Why is Tankless Water Heater Installation so Expensive

Why is Tankless Water Heater Installation so Expensive?

  • Installation is a big part of any home appliance, and the tankless water heater is no exception. Many believe the installation of a tankless water heater to be costly, but why is tankless water heater installation so expensive? This article explores everything you need to know about installing a tankless water heater.

Tankless water heaters have gained popularity recently due to their energy efficiency and endless hot water supply. However, their installation costs have left many homeowners scratching their heads. With tankless units, water is heated on demand as it flows through the system, saving space and energy. But what sets them apart from conventional heaters, and what makes their installation process more expensive?

We’ll look closer at the nuts and bolts of tankless water heater installation, exploring the factors contributing to the overall cost. From the initial investment in materials and specialized labor to the long-term benefits and environmental impact, we’ll leave no stone unturned.

Tankless Water Heater Installation

Installing a tankless water heater is a process that involves unique considerations compared to traditional water heaters. Unlike the latter, which stores hot water in a tank, tankless water heaters heat water on demand as it passes through the unit. This fundamental difference impacts the installation process.

To get a better understanding, let’s briefly compare the installation steps for both types:

Traditional water heater installation


Traditional water heaters require a designated space where the tank can be installed, usually in a basement or utility room. This is because traditional water heaters consist of a large storage tank that holds and heats a specific amount of water. The tank needs to be placed in an area with proper ventilation and enough space to accommodate its size.


The unit is connected to the water supply line and the home’s gas or electric system. The unit typically includes a water heater, a heating element or burner, a thermostat, and a pressure relief valve.


Proper venting is essential to releasing combustion gases safely.

Tankless water heater installation


Tankless water heaters are compact and can be mounted on walls, inside closets, or outdoors, saving valuable floor space. These space-saving qualities make tankless water heaters popular for smaller homes or apartments with limited space.


Proper sizing is critical to meeting the hot water demands of the household. Sizing the water heater correctly can also reduce energy consumption and save money. A water heater that is too small may not be able to provide enough hot water, leading to discomfort and inconvenience. On the other hand, a water heater that is too large may result in wasted energy and higher utility bills. Therefore, it is important to consider factors such as the number of family members, daily hot water usage, and peak demand periods when determining the appropriate size of a water heater for a household.

Gas line and venting

Gas-powered tankless heaters need a dedicated gas line and ventilation for safe operation. Gas-powered tankless heaters need a dedicated gas line and ventilation for safe operation. Depending on the model, they may also require a power source, such as electricity, to power the ignition and control systems. Ensuring the gas line is properly installed and connected is important to avoid leaks or hazards.

Electrical work

Electric tankless heaters require adequate electrical connections. They typically need a dedicated circuit, which means they should be the only appliance on that circuit. This ensures that the heater receives the necessary power and reduces the risk of electrical overload.

The complexity of tankless water heater installation lies in addressing these unique requirements. Proper sizing and placement ensure the system meets the household’s hot water demands. Additionally, specialized knowledge is essential to safely handling gas lines, venting, and electrical connections. While the installation process may seem more intricate, the benefits of tankless water heaters, such as energy efficiency and continuous hot water, outweigh the initial challenges.

Cost Analysis: Material Expenses

Traditional vs. tankless

Traditional water heaters have a large tank that stores hot water, typically steel or glass-lined steel. Depending on the model and household needs, these tanks can hold anywhere from 30 to 80 gallons of water.

On the other hand, tankless water heaters don’t require a storage tank. Instead, they rely on advanced heating elements or burners to heat the water as it flows through the system. This means there’s no need for a bulky tank, saving space and material costs. So the tankless water heater installation cost is better than the traditional water heater.

Material expenses for tankless water heaters

The material cost of tankless water heater is high compared to its tank-style counterpart, but it’s worth it. Although tankless water heaters skip the tank, they come with their own set of specialized components. Some of the key materials involved in tankless water heater installation include:

Heat exchanger

The heart of the tankless unit, the heat exchanger, is responsible for quickly heating the water as it passes through the system. High-quality heat exchangers, often made of copper or stainless steel, contribute to the durability and efficiency of the heater.

A gas burner or electric element

Gas-powered tankless water heaters need a burner to heat the water, while electric units use electrical elements. These components must be robust and energy-efficient to ensure consistent performance.

Venting materials

Proper ventilation is essential for gas-powered tankless water heaters to discharge combustion gases safely. Venting materials like stainless steel pipes ensure the unit operates efficiently and safely.

Control panel and sensors

Tankless water heaters require advanced control panels and sensors to accurately regulate water flow and temperature. These components ensure you get the desired hot water when you need it.

