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The average tankless hot water heater cost for a complete installation is around $2,800. However, homeowners can expect to pay anywhere from $2,500 to $6,000, depending on the model and the complexity of the installation. This price includes both the unit itself and professional labor.
The final cost is influenced by:
- Heater’s fuel type
- Heater’s size
- Any necessary upgrades to your home’s plumbing, electrical, or gas lines
While the initial investment is higher than a traditional tank heater, a tankless model offers long-term savings through greater energy efficiency and a longer lifespan.
What is the average cost to install a tankless water heater?
| Installation type | Cost range | National average | What you’re paying for |
| Standard | $1,200 – $3,500 | $2,800 | Unit cost, Basic labor, Simple connection |
| Complete | $2,500 – $6,000 | $4,250 | Unit cost, Labor, System modifications |
| Complex | $3,500+ | Varies | Unit cost, Extended labor, Major home modifications |
The national average cost to install a tankless water heater is approximately $2,800. Most homeowners find their total project cost falls within a typical range of $1,200 to $3,500 for a standard replacement.
However, more complex installations can increase the price. For a complete system, households often spend between $2,500 and $6,000. The two main expenses are the unit itself and the cost of labor.
Labor alone can average around $1,200, but varies based on your location and the specific requirements of the job. The final cost depends heavily on whether you choose a gas or electric model and what modifications your home needs.
What factors impact the cost of a tankless water heater?
The most significant factors that impact the total cost of a tankless water heater are the fuel type (gas or electric), the unit’s size and flow rate, and local labor rates. Your home’s existing infrastructure also plays a crucial role in the final price.
Choosing between gas and electric models will create the biggest difference in your budget. Additionally, the size of the unit, measured in gallons per minute (GPM), must match your household’s hot water demand, with larger units costing more.
Fuel type
Gas-powered tankless water heaters are typically more expensive to buy and install than electric models. The total installed cost for an electric unit averages $1,400–$3,000, while a gas unit ranges from $2,100–$5,600.
Gas models often cost more because of several factors. The units themselves are more complex, and the installation often requires new venting systems and potentially larger gas lines to meet their fuel demands.
While more expensive upfront, gas models often have higher flow rates, making them better for larger families who use hot water in multiple places at once.
Electric units are simpler to install but may not be able to keep up with high demand.
Size
A larger tankless water heater with a higher flow rate will cost more than a smaller unit. The size you need is determined by how much hot water your household uses at one time, which is measured in gallons per minute (GPM).
To figure out the right size, you add up the GPM of all the fixtures you might run simultaneously.
For example, a modern shower uses about 2.5 GPM and a dishwasher uses 1.5 GPM. If you plan to run both at once, you’d need a unit that can provide at least 4.0 GPM.
A larger home with more bathrooms and appliances will need a unit with a much higher GPM, which will cost more.
Additional costs
The biggest surprise costs for homeowners often come from necessary upgrades to your home’s existing systems, such as when switching from a traditional tank heater to a tankless model. Things like these can significantly increase the total project price.
- Plumbing Modifications: A tankless unit is smaller and often installed in a different location than a tank heater, meaning a plumber may need to reroute water pipes to connect the new unit.
- Electrical Upgrades: Electric models draw a lot of power and frequently require a new, dedicated circuit run directly from your home’s breaker panel.
- Gas Line Upgrades: Tankless heaters need more fuel to heat water instantly, so a plumber may need to install a larger-diameter gas line to ensure sufficient fuel flow.
- Venting System: Gas units require a new, dedicated venting system to safely exhaust fumes outside, which adds to the labor and material costs.
- Water Softener: If you have hard water, installing a water softener is highly recommended to prevent mineral buildup that can damage the unit and reduce its efficiency.
Pros and cons of tankless water heaters
The main advantages of a tankless water heater are:
- on-demand endless hot water
- higher energy efficiency
- a longer lifespan
The primary disadvantages are:
- the high upfront installation cost
- the potential for limited hot water flow if the unit is not sized correctly for your home’s needs.
These units provide hot water instantly whenever a tap is turned on, so you won’t need to wait.Because they don’t store and constantly reheat water, they use less energy. However, the initial investment is much higher than for a standard tank heater, and a single unit may struggle to supply enough hot water for multiple simultaneous uses in a large household.
How to save money on a new water heater
You can save money on a new tankless water heater by taking advantage of rebates and tax credits, getting multiple installation quotes, and ensuring you choose the right size unit for your home.
Being a smart shopper can reduce both the upfront cost and long-term expenses.
- Look for rebates and tax credits. Many energy-efficient models qualify for financial incentives. The federal Energy Efficiency Home Improvement Credit provides a tax credit for 30% of the cost, up to $600. You should also check with your local utility company for available rebates.
- Get at least three quotes from licensed plumbers to find a competitive price for labor.
- Work with a professional to correctly size your unit so you can keep from overspending on a model that’s bigger than you need.
When should I call a professional for installation?
You should always call a licensed professional to install a tankless water heater.
The process is complex and involves high-voltage electricity or natural gas lines, making it a dangerous DIY project. A professional ensures the installation is safe, efficient, and up to code.
It is especially important to hire a professional in the following situations:
- Switching from a tank to a tankless model, as plumbing, venting, and mounting locations will change.
- You need to upgrade your home’s gas lines to meet the higher demands of a gas unit.
- Your electrical panel needs a new, dedicated circuit to power an electric unit.
- A new vent system must be installed through an exterior wall or the roof.
- To ensure the unit is sized correctly for your family’s hot water needs.
- To handle all necessary building permits and ensure the work passes inspection.
Water Heater Installation in Prescott, AZ
A tankless hot water heater is a smart investment that provides endless hot water and long-term energy savings.
Your final price will depend on the fuel type you choose and whether your home needs upgrades to its plumbing, electrical, or venting systems to support the new unit.
If you’re considering a water heater installation, consulting with an expert is the best first step. A licensed plumber can evaluate your home, recommend the right unit for your needs, and provide an accurate quote for a safe and reliable installation.
Contact us today for a consultation to learn more.
Frequently asked questions
What is the average cost to install a tankless water heater?
The national average cost for a complete water heater installation is around $2,800. However, most homeowners pay between $2,500 and $6,000, depending on the heater model and the complexity of the job.
What are the main factors that affect the cost?
The biggest cost factors are the unit’s fuel type (gas or electric), its size or flow rate (GPM), and local labor rates. Additionally, the need for upgrades to your home’s plumbing, electrical, or gas lines can significantly increase the final price.
Are gas or electric tankless water heaters more expensive?
Gas tankless water heaters are typically more expensive to purchase and install than electric models. This is due to the higher unit cost and the need for new venting and potentially larger gas lines.
What are the main benefits of a tankless water heater?
The primary advantages are energy efficiency, which lowers utility bills; a long lifespan of 20 years or more; and endless on-demand hot water. Their compact size also saves floor space compared to traditional tank heaters.
What are the disadvantages of a tankless water heater?
The two main disadvantages are the high upfront installation cost and a limited flow rate. If a unit is too small, it may struggle to supply enough hot water for simultaneous uses, like running a shower and a dishwasher.
How do I choose the right size tankless water heater?
To choose the right size water heater, you must calculate your home’s peak hot water demand in gallons per minute (GPM). Add the GPM of all fixtures you might use at once to determine the minimum flow rate you need.
Can I install a tankless water heater myself?
No, you should always hire a licensed professional for a tankless water heater installation. The job involves complex plumbing, high-voltage electricity, or gas lines, making it a dangerous DIY project that requires an expert to ensure it’s done safely and to code.