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How much does a tankless water heater installation cost?

The national average cost to install a gas or electric tankless water heater ranges from $2,000 to $5,000. That cost includes:

  • Installation of a new water heater
  • Modifications to the existing plumbing and pipes, if needed, to accommodate the new water heater
  • Removal and disposal of the existing water heater

You may not think much about your hot water heater about until it stops working. One day you have hot water. The next, you don't. Everyday experiences like taking a shower, doing laundry, or washing dishes can be quite miserable until your hot water system is repaired or replaced.

Installing a tankless hot water heater generally isn't a do-it-yourself project. Water heaters use natural gas or electricity, which means you could injure yourself if you don't install the heater safely.

A competent plumber, electrician, or handyman will have the proper tools, materials, training, and expertise to install a water heater. If you need a replacement water heater, or are swapping out a traditional water heater with a tank for a tankless one, a pro can also help you choose a system that's the right size for your home. Before you hire a contractor to install your tankless water heater, get an estimate on how much it will cost.

What's in this cost guide?

What's the cost of installing a tank vs. a tankless water heater?

There are two main types of hot water heaters: tank and tankless water heater. Installing a traditional tank-style water heater usually costs between $350 and $2,000, which is much lower than the $2,000 - $5,000 price tag associated with a tankless unit.

Type of water heater Average water heater cost Average installation cost
Gas water heater with storage tank $650 - $900 $350 - $2,000
Electric water heater with storage tank $300 - $700 $350 - $2,000
Gas tankless water heater $200 - $1,300 $2,000 - $5,000
Electric tankless water heater $250 - $700 $2,000 - $5,000

Although tank systems are generally easier and cheaper to install, a tankless model may be less expensive over time. Because they heat water on demand, a tankless heater may lower your energy bills and could save homeowners as much as $100 a year in the long run.

Since they are more labor-intensive to install, it's helpful to know the pros and cons of each before you figure out which heater is right for you and your home:

Tank-style hot water heaters

A tank-type water heater is the more traditional water heater model. A tank system holds a set amount of heated water in a storage tank that's ready for use at all times. Tanks range in size from 20 gallons to 80 gallons, depending on how much hot water you think your house will need. The most common tank size is 40 gallons. Larger tanks typically cost more than smaller ones.

Since a tank system keeps hot water ready at all times, it requires a continual use of gas or electricity. A gas model will typically cost $50 to $100 more than an electric one.

If you have a tank system and you use a lot of hot water all at once, you may run out and have to wait until it can heat more water and store it in your tank. If you frequently run out of hot water, you may want to consider a larger tank or a tankless water heater.

Tankless hot water heaters

A tankless system uses a heat exchanger to heat water as it flows through the system. Water is heated on-demand, that is, when you want to use it, rather than heating it in advance. After heating the water, the system sends it through your pipes and to your sink, shower, or washing machine to use. If your tankless system has a high flow rate, or how many gallons your water heater can heat in one minute, you'll be much less likely to run out of hot water.

Like tank systems, tankless heaters use natural gas or electricity and are connected to your home's gas line or electrical grid. Typically, an electric tankless water heater costs at least $500 less than a gas tankless system, though a gas system can heat water faster.

Tankless units are also smaller than tank systems, so they take up less space and are a good water heater option for apartments and other small homes.

Finally, while tankless models usually cost more to purchase and install, they tend to be more energy-efficient. This will save you money on your utility bills over time.

What affects the cost of a tankless water heater installation?

The total cost of a tankless hot water heater installation depends on the type of tankless heater you choose, labor costs, prep work, building permits and codes, and the location of the heater in your house. It will include the tankless water heater cost as well as installation costs.

The type of system you choose

A tankless water heater costs about $100 for a no-frills model designed to supply one or two sinks to $700 or more for a whole-house electric model. If you don't normally need a lot of hot water all at the same time, you may save money by buying a system with a lower flow rate, shorter warranty, or fewer bells and whistles.

Add-ons, like digital temperature controls or the ability to adjust the temperature remotely with a WiFi connection and app, can add to your tankless water heater cost.

You can purchase a hot water heater yourself at a home improvement or plumbing supply store or you can hire an installer who will purchase a system for you and include the cost in the project estimate or bid.

Labor and installation costs

You will need to hire a plumber to install your water heater. Nationally, the hourly rate for plumbing services ranges from $45 to $150, depending on where you live.

You might also need to hire an electrician, depending on the type of tankless water heater you're installing, whether you already have the necessary hookups in place, and the plumber's skills. Either way, you should get estimates from several contractors before you select one or two to do the installation work for you.

Barring any unforeseen complications, it should take 2-3 hours for installation. If you're swapping a traditional tank system for a tankless one, additional construction and time might be required.

Replacing a tankless unit vs. a tank system

If you're replacing an old tankless hot water heater, the proper gas line or electrical hookups for it will already be in place and installation will be straightforward.

If you're switching from tank to a tankless, you'll have to pay extra to replace or upgrade those systems, since you may have to rework venting in order to have it work properly.

It's easiest to put in a tankless water heater when a home is new.

Building permits

You'll usually need a building permit to install or replace a water heater. Permit fees vary based on where you live. Your installer or local governmental building department should be able to inform you about the requirements, fees and inspections.

Building code upgrades

If you have an older home and your existing water heater was installed a while ago, you may have to pay for upgrades to your home's systems to comply with current building codes. Your installer or local building department should be able to tell you what's required.

The location of your system in your home

If your existing water heater is installed in your attic or basement or up several flights of stairs, your installation cost may be higher because they take more time to access.

How long will a tankless water heater last?

The life expectancy of a tankless water heater is also longer than a traditional water heater, says Gonzalez with All Pro Plumbing, Heating & Air in Ontario, California. As long as you have proper professional maintenance, tankless water heaters can last 15-20 years, which is 5-10 years longer than the life of a traditional tank-style heater.

What should you look for in a tankless water heater installer?

When you hire a contractor to install your tankless water heater, follow these tips:

  • Double check the contractor's experience and expertise. Some pros who install tank systems don't install tankless ones, so you should be sure that whomever you hire has experience with the type of system you want installed.
  • Ask for a free estimate. Your contractor or plumber should be able to provide an estimate of how much it will cost to install a tankless water heater before doing the work.

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