Investing in long-term savings

Tankless water heaters may require a higher upfront investment due to their specialized components. However, they can offer significant long-term savings through reduced energy consumption and lower utility bills. With tankless units, you only heat the water you use, avoiding energy waste from heating and reheating water stored in a tank.

So, while the materials for tankless water heaters may initially cost more, the potential for long-term savings and increased energy efficiency make it a smart investment for many homeowners.

Labor Costs

Specialized skills

Installing a tankless water heater requires a certain level of expertise beyond the typical installation of a traditional water heater. While traditional water heaters are relatively straightforward to install, tankless units demand specialized skills.

Training and experience

Qualified technicians undergo specialized training to handle tankless water heater installation. They need to understand the unique requirements of these modern units, such as gas line connections, venting, electrical work, and precise calibration. Experience is crucial to ensure everything is set up correctly and safely.

Gas line and venting expertise

Gas-powered tankless water heaters require a dedicated gas line and proper ventilation to function safely. Handling gas lines demands careful attention and knowledge of safety protocols. Certified professionals know how to set up gas lines and ventilation to avoid hazards.

Electric know-how

Electric tankless water heaters have their complexities when it comes to electrical connections. Technicians must be familiar with the electrical requirements and ensure the system is wired correctly to prevent electrical issues.

Time and effort

The intricacies of tankless water heater installation mean that the process can take longer than with traditional water heaters. Technicians must carefully assess the home’s hot water needs, determine the best placement, and install the various components accurately. This attention to detail requires time and effort, which adds to the overall labor costs.

Ensuring quality installation

Hiring a qualified professional for tankless water heater installation is crucial for a smooth and successful process. Attempting a DIY installation or relying on an inexperienced contractor may result in costly mistakes or even compromise the safety and efficiency of the unit.

Maintenance and Servicing Costs

While tankless water heaters offer numerous benefits, they require regular maintenance to perform at their best. Let’s explore the maintenance requirements, compare servicing costs with traditional water heaters, and understand how maintenance impacts overall expenses.

Maintenance requirements of tankless water heaters

To troubleshoot the water heater and prevent common water heater problems, follow these maintenance steps:

Flushing the system

Annually flush your tankless water heater to remove mineral deposits and debris that could be the reason for no hot water in the house or cause hot water to run out quickly during showers.

Inspecting the venting

Regularly check the venting system for blockages or damage. A clear venting path ensures the safe release of combustion gases, avoiding potential hazards.

Cleaning the air intake filter

Keep the air intake filter clean or replace it periodically to maintain proper air circulation and ensure your tankless water heater operates efficiently.

Checking for leaks

Regularly inspect all connections, including the water and gas lines, to detect and address leaks promptly, preventing water and energy waste.

Comparing service costs with traditional water heaters

When comparing servicing costs, tankless water heaters may require slightly higher maintenance expenses than traditional water heaters due to their advanced technology and specific requirements. However, the investment in proper maintenance is well worth it, as it helps avoid the most common water heater problems.

Impact of maintenance on overall expenses

While some additional costs are associated with tankless water heater maintenance, these expenses are minimal compared to the potential benefits. Regular maintenance can troubleshoot the water heater, identify issues early, and prevent costly breakdowns in the future.

Wrapping Up

A tankless water heater might seem like a lot to invest in but think of it as an investment in never-ending hot showers and lower energy bills. No more shivering under a lukewarm stream or watching your energy costs rise.

Remember, it’s not just about the money you spend upfront. It’s about the value you’ll get over time. A tankless water heater can be your home’s little energy-saving secret, quietly working to keep you comfy and your wallet happy. So, as you ponder whether to go tankless or stick with the traditional, weigh the costs against the benefits. The decision is yours, Now that you know why tankless water heater installation isn’t just another drop in the bucket.

Frequently Asked Questions

How to install a water heater expansion tank?

To install a water heater expansion tank, turn off the water supply and power, drain some water to relieve pressure, determine the location, install the tank on the cold water line using a tee fitting, tighten connections, turn on the water supply, check for leaks, and adjust tank pressure if needed.

What is the tankless water heater annual maintenance cost?

The annual maintenance cost for a tankless water heater varies but averages between $100 and $300. Tasks include descaling, flushing, leak checks, and component inspection to ensure efficiency and longevity.

How expensive is a tankless hot water heater?

The cost of a tankless hot water heater ranges from $500 to $2,500 or more, depending on size, brand, features, and installation. While the initial investment is higher than traditional heaters, long-term energy savings and durability are benefits.

How to reduce water heating costs?

To lower water heating costs, adjust thermostat temperature, insulate hot water pipes, install low-flow fixtures, use cold water for laundry and adjust dishwasher settings, fix leaks promptly, consider energy-efficient appliances, and use appliances during off-peak hours to benefit from lower electricity rates.