What is the installation cost for a waterless tankless water heater?
If you choose to install it yourself, please refer to our installation video. and Key Steps in Installing a Thermostatic Water Heater A tankless water heater installation can cost $1,200–$3,500, averaging $2,800 with equipment and labor, based on research by our team. Unlike conventional systems, these units heat water instantly without a storage tank, offering benefits for energy-conscious homeowners. Before selecting your unit, check out our guide to the best tankless water heaters for model comparisons.
Switching to tankless or on-demand water heating can improve energy efficiency by up to 34% compared to standard tank models, according to the U.S. Department of Energy. On-demand heating saves space in your home and provides continuous hot water for 15–20 years with regular system maintenance. Read on to learn more about tankless water heater costs, equipment types, and how to save on installation.
Tankless Water Heater Installation Cost by Fuel Type
Your choice of electricity, natural gas, or propane as the fuel source for your tankless water heater affects the purchase price and operating costs. Electric units need specific voltage and amperage to operate, while gas- and propane-powered models require venting and gas line specifications. Here’s a cost breakdown by fuel type:
Tankless Water Heater Type Unit Cost Range Installation Cost Range Total Cost Range
Electric $500–$1,500 $150–$1,000 $650–$2,500
Propane $500–$2,000 $900–$1,500 $1,400–$3,500
Natural gas $750–$2,000 $900–$1,500 $1,650–$3,500
Note: We determined the above cost ranges using RSMeans data from Gordian and market research.
In addition to the unit cost, licensed plumbers charge $75–$150 per hour for installation, which typically takes 4–8 hours. Your home’s current setup also affects installation complexity, and in turn the total cost. Electric models cost less upfront but might need panel upgrades, which can add to the price of your project. Gas units have higher initial costs but offer stronger flow rates, or the amount of hot water a water heater delivers, and lower operating expenses.
In the sections below, we’ll look at specific installation requirements for tankless water heaters based on each fuel type.
Propane Tankless Water Heater Installation
Propane tankless heaters work best in homes without natural gas access. These units deliver 8–10 gallons of water per minute (GPM), supporting multiple hot water fixtures at once. Units cost $500–$2,000, with costs varying by size and manufacturer, such as Rinnai or Rheem.
A propane tankless water heater setup needs direct or power venting, precise gas line sizing, and often a conversion kit for fuel switching. Licensed plumbers need to verify gas pressure and install carbon monoxide detectors. While costing more upfront than electric models, propane units heat faster and maintain steady temperatures in cold weather. Homeowners opting for this fuel type can plan for a minimum 100-gallon propane tank and ongoing fuel delivery service as needed.
Electric Tankless Water Heater Installation
Electric models offer the lowest equipment costs at $500–$1,500 per unit. These compact heaters can suit homeowners in warmer regions and with smaller households, delivering 3–8 GPM based on the model. Point-of-use versions can fit under sinks or in closets, serving individual fixtures efficiently.
Installation success depends on your home’s electrical capacity. Most tankless water heater units require 120–160 amps of dedicated service and multiple 240 volt (V) circuits. If you need panel upgrades during installation, it can add $200–$800 to your project costs. While avoiding gas line work can help keep labor costs down, monthly operating expenses for electric-powered tanks may increase in areas with high utility rates.
Natural Gas Tankless Water Heater Installation
Natural gas models achieve the highest flow rates—up to 11 GPM. These $750–$2,000 units can handle simultaneous demands from showers, dishwashers, and washing machines. The heat exchange provides quick, steady heating, which can offer value in regions with cold incoming water.
For some older homes, installing these units often means upgrading the size of your home’s gas lines from half-an-inch to three-quarters of an inch, adding $400–$800 for materials and labor. Adding venting through walls or roofs costs another $400–$800. As for ongoing maintenance costs, annual descaling can help prevent mineral buildup, which can cost around $100–$500.
How Much Does Tankless Water Heater Installation Cost by Unit Size?
The size of your tankless water heater affects both purchase and installation costs. Your home’s peak hot water demand, measured in gallons per minute (GPM), determines the right unit size. Small households may need 2–3 GPM to cover hot water usage, while larger homes may use 8–10 GPM for multiple bathrooms and appliances. The following chart outlines cost differences across different unit sizes, including flow rates and typical home uses.
