Tankless water heaters—also called on-demand water heaters—heat water only when needed, eliminating the need for a storage tank. This design offers space savings and energy efficiency. However, installing a tankless system can be more complex: it often requires new plumbing or venting. Apart from that equipment, labor and permits can significantly add to the final price.
Expect to pay in the low thousands for a tankless setup. For example most installations cost about $1,400–$4,000 (around $2,600 on average). A complete residential installation (including all labor and parts) can reach $4,000–$8,000 at the high end. Actual costs depend on details like home size, fuel type, and required upgrades.
These figures illustrate that home size and system needs matter greatly. A large two-story home with multiple bathrooms will tend toward the higher end of these ranges, while a small apartment or condo will be at the lower end. The sections below will dive into the specific factors (heater type, fuel, labor, etc.) that influence the final tankless water heater installation cost.
Factors Influencing Tankless Water Heater Installation Cost
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Unit & Materials: The tankless heater itself is a large part of the cost. High-capacity or condensing models can cost around $1,800–$2,500 for the unit alone. Additionally, plumbers typically add about $150–$500 for valves, piping, and other installation materials. Premium brands or extra features (like built-in recirculation pumps) will further increase the equipment expense.
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Labor & Installation: Skilled labor is significant. For a typical tankless swap labor alone runs about $600–$1,850. Since labor often accounts for roughly half of the total cost, any extra work (like running long vent pipes or upgrading electrical panels) will significantly increase the bill by several hundred dollars or more.
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Fuel & Venting: Fuel choice significantly impacts cost. Electric tankless units cost less to install ($800–$1,500) because they don’t need a gas hookup or exhaust vent. By comparison, natural gas or propane systems average $1,000–$1,500 installed. Gas units often require new venting and piping (adding labor), whereas electric units may just need an electrical panel upgrade.
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Permits & Codes: Permits and code compliance add some expense. Most regions require a permit to install or replace a water heater; the fee is typically $50–$100. Additionally, meeting code requirements (proper venting, gas pipe standards, seismic strapping, etc.) may add a bit of material and labor. These regulatory costs are usually small relative to the overall installation cost but are necessary for a safe, legal job.
Tankless installation costs vary depending on those factors. Big homes needing high-capacity or condensing units, new vents, or fuel line changes will pay at the higher end of estimates. Smaller homes opting for a simple electric unit will pay on the lower end. The next section will compare residential vs. commercial costs in detail.
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Residential vs Commercial Tankless Installation Costs
In a typical household, one tankless unit costs around $2,632. Commercial buildings often need multiple heaters, so costs multiply. For example, three units at that rate would total about $8,000.
Commercial installations often use high-end or condensing models, which carry a premium price. For example top-quality tankless heaters can cost $1,000–$3,000 more than a basic unit. Businesses may need several of these units, so multiply that premium by the number of heaters used. The total can easily far exceed the cost of a typical home installation.
Cost by Heater Type (Electric, Gas, Propane, Solar)
The fuel type of a tankless water heater greatly affects its installation price and complexity. Electric heaters are usually cheapest to install, while gas or propane models cost more upfront due to the need for vents and gas lines. Solar-powered units are the most expensive. Below, we break down typical installation costs by heater type:
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Electric: Electric tankless heaters generally have the lowest installation cost among tankless models. Typical installed price ranges around $800–$1,500. They don’t need a gas line or vent, which simplifies installation. However, electric units have a lower flow rate (often up to ~2–3 gallons per minute) and may require a high-amperage circuit. Their low upfront cost makes them a budget-friendly choice for smaller homes.
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Natural Gas: Gas-powered tankless units cost more to install (typically about $1,000–$1,500) because they need exhaust venting and a gas supply. These heaters provide higher flow rates (around 5–7 GPM) ideal for large homes. Additional expenses include new vent pipes and gas-line work, which can add up to ~$1,000. Despite the higher initial cost, gas heaters often save on energy bills over time.
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Propane: Propane tankless units install for a similar upfront cost (around $1,000–$1,500). The installation process is like gas models, but you need a propane tank or delivery system instead of a gas line. The fuel cost of propane is higher (roughly $350/year, versus ~$200/year for natural gas). In summary, propane models cost about the same to install as gas models, but be sure to include propane fueling costs in your calculations.
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Solar: Solar tankless water heaters have the highest installation cost, ranging roughly $1,700–$6,000 (and possibly above $13,000 for large systems). These systems require solar collectors and controls in addition to the tankless unit. While upfront expenses are steep, many solar models qualify for a 30% tax credit. Over time, a sunny home’s utility bills can drop significantly with solar heating.
In short, electric units are cheapest to install but have lower output, gas/propane models cost more (with added venting work) but provide higher flow, and solar systems have the highest upfront cost but offer long-term savings. Factor your home’s hot water demand against these costs to choose the right type.
