How Much Does It Cost To Install A Tankless Water Heater?

Are you looking to save energy and money on your water heating bill? Installing a tankless water heater is an excellent way to do just that. By converting from a traditional storage tank system, homeowners can reduce their utility bills significantly.

But before making the switch, it’s important to understand the overall tankless water heater installation cost. Here are some factors that will affect how much you pay for a new system.

How Much Does It Cost To Install A Tankless Water Heater

Factors Affecting Tankless Installation Costs

The cost of a tankless water heater installation may vary depending on various factors. From the fuel source to the size and model of the tankless unit you choose, these details can increase or decrease your total installation costs.

1. The Brand of Tank You Are Installing

If you’re looking to install a high-end tankless water heater, consider the brand Navien. Their quality is unsurpassed and they offer both electric and gas units, so you can decide which type works best for your home.

On average, installing a Navien tankless water heater will cost between $1,000 and $2,000. But the benefits of this system far outweigh the costs. With its energy efficient design, you’ll be able to heat up to five gallons of hot water per minute without wasting any energy.

2. Utility Bills

Tankless water heaters are the perfect solution for those looking to save money on their utility bills. Unlike conventional hot water systems, tankless units use only the energy needed to heat water when it’s in demand.

This means that you don’t have to keep your heater running constantly and instead can limit its usage. As a result, you get to enjoy a monthly bill that’s about 10% lower than before, as long as you pick an efficient model and get it installed properly.

3. Labor Costs

The labor expenses associated with installing a tankless water heater may be between $250 and $1,000 depending on the type of unit and how complex the job is.

For example, installing an electric tankless water heater requires less work than installing a gas unit, which can be more complex.

4. Permits

When it comes to installing a tankless water heater, acquiring the necessary permits is essential. Without having an up-to-date permit for your project, you may find yourself in trouble with local authorities.

Thankfully, obtaining a permit isn’t as difficult or expensive as one might think. In most cases, you can easily obtain the required permit from your plumber or your local regulatory agency for $50 to $100. In certain cases, obtaining a permit can cover the cost of an inspector visiting and assessing the completed project.

5. Fuel Type

The type of fuel you use can have a big impact. Gas-powered tankless water heaters are generally more expensive than electric units, but they also tend to be more energy efficient and come with lower gas rates.

If your home doesn’t already have a gas line, or if the current one doesn’t reach your desired location for the tankless heater, you may need to pay extra for installation or extension of the line. Keep in mind that these additional costs can add up quickly, and you should factor them into your decision when comparing different models.

6. The Size of the Unit You Need

The size of the tankless unit required will be determined by both the flow rate of the unit and the number of bathrooms in the house. For a 3-bedroom house, the ideal water flow rate should be between 7 and 11 gallons per minute (GPM).

If you have a larger home, such as 4 or 5 bedrooms, then you’ll need one with a higher flow rate, between 11 and 15 GPM. While these higher flow rates will cost more upfront, they also provide greater options for hot water usage in your home – allowing you to run multiple fixtures at once without issue.

7. Tax Credits and Rebates

With tankless water heaters, you may be eligible for a tax credit or rebate depending on the type of unit you install and the state or city you live in.

British Columbia homeowners may be eligible for rebates of up to $1000 for purchasing and installing tankless water heaters from FortisBC, BC Hydro, or CleanBC. These incentives provide an additional incentive for customers to make the switch and start enjoying the benefits associated with energy-efficient technology.

8. Converting the Power Source

Upgrading to a tankless electric water heater requires an increase in an electrical service capacity. This is not only costly but also time consuming, as it means hiring an electrician to perform this work.

The cost of this labor combined with the installation cost of a new tankless unit can be quite expensive. But before you write off investing in one of these efficient heaters, consider that electric models are usually more affordable than gas units and require no additional gas lines or fuel sources.

9. Running New Gas Lines For The Tankless Water Heater

Running gas lines for a tankless water heater can be a complex process and should always be done by an experienced professional. Doing it yourself is not recommended due to the potential for explosion if not done correctly. This will add to the cost of installation, but it’s necessary to ensure that the unit is installed properly and safely.

The average cost of running new gas lines for a tankless water heater can range anywhere from $500-$1000 depending on the length of the line and the difficulty of access. Although this is an additional expense, it is in your best interest to have a qualified technician do the job right, as this could save you thousands in repairs or replacements down the road.

10. The Type of Company You Choose To Do The Installation

When it comes to tankless water heater installation, the company you choose to do the work for can have a big impact on your costs. Professional companies will typically charge more than a handyman or DIY installation, but they will also have the experience and knowledge to get the job done correctly.

Not only that, but professional companies often offer warranties on their work and may even be able to provide special energy efficient options for your unit.

Tankless water heater installation cost

Installation costs for a tankless unit range from $700 to $4,600 for gas systems and $600 to $2,500 for on-demand electric units.

Natural gas water heaters are known to be the most efficient in terms of energy as they have annual operating costs that range from $150 to $260, and they offer higher gallons per minute (GPM) rate than electric models. Additionally, most gas units are eligible for a federal tax credit of up to $300.

Electric tankless water heater installation is slightly less expensive but has higher running costs of about $300 to $540 per year, making them more suitable for smaller homes or apartments. So if you’re looking to save money on your hot water bills and reduce your carbon footprint, then tankless water heater installation is definitely worth considering!

