventilation ducts if setting up a gas-powered tankless water heater. Set up new electrical wiring if installing an electric tankless water heater.
  5. Connect the cold water line to the tankless water heater’s inlet port and the hot water line to the appliance’s outlet port.
  6. Plug the tankless water heater into an electric outlet or connect it to a gas supply line.
  7. Open a hot water faucet to test the appliance’s water heating capabilities.

Frequently Asked Questions

Why is tankless water heater installation so expensive?

The average cost to install a tankless water heater is more expensive than storage tank versions because it requires more work.

For example, electric tankless water heaters require appropriately-sized electrical wiring and circuit breakers to handle the load. It is worth noting that these appliances can draw up to twelve amperes at maximum performance.

Meanwhile, gas tankless water heaters also demand a new gas supply line, adding another expense to the price of tankless hot water heater units.

Tips to save money when installing a tankless water heater

A tankless water heater installation cost can run in thousands of dollars. However, you can consider the following tips to save money.

  • Buy a standalone tankless water heater to save as much as 30%.
  • Purchase a tankless water heater directly from the manufacturer, if possible.
  • Shop for plumbing companies that offer you the best value for their services. Check the rates, inclusions, coupons, and discounts.
  • Look for PEX and similar materials for pipes and water heater fittings because these are less expensive than copper.
  • Choose your plumber wisely, ensuring only knowledgeable and experienced professionals will install your tankless water heater.

Pros and cons of a tankless water heater

The US Department of Energy says tankless water heaters use energy 24-34% more efficiently than tank versions. This is because they operate on-demand, meaning they don’t lose heat. Meanwhile, storage tank water heaters waste energy due to standby heat losses.

Since they don’t not have a storage tank, tankless systems are safer. They also last at least three years longer than the most durable storage tank water heater.

The only downside to a tankless water heater is its costlier purchase price and installation cost.

Total costs of a tankless water heater

The cost to install gas tankless water heater units is lower than electric, propane, and solar options. The following table summarizes the total costs of different tankless water heater systems over the first year and after ten years.

Electric Gas Propane Solar
Unit cost $170-$800 $230-$2300 $195-$2200 $1500-$4000
Installation cost $800-$1500 $1000-$1500 $1000-$1500 $1800-$6000
Yearly operating cost $300-$540 $192-$264 $348-$480 $90-$175
Total cost in the first year $1270-$2840 $1422-$4064 $1543-$4180 $3590-$8175
Total cost over ten years $3970-$7700 $3150-$6440 $4675-$8500 $3390-$11750


Several factors impact how much does it cost to install a tankless water heater. Capacity, brand, and fuel source dictate the price of tankless water heaters alone, excluding labor and other expenses.

The average US homeowner spends $1200 to $3500 to install a tankless water heater (unit, labor, and other expenses). It is a small price to pay for the many benefits tankless water heaters bring to modern families.

Moreover, tankless water heaters are more energy efficient, allowing families to recover their expenses in the long run.

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