Unit Size Flow Rate Typical Use Cost Range
Point-of-use 1–2 GPM Single faucet or appliance $150–$500
Small whole-house 2–4 GPM Small apartment or condo $500–$1,000
Medium whole-house 5–7 GPM 2–3 bedroom home $1,000–$2,000
Large whole-house 8–10 GPM 4+ bedroom home $1,500–$3,000
Note: We determined the above cost ranges using RSMeans data from Gordian and market research.
What Additional Costs Affect Tankless Water Heater Installation?
Besides equipment costs, several factors can influence your total tankless water heater installation price. For example, the type of unit you buy can impact added work and installation requirements. Here’s what to budget for when upgrading your water heater unit:
So here’s the thing—going with a tankless water heater can be a smart move, but there are some extra costs you should know about before jumping in. Let’s break it down.
If you’re going electric, your electrical panel might need an upgrade to handle the extra load. That could mean adding a new circuit, which usually runs between $200 and $600. And if your home’s older or the panel’s really outdated, a full upgrade could set you back $1,000 to $2,000. It’s pretty common in older houses—they just weren’t built for today’s power demands.
Now, if you’re going with gas, you might need to update your gas lines too. Converting them to meet the unit’s needs typically costs $350 to $750. And if the setup is tricky—like if the pipes have to run a long way or go through tight spaces—that price can creep up.
Gas units also need special venting made of stainless steel, since regular vents can’t handle the heat. Running that through a wall or roof? That’s another $400 to $800, including materials and sealing everything properly so it’s weatherproof.
Oh, and don’t forget about getting rid of your old water heater. Removal usually runs $100 to $500, depending on how big the tank is and where it’s located. Some pros even tack on extra disposal fees, so ask about that upfront.
Then there’s the paperwork side of things—permits and inspections. Yeah, it’s not the most exciting part, but it’s important. Most places require permits for both plumbing and electrical work, which can add $50 to $200 (or more, if they charge separately). And after installation, you’ll likely need a safety inspection, which is another $74 to $150. But hey, it keeps everything up to code and safe.
By the way, we’ve got a full guide on water heater installation costs if you want to dig deeper and plan your budget better.
Tankless vs. Traditional Water Heaters
So what’s the real difference? Tankless heaters heat water on demand using a heat exchanger—no storage needed. Traditional tanks, on the other hand, keep 40 to 80 gallons of water hot and ready 24/7.
Upfront, tankless units cost more—anywhere from $1,200 to $3,500 installed—while traditional ones usually run $800 to $1,500. But here’s the upside: if your household uses around 41 gallons of hot water a day or less, a tankless system can save 24% to 34% on energy, according to ENERGY STAR.
Lifespan-wise, tankless wins by a mile. You’re looking at 15 to 20 years compared to 8 to 12 for a standard tank. Yearly operating costs? Electric tankless runs about $300–$540, gas models even less—around $192 to $264. Traditional tanks cost more to run, roughly $440 to $580 a year.
Space is another factor. Tankless units are tiny—barely take up three square feet on a wall. Tanks need way more room, but they do have one advantage: they store hot water, so they can handle multiple showers or appliances running at once without a hitch. Plus, during a power outage, gas-powered tanks still work—tankless units usually won’t unless they’re designed for it.
On the flip side, tankless systems need a little more love. You’ve gotta descale them once a year to prevent mineral buildup, which adds a few hundred bucks to your annual maintenance budget. But overall, they last longer and save money over time.
DIY vs. Hiring a Pro
Look, I get it—doing it yourself sounds like a great way to save cash. But honestly, we really recommend hiring a pro, especially for tankless units. These aren’t simple hookups; you’re dealing with plumbing, gas lines, and possibly high-voltage electrical work—all stuff that can go wrong fast if you’re not trained.
Plus, doing it yourself could void the warranty. And that’s a big deal. Not to mention the risks: messed-up gas lines can lead to fires or carbon monoxide leaks, and electrical mistakes? Also fire hazards. Scary stuff.
Hiring a licensed plumber does add $500 to $1,500 to the total bill, but it means everything’s done safely, up to code, and your warranty stays intact.
Sure, if you’re super handy and just installing a small electric point-of-use heater under a sink, you might pull it off. But for whole-house systems? Definitely call in a certified pro. They’ll handle the gas lines, venting, and electrical connections—and give you peace of mind.
Correct gas line sizing
Safe electrical connections
Code-compliant venting
Water pressure testing
Required permits
System calibration
Drainage setup
Safety verification
While some homeowners may attempt the installation themselves for a small electric units, note that doing so requires the following tools and hardware:
Pipe wrenches
Adjustable wrenches
Screwdrivers
Wire strippers
Voltage tester
Pipe cutter
Solder and torch
Mounting hardware
Pipe fittings
Teflon tape
How Can You Save on Tankless Water Heater Installation Costs?