Tankless Water Heater Installation Labor Cost

Tankless water heater installation labor costs vary greatly depending on the type of fuel source you’re using. Electric models are typically cheaper, ranging from $150 to $1,000 for the labor cost alone. Natural gas and propane tankless water heaters often cost more—about $900 to $1,500 in labor costs.

Oil and solar units tend to be the most expensive, with labor costs ranging from $1,200 to $2,000 for oil and up to $4,000 for solar. However, additional costs may be necessary if changes must be made to your home such as installing a cabinet or additional insulation for pipes that run outdoors.

Professional handymen usually charge between $25 and $75 an hour while electricians charge an average of $50 to $100 per hour when rewiring is necessary. When shopping around for a tankless water heater installation, make sure you take these extra expenses into account in order to get the best deal possible on your new hot water solution.

Yearly Cost to Operate a Tankless Water Heater

The yearly cost to operate a tankless water heater can vary greatly depending on the fuel source and the amount of hot water you use. For example, an electric tankless unit will require more energy to heat the same amount of water than a gas-powered unit.

Using multiple appliances at the same time, such as a dishwasher and shower, can cause an increase in energy use from a tankless system.

Gas tankless water heater cost

The average cost for a gas tankless water heater installation is between $700 and $4,600, with labor costs usually accounting for around half of the total price.

In addition to the cost savings on energy bills, many gas units are eligible for a federal tax credit of up to $300. This makes them an even more attractive option if you’re looking to upgrade your current hot water system.

Electric tankless water heater installation cost

Installation costs for electric tankless water heaters can vary, but on average they range from $600 to $2,500. Electric systems typically require less installation and maintenance compared to gas units.

Though electric systems may require a higher installation cost initially, they can end up saving you money in the long run. With average annual operating costs of only $300 to $540, they’re much more affordable than those powered by fuel sources such as gas or propane which can cost up to four times as much each year.

Propane tankless water heater installation prices

Installing a propane tankless water heater can be an economical option for your monthly energy costs. The average cost for installation is between $700 and $4,600, depending on the type of tankless unit you choose and the complexity of the installation process.

For example, gas tankless water heaters require additional gas lines which increases labor costs. On the other hand, electric units are much simpler to install and require fewer materials.

Solar tankless water heater system

Solar tankless water heater systems are an ideal choice for homeowners looking to reduce their energy costs by 50% to 80%. Not only do these systems provide hot water on demand, but they also eliminate the need for a storage tank.

Tankless water heaters can be powered by standard solar panels, and depending on the fuel source of the system, they can cost anywhere from $1,500 to $26,400 to install after tax credits. Electric models are typically cheaper than gas units and still offer energy efficiency.

An electric model can cost around $2,000 for a whole-house unit, while a gas unit will usually exceed this amount.

Cost to install a point-of-use water heater

Installing a point-of-use water heater can be an economical and energy efficient way to heat your home’s water. Tankless models provide endless hot water for a single room or appliance, but the cost of installation and labor may seem expensive.

However, the average cost of installing a tankless unit is only between $300 to $1,500. The unit itself may cost anywhere from $150 to $700 depending on the model you choose.

Tankless water heater replacement cost

Tankless water heaters are a great way to save on energy costs and increase your hot water supply. But the installation cost can be daunting, with labor costs ranging from $300 to $2,500 alone. If you’re switching from a storage tank heater to tankless, expect to pay $800 to $3,500 for the conversion – plus upgrades for gas supply lines and venting systems.

Depending on the scope of work, you may also need permits or have to bring old plumbing up to code. Fuel type will also affect the price – electric models are often cheaper than gas units; however, gas models offer more gallons per minute of hot water flow.

Cost to Replace a Gas Tankless Water Heater

Replacing a gas tankless water heater can be a costly endeavor. The average cost to replace one in the Austin, Texas area is around $4,700. However, if you’re having problems with your current unit, you may be able to repair it instead of replacing it altogether.

While tankless heaters are usually more energy efficient than storage tank water heaters and can save money on utility bills over time, they also tend to require more maintenance than storage tank models. But if maintained properly, they can last up to 15 years without needing to be replaced.

And while the initial installation costs may seem high compared to other hot water heaters, the long-term savings in energy efficiency will make it worth the investment!

Cost to Replace an Electric Tankless Water Heater

Replacing an electric tankless water heater can be a costly process, but it doesn’t have to be. In Austin, Texas, replacing an electric tankless water heater with a licensed plumber typically costs around $4,200.

However, this expense is much less than if you had to replace a whole-house unit that requires extensive fuel lines or extensive electric models. With proper maintenance and care, these units can last 15+ years without needing replacement.

Can I Install a Tankless Water Heater Myself?

The short answer is no. While it may be possible, it is not recommended for the average DIY homeowner. The installation process requires knowledge of electrical and gas connections as well as plumbing experience to ensure that all code requirements are met.

Additionally, it can be difficult to determine the right size and type of tankless water heater for your home without the help of a professional.

It is highly recommended that you have a certified technician install your tankless water heater in order to ensure safety and efficiency. They will have access to high-grade materials and can make sure that your unit meets all necessary requirements while providing you with hot water whenever needed.


In conclusion, the tankless water heater installation cost varies greatly depending on the type of water heater you choose and the complexity of your home’s plumbing. make sure to do some research before making a decision so that you get the best product for your needs at a price that fits your budget.

No matter which option you go with, however, one thing is certain: you’ll be happy when the installation is over and you can start enjoying hot water right away!