Other Installation Expenses (Labor, Permits, Extras)
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Permits & Inspections: Don’t forget permits and inspections. Most regions require a permit to install or replace a water heater, typically costing around $50–$100. Plumbers usually obtain permits on your behalf, but budget for these fees. Proper permits ensure the job meets local codes—skipping them can result in fines or costly corrections later.
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Old Unit Removal: Don’t forget to account for the old heater’s removal. Pulling out an old water heater and disposing of it can cost $500 or more (depending on unit size and ease of access). Always clarify if your quote includes old-unit disposal; if not, budget extra to have the plumber remove or haul away the old tank.
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Pressure Regulator: If your home’s water pressure is high, a pressure regulator replacement may be needed. This ensures the tankless unit isn’t over-pressurized. Professional plumbers replace regulators for about $250–$350. This cost is optional (only required for high-pressure systems) but can protect your new heater from damage, so consider it when budgeting.
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Insulation & Prep: In colder climates, plumbers often insulate the new plumbing or vent lines (only about $10 per foot) to prevent freezing. Though a small charge, this protects the system and avoids damage in winter. Factor these insulation expenses into your budget if you live in a cold area.
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Add-on Upgrades: Homeowners often include extras like recirculation pumps, leak detectors, mixing valves, or shut-off valves when installing a new tankless. Each added accessory increases parts and labor. For example, a recirculation pump installation can be several hundred dollars. Plan any desired upgrades ahead of time so the estimate reflects these costs.
Cost-Saving Tips and Considerations
A few practical tips can help reduce expenses or maximize value. For example, many states and utilities offer rebates or credits for high-efficiency heaters. Aligning your tankless installation with other renovations can save on labor costs. Always compare multiple quotes and factor in the long-term benefits of the tankless system.
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Rebates & Efficiency: Look for rebates and tax credits. For instance, some tankless water heaters (especially solar or ENERGY STAR models) qualify for federal tax credits up to 30%. These incentives can offset a chunk of the installation cost. Additionally, remember the energy savings: DOE estimates gas tankless can save ~$100/year and electric ~$50/year on utility bills. Over the system’s lifetime, these savings add up significantly.
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Bundle & Quotes: If you have other home renovation or plumbing work planned, schedule the tankless installation at the same time. Contractors may offer better rates when bundling jobs, and shared labor can reduce costs. Always get multiple estimates. Beware of quotes that seem too low—they may omit necessary items. Confirm that each quote includes all expected services: permits, old-unit removal, venting, etc. Paying a bit more for an experienced installer can save money by preventing errors or rework.
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Long-Term Value: Consider the long-term value. Tankless heaters last much longer than tank models (around 20+ years) and often come with longer warranties. A higher upfront cost means you likely won’t need a replacement for many years. Balance the higher installation price against this reduced maintenance and longer lifespan to decide if it pays off for you.
In short, these strategies won’t dramatically reduce the upfront price, but they can lower your final cost or improve the return on investment of a tankless system. For example, tax credits and rebates can cover a significant portion. Comparing quotes ensures competitive pricing. A little planning and research go a long way in getting the best deal.
Conclusion: Total Cost and Long-Term Value
Installing a tankless water heater is usually a bigger upfront expense than a traditional tank. Expect most home installations to fall in the $1,400–$4,000 range (with averages around $2,600), while larger or commercial projects can be much more (often $6,000–$8,000 or higher). These totals include the unit, labor, and necessary materials or upgrades.
However, don’t overlook the long-term advantages. Tankless systems typically last around 20 years (versus ~10–12 for tank heaters) and usually come with longer warranties. They run more efficiently, potentially saving ~$50–$100 per year on energy. When comparing quotes, think of these lifetime benefits too: the higher installation cost can be justified by years of lower bills and no tank replacements.
If you’re thinking about upgrading to a tankless water heater and want expert help from start to finish, Cyclone Plumbing USA is a trusted local choice across Orange County, Garden Grove, Newport Beach, Anaheim, Santa Ana, Huntington Beach, and surrounding Southern California areas. Their licensed technicians handle everything from selecting the right gas, electric, or propane unit to managing venting, gas line adjustments, and permit requirements—so you don’t have to worry about any surprises. Whether it’s a simple residential replacement or a full commercial setup, they focus on safety, efficiency, and long-term reliability with every installation.
Instead of guessing which system to buy or dealing with complicated installation steps on your own, let Cyclone Plumbing USA take care of it. They offer free estimates, fast scheduling, and clear pricing with no hidden charges, making the process quick and stress-free. Ready to get endless hot water the right way? Contact Cyclone Plumbing USA today to schedule your tankless water heater installation.
Related:
How Long Does a Water Heater Last? Detailed Guide
How to Flush a Water Heater – A Complete Guide
What To Do When Your Water Is Discolored – Causes & Fixes
Water Heater Cost in Fullerton, California: A Homeowner’s Guide