The 30% federal tax credit, which homeowners can claim for efficiency-focused home improvements, offers up to $600 back on gas units rated with an 0.95 energy factor or higher. Many utility companies also offer $100–$300 rebates for efficient systems. If your current water heater shows signs of failure, these incentives can help offset replacement costs.
You can also consider the following factors when looking for savings:
Seasonal Timing: Purchasing a water heater during the fall or spring often qualifies buyers for retail discounts of 10%–20%, as demand tends to be lower during these transitional seasons.
Right-Sizing: Accurately sizing a water heater to match household needs helps avoid overspending on equipment capacity. Proper calculation may also reduce installation labor costs, particularly if a smaller system suffices for the application.
Package Deals: Bundling water heater installation with other necessary plumbing repairs can lead to significant savings on overall labor expenses, as service providers often offer reduced rates for combined work.
Multiple Bids: We recommend obtaining at least three quotes from licensed plumbers, as pricing for identical installations can vary by $500 or more. Competitive bidding enhances cost transparency and supports informed decision-making.
Regular Maintenance: Annual system cleaning typically costs between $100 and $200 but can extend equipment lifespan and prevent expensive repairs caused by mineral buildup or component degradation over time.
Local Incentives: Many state and local governments provide rebates and energy efficiency incentives that can reduce purchase and installation costs by $20 to $1,000, depending on regional programs and eligibility criteria.
Manufacturer Rebates: Leading brands such as Rheem and Rinnai frequently offer rebates ranging from $100 to $400 on new units, based on current market promotions and model availability.
How Does a Tankless Water Heater Work?
When a hot water tap is opened, cold water flows into the tankless unit, activating a flow sensor that triggers either gas burners or electric heating elements. The water is then heated instantaneously via a heat exchanger, eliminating the need for a storage tank. An integrated control system dynamically adjusts the heating output based on incoming water temperature and real-time demand, ensuring efficient and responsive performance.
Gas vs. Electric Performance: Gas-powered models generally deliver higher flow rates—typically 8 to 10 gallons per minute (GPM)—compared to electric units, which range from 3 to 8 GPM depending on electrical capacity. These differences are critical when multiple fixtures operate simultaneously; for example, a shower typically uses 2 GPM, while a washing machine requires approximately 3 GPM.
Temperature Control and Continuous Supply: Tankless water heaters use precision temperature sensors and computerized controls to maintain consistent hot water output. Unlike traditional storage tanks, which can deplete their supply, tankless systems provide a continuous flow of hot water within their rated capacity. Properly sizing the unit to household demand minimizes temperature fluctuations during concurrent usage of multiple fixtures.
The experience of a consumer using an instant hot water heater
One of our customers lives in California and installed an instant hot water heater in their residence last year. The total cost of the equipment and installation was $2,800. After its use, this system demonstrated excellent economic and practicality: the average monthly gas expense was reduced by 25 to 30 dollars, and it could consistently meet the continuous hot water demand of a family of four.
According to the suggestions of our technical engineers, users should obtain multiple installation quotations before purchasing an instant hot water heater and confirm in advance whether the existing gas pipeline meets the requirements of the equipment. This customer spent an additional $500 on pipeline renovation due to insufficient specifications of the original pipeline. Moreover, to reduce long-term maintenance costs, the customer chose to conduct a basic maintenance once a year, which mainly includes using an acetic acid solution to perform a one-hour circulation cleaning on the equipment to maintain its efficient operation.
Is Tankless Water Heater Installation Worth It?
For most homeowners, a tankless water heater is worth the cost. However, the value depends on your household needs and long-term plans. The $1,200–$3,500 installation cost can pay itself back with lower utility bills and a doubled lifespan compared to conventional units. Most homes cut energy use by 24%–34%, with units lasting 15–20 years versus 8–12 for standard tanks.
Installing a tankless water heater may make more sense for people planning to stay in their current home for five or more years, households with high water heating costs, or families with increased hot water needs. Generally, gas offers more benefits for homeowners in cold climates and large houses, while electric models fit warm regions and smaller households better. If you’re looking for savings, we recommend factoring in your household’s energy rates, available rebates, and tax credits when deciding on a unit.
If you're ready to make a purchase, feel free to browse our product catalog to see if there's something that suits your needs.