Hot water heater replacement is one of the most common home improvement projects, as standard tank-style electric or gas devices start to leak and fail every 8-12 years.

If you are thinking of installing a new hot water heater in your house, there are a number of options to consider.

• Tank or tankless?
• Gas, Electric or perhaps Solar?
• 40, 50, or 75 gallon capacity?

All these factors will ultimately impact the price of the device, as well as the installation cost.

Here are up-to-date installation costs for the most popular types and sizes of hot water heaters.

How Much Should You Pay to Replace a Hot Water Heater?

On average, it costs $800-2,500 to install a new water heater (device and labor included). However, this price can go up to as much as $5,000-6,000 installed depending on the unit you purchase, as well as the amount of labor needed to perform the installation up to code.

Storage Tank Water Heaters:

Average price is around $780, but units are available for as low as $315 (Kenmore) to as high as $3,100 (A.O.Smith). A 75 gallon unit can range in price from $999 (Bradford White) to $3,300+ (Rheem and A.O.Smith) Average cost of installation is about $350-450

Also See: Water Heater Replacement Price Calculator

Using this tool you can estimate the cost of installing new Tankless or Tank Water Heater. Gas or Electric, 40, 50, 75 gallon, Power Venting options, and even locally adjusted pricing.

It takes 15 seconds to get an instant price quote!

Tankless (on demand) Gas Water Heater:

Tankless units range in price from $800 (Rheem) to $3,500+ (Noritz). Installation prices range from $1,200-2,500, but can be a lot higher depending on the work that needs to be performed.

It’s presumed that tankless heaters are more energy efficient that storage tank units, because they only turn on when you need hot water, compared to continuously turning on to keep water at set temperature, in tank units.

Some modern forced hot water boilers have a tankless water heater built in, making a whole system installation much cheaper!

Solar Hot Water Heater:

Prices for solar water heaters start at around $1,100 (Stiebel Eltron), but can cost as much as $5,000+ (SolPak by Rheem). Installation cost is typically not included in the price of the unit.

If you prefer a DIY option, you can get a solar water heater kit that you can install on your roof, and will have to run water pipes into your storage tank. This will require some roof climbing and flashing skills, as well as some advanced plumbic skills. But after installed, this will give you lots of Free Hot Water!

Solar water heaters are widely used in Israel and Middle East, where sunlight is abundant, and gas/electricity is expensive. Israelis perfected the efficiency and cost of these units.

Here is how Solar Water Heater Works:

This video was recorded in Israel’s solar village in Negev Desert. See how water is heated to boiling temperature in less than 2 minutes:

In the United States, we have slightly different design of these unit, which typically use vacuum solar tubes, that transfer heat to either directly to water that circulates through copper pipes, or to heating liquid, that runs through storage tank, and heats up the water.

When sun is down, and you need hot water, an auxiliary electric heating element turns on, to bring up the temperature in the tank.

Common Factors that Impact Hot Water Heater Installation Cost

You can expect to pay more for installation of a new unit, if any of the following factors are present:

1. Tankless Device:

It takes a lot longer (average 8-10 hours) to install a tankless hot water heater than a storage tank unit (average 2-3 hours). The reason it takes so long is because a plumber needs to install a dedicated gas line (if one was not there before), install proper venting and any necessary electrical work.

What Size and Type Water Heater Should You Get?

When choosing your water heater tank type and size, the rule of thumb is that it should provide enough hot water for all household members and appliances in a way that is efficient, and does not waste energy or water.

Water Capacity / Size:

Typically, if your household is 1-2 people, a 40 gallon unit capacity is enough. For a household of 4 people, a 50 gallon tank should suffice. For 5 or more people, consider getting a unit with a 60-80 gallon capacity.

Tank vs Tankless:

If you get a standard tank water heater, you may end up wasting water and energy if it puts out more than your household uses. You can avoid this issue and the associated energy costs by getting a tankless (on-demand) water heater.

Gas vs Electric

Installation and material costs for both gas and electric units are pretty similar. However, it is VERY important to understand and take into account operating (energy) costs. Generally speaking, GAS units will cost 30-50% less to operate vs electric, because gas costs less, and electricity is less efficient.

Think of it this way: Its is likely that your electricity comes from a gas-powered power plant, so gas was already used to heat up water, which makes the turbine spin, which produces electricity. Now you would be using this electricity to once again heat water. Seems redundant, doesn’t it?

However, if you do not have gas in your house, your only choice is pretty much electric water heater, unless you are willing to put in a solar or propane powered heater.

See our guide on whether you should get gas or electric water heater.

Getting the Best Deal on a Hot Water Heater Installation

To get the best deal on your new hot water heater, both the price of the device and the cost of labor have to be right.

Price of the Unit

When it comes to choosing a water heater, you may be tempted to go for the lowest price. However, remember, with these devices, cheap – usually means low or mediocre quality parts and materials that will not last too long after the warranty runs out.

If you want the lowest price, home improvement stores, such as Lowe’s or Home Depot, are your best bet. However, if you want a hot water heater that will last for many years, it is best to pay more and get it from a wholesale HVAC supplier and installer.

One of the easiest ways to distinguish a cheap lower-quality water heater from its high-end counterpart, is by weight. High quality, expensive water heaters weigh a lot more, because they use heavy duty parts and materials to manufacture the device, making it a lot more durable.

Also, keep in mind than a tankless unit can cost 2-3 times as much as a standard tank style unit. Moreover, an electric tank unit costs 15-25% less than a gas tank unit of the size capacity.

Installation Cost

In a straightforward comparison, a tank-style hot water heater costs MUCH less to install than a tankless unit. The difference can be thousands of dollars! However, you should also consider the fact that an average tankless unit will last 8-10 years longer than a tank one. Therefore, you need to decide whether the higher upfront cost of the on-demand unit is worth it.

Here is another factor to consider: because many homeowners don’t do enough research on installation prices, many plumbers get away with charging exorbitantly high and unfair fees for their labor. We are talking about straight forward replacements, where no complex or lengthy plumbing work is required.

The best way NOT to fall for these pricing scams is to get at least 3-4 estimates from local licensed plumbers.

You should also research online and see how much homeowners in your area paid for a similar installation. This is a great way to gauge the fairness of the quotes you are getting from contractors.

It is best to avoid trying to save money by hiring an unlicensed handy-man for this job, as you want everything to be done in line with building code guidelines. This is very important, as improper installation that involves gas and or electricity can create unsafe living conditions (carbon monoxide gas leak or a fire hazard) for you or your family.