Although regular water heater maintenance and water heater repair may extend the life of your hot water heater, it won’t last forever. Most water heaters have a life expectancy of about 10 years. Many water heaters need to be replaced when they’re 8-12 years old — that’s when they start to show signs of fatal wear, such as leaking around the base of the tank. A water heater should be replaced when it fails to sufficiently heat water for the home; if your heater is operating erratically, check first for a blown fuse or a tripped breaker to make sure an electrical issue isn’t causing the problem. Another time to replace a water heater is when you want to upgrade to either a larger model or a more energy-efficient one.

Your water heater is an essential part of your home, heating water for showers, dishwashing, laundry and more. On average, a traditional water heater will last 8-12 years. The general consensus is that it’s better to replace your water heater with a new one than to repair one that’s 10 years old or more. Older models are less energy-efficient and thus more costly to run than newer models with better technology. Here are some indicators of when it may be time to replace an old water heater instead of repairing it:

• Leaks: If leaking is not caused by loose connections, the water may be seeping out through slight fractures in the metal of the tank that have formed over time.
• Strange noises: Clanking, rumbling and other noises can mean that sediment has formed on the base of your tank, contributing to fissures leaks, and inefficiency.
• Age: If it’s more than 10 years old, it’s probably time to replace.
• Discolored or rusty water: Have a pro check it out; if the problem isn’t resolved by draining and cleaning, you’ll want to replace the heater.
• Lack of hot water: Inconsistent heating and hot water supply that runs out too quickly likely means it’s time for a new unit.

Nationally, the average water heater repair cost ranges between $120 and $200, although prices can range up to $400 or more. Water heater repair costs will depend on the type of water heater you have (tankless, electric, natural gas, etc.), the source of the problem, the cost for new parts, and labor rates in your area. Common water heater issues include problems with the thermocouple, thermostat, heating element and leaks. Most standard electric water heaters have two thermostats and two elements. One example for the cost to replace a bad thermostat is $185 for parts and labor. Replacing both the thermostat and the heating element could cost approximately $150-$200. The thermocouple is a safety device that senses when the pilot light is burning and signals the gas valve to close if the pilot light goes out. If your thermocouple is bad or corroded, the average cost to clean and repair it could be between $350 and $400. If your water heater has started to leak, it is usually more cost-effective to invest in a new water heater than to repair it, unless you’re covered by a warranty.

Tankless water heaters usually cost more to install than traditional tanks, because many homes need to be retrofitted to accommodate the new system. Tankless electric water heaters retail on average between $150 and $1,200, and tankless natural gas water heaters retail between $200 and $1,300 on average. The lower prices ($150-$250) are generally for point-of-use tankless heaters that can be installed to boost hot water in high-demand areas such as the bathroom or kitchen sink. Tankless water heaters designed to heat whole homes usually start under $300 at the low end and go up to $1,400 or more. Pricing for whole-home varies with the heater’s technology and features. Nationally, standard water heater installation costs average $360-$780, but tankless water heater installation costs may range from $400 to $1,000, depending on the work needed. Some perks of tankless water heaters are that they have nearly double the life expectancy of traditional water heaters and are generally more cost-efficient. Homeowners may be able to save $100 or more per year on their utility bills with an Energy Star approved tankless heater, depending on how much hot water they use.

The cost of a new water heater depends largely on the type and size of the heater. The average national cost for a new water heater installation including a 40- to 50-gallon tank is $350-$780. Most homes don’t need larger tanks, but they are available — for a price. The average difference between a 50-gallon tank and a 75-gallon tank (the next most common size) ranges from $400 to $600. Hundred-gallon tanks are also available, and they can cost double or triple the price of a 50-gallon tank from the same manufacturer. New water heaters tend to be far more energy-efficient, so they can cut energy costs; homeowners may also be eligible for a new water heater rebate from their local utility company.

Typically, tankless water heaters, which heat water only when you need it, cost more but can save about 25 percent of annual water heating costs, on average. They also lose only 5 percent of their energy compared with a tank unit’s 30 percent energy loss. Note, too, that a water heater with a tank has a life expectancy of 10 years, while tankless units generally last about twice as long.

The final expense to consider is a possible disposal fee to get rid of the old water heater; some companies include it in the price, while others charge an average of $35-$150.