Tankless Water Heater Cost: Average Prices & Cost Factors

A tankless heater warms water only when a tap is open, so it has no storage tank to fill and keep hot. That design changes what the job involves. Gas models need a bigger gas supply and special venting, and electric models can pull far more power than a tank does. Those side projects often cost as much as the unit itself.

This page covers tankless installs only. For tank, heat pump, and swap-in-kind pricing, see a general water heater guide. Figures below come from published sources and carry a check date of Oct 11, 2026.

Electric units cost less to install because they skip the gas line and the exhaust vent. The catch is the electrical service. A whole-house electric unit draws a lot of power, and an older panel may not have room for it. If the panel needs work, the electric price moves toward the top of its range.

Gas units, both natural gas and propane, cost more to install. They need a vent rated for the exhaust and a gas line that can deliver enough fuel when the burner fires at full output. Propane models follow the same pattern as natural gas, and they also need a tank or supply on site.

Running costs depend on local gas and electricity rates, so the install price alone cannot tell you which type is cheaper over time. Ask your utility for current rates, then compare them against the efficiency rating on the unit's label.

Labor makes up a large part of the total, and it differs by fuel type for the reasons above.

Most of the gas premium comes from the extra pipe and vent work. Plumbers set hourly rates, and electrical work may be billed separately by an electrician.

Tankless units are sized by flow, measured in gallons per minute (GPM), not by tank volume. The unit price rises with the flow rate.

How to size by GPM

Add up the fixtures that may run at the same moment, such as a shower and a dishwasher, and pick a unit that covers that combined flow. Two things shape the real capacity:

• Incoming water temperature. Colder groundwater means the heater must add more heat to reach the set temperature, so the same unit delivers less flow in a cold climate.
• Peak demand. A single bathroom household can often use a small unit. A home with several bathrooms in use at once may need a large unit or two units.

Point-of-use models serve a single sink or shower. They cost less but do not supply the whole house. Check the manufacturer's flow chart for your region before you buy.

Replacing a tank with a tankless unit is rarely a straight swap. The table lists upgrades that commonly show up on the quote.

• Gas line. A tank heater often runs on a smaller gas line than a tankless burner needs, so the pipe may have to be upsized.
• Venting. Condensing and non-condensing models use different vent materials, and the route through a wall or roof adds labor.
• Removal. Haul-away of the old tank is sometimes a separate line.
• Permits. Many local codes require a permit and an inspection for gas appliance work.

Two guides can quote very different totals for the same product. One may price a modest electric install, while another assumes a whole-house gas unit with new venting and permits. Region, home layout, and the brand of unit also change the number.

Before comparing figures, check which fuel type and size each source assumes, and whether permits and removal are included.

Tankless

• Heats water on demand, so hot water does not run out during a long shower.
• Takes less floor space and can mount on a wall.
• Costs more to buy and install, especially for gas.
• Needs periodic maintenance, and hard water can build scale inside the heat exchanger.

Tank

• Costs less up front and is simpler to install.
• Keeps heated water in reserve, which loses some heat while it sits.
• Can run out when demand is high.

Tankless installation involves gas, combustion exhaust, high-amperage wiring, or all three. Mistakes can cause gas leaks, carbon monoxide exposure, or fire, and a DIY install may void the manufacturer's warranty. Many areas require a licensed plumber or electrician and a permit. Hire a licensed professional and ask for an itemized quote.

What to ask when you get quotes

• Does the price include venting, a gas line upgrade, and any panel work?
• Is the old heater removed and disposed of?
• Who pulls the permit?
• What does the labor and parts warranty cover?