Before you buy a new water heater, it’s a good idea to know and compare the average water heater cost.
These essential appliances can be a bit pricey, but they may be less expensive than you think.
Water Heater Costs Vary
The type of water heater you buy (storage water heater or tankless water heater) has a lot to do with the overall cost. So does the power source (gas vs electric units).
Installation costs factor in, too. If you want the best deal, you should consider the average annual energy costs of using different types of water heaters.
The best way to make a smart decision on your purchase is to arm yourself with information. When you know how much each type of water heater should cost, you won’t find yourself paying more than you need to.
You’ll know which type of water heater produces the most energy cost savings and what is the best water heater brand. And you will be able to better compare different types to make sure you get the best unit in your budget.
Our complete water heater cost guide is a great place to start. We strive to cover all you need to know, plus some. With that said, let’s dive in!
Overall Water Heater Cost
If you’re unsure whether you want a storage (tank) water heater, tankless, gas, or electric water heater, you can still get a general idea of how much you’ll pay.
Let’s look at the overall water heater cost range.
That’s a wide range! On the lower end of the scale are small electric storage water heaters. Gas storage water heaters cost a little more, as do ones with more capacity (bigger tanks).
On the high end of the scale are top-of-the-line tankless water heaters. We’ll talk more about the difference between types of water heaters and their costs next.
Electric Water Heater Cost
Electric storage water heaters (those with tanks) are the most affordable type, at least in upfront costs. They have fewer components than similar natural gas units, so they’re cheaper to manufacture.
On average, electric waters cost about $100 to $200 less than similar gas water heaters. You can expect to pay anywhere from about $300 up to about $1,600 on an electric storage water heater.
You can find small, cheaper units for as little as $200. The more capacity an electric water heater has, the higher the cost. A 30-gallon electric water heater might cost as little as $270.
But most households need more tank capacity than that to ensure there’s enough hot water for all their needs. A more sizable 50-gallon electric water heater runs about $400 to $700.
A very large 80-gallon tank capacity is on the high end of the pricing scale at about $1,000+.
Gas Water Heater Cost
A natural gas storage water heater costs a little more upfront than an electric one. It has more components (like a combustion chamber), so it costs more to manufacture.
But there are cost savings down the road when you buy a gas water heater. We’ll talk more about that in the Water Heater Energy Cost section.
Overall, a gas water heater can cost anywhere from about $400 up to about $1,600. You can find small, cheaper units for as little as $250.
This is very similar to the cost of an electric storage water heater. Like electric water heaters, the tank capacity (size) has a lot to do with the overall cost.
A small 30-gallon tank may be less than $400, but most households will need a 40 gallon (about $400 to $600) or 50 gallon (about $500 to $800) to meet their hot water demands.
Tankless Water Heater Cost
Tankless water heaters do the same job as storage water heaters, but they take up a lot less space and operate more efficiently.
Tankless water heaters are connected to the water supply and heat water on demand. So when you turn on a hot water tap, the unit heats the water right then using either gas or electricity.
On the other hand, storage water heaters fill with water, heat it with the help of electric heating elements or a gas burner, and keep it hot until someone uses it. Naturally, this uses more energy than tankless units.
Tankless water heaters are not only more energy-efficient – they’re also a constant source of hot water. When you use the full capacity of hot water from a storage unit, it takes time to recover and heat the cold water that’s refilled the tank.
But a tankless water heater always heats water on demand. If more gallons per minute are being used at once than the tankless heater is rated for, the flow rate will just decrease.
With this in mind, tankless water heaters are more expensive than storage-style units. Whole-house tankless water heaters cost anywhere from about $1,000 up to about $3,000.
But there are also “single-point” tankless water heaters that aren’t powerful enough to heat enough water for an entire household, but can handle a single point of use, like a shower or dishwasher.
These are much cheaper, usually in the $150 to $300 range.
Water Heater Installation Cost
When you’re figuring up the cost of a water heater, don’t forget to factor in installation costs. Unless you’re confident enough to do the installation yourself (and we don’t recommend it), you’ll need to pay a professional to do it for you.
The process usually takes anywhere from 2 to 4 hours. Overall, the average water heater installation cost is about $1,165.
The broad range of installation costs is anywhere from about $800 to about $1,500. You may pay more or less, depending on your location and the professional or company you use.
It’s a little cheaper to have a tankless water heater installed. Tankless water heater installation is anywhere from $150 to $600.
Installation costs will also need to factor in the cost of removing and possibly disposing of your old water heater. This increases the cost of installation by about $500, but some companies may offer this service for free.
Water Heater Energy Cost
While the upfront water heater costs stem from the unit’s purchase and insulation, energy costs should also be considered.
Whether you choose a natural gas or electric unit, you will pay for the power used in heating your household’s water.
In the industry, this cost over one year is referred to as the annual operating cost. In general, gas water heaters have a lower annual operating cost than electric.
Gas water heaters’ annual operating cost is about ⅓ of the cost of operating an electric water heater. This varies based on utility prices in your location, but it’s a good rule of thumb.
As you look at different water heaters and compare the cost, remember that you’ll pay slightly more upfront for a gas water heater. But in return, you’ll have a more efficient unit (read: more hot water) and lower energy costs.
If you choose an electric water heater, you’ll pay slightly less upfront, and the unit will be more energy-efficient, but the annual operating costs will be higher. Your unit also won’t be as efficient in providing hot water.
Annual Operating Cost Examples
Utility prices vary widely, but here are a few examples demonstrating how much you can expect to pay annually in energy costs.
- Gas 50 gal. water heater: $213 per year
- Electric 50 gal. water heater: $561 per year
- Gas tankless water heater: $228 per year
You may pay a little more or less, depending on your area’s utility costs and the size or flow rate of the water heater you purchase.
Before You Buy a Water Heater, Know the Total Cost
Water heater prices are clear enough – you’ll see them as you shop around, but they don’t tell the full story. Before you buy a water heater, make sure you know the total cost.
That means you’ll need to consider the purchase price, the cost of installation, and the annual operating cost for the units you’re considering. A $300 electric water heater may look like the cheapest option at first glance.
But once you consider that you could spend $317 more on energy costs each year to operate it than a gas water heater, that small initial cost savings won’t matter as much.
Consider All of Your Options
Likewise, if you’re thinking about getting a tankless water heater, the higher price range of $1,000 to $3,000 can be off-putting.
But factoring in the cheaper installation cost and your expected energy cost savings of around $400/year over an electric storage water heater, you’ll see that you can recover the upfront cost within a few years.
Knowing the average cost of water heaters according to their type, the cost of installation, and how much you’ll pay to operate it each year is essential to make the best purchase decision.
By making an informed decision, you’ll end up with the best water heater in your budget that you can benefit from for years to come