What Is Cheaper to Run? Tankless or Tank Water Heaters

Tankless or Tank Water Heaters

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Hot water is an essential component of your home when it comes to taking a hot shower in the morning or cleaning filth and stains from clothing. Since it comes from your water heater, you may be considering whether to use a tankless or a tank model.

We’ll compare the two models and give you everything you must know about which type of water heater to install and answer questions like how much do tankless water heaters cost, cost of tankless water heater vs traditional, and many more.

Before we dive in, you must know that tankless water heaters are regarded as wise options. However, storage tank water heaters have a lower initial cost than tankless water heaters, and buying one that’s insulated can help reduce standby heat loss and operating costs.

Depending on the household’s hot water usage, storage tank models could be more cost-effective.

Please read on below as we give a comparison of tankless water heater vs tank cost, plus several things to consider, and how to size a water heater for your home’s requirements.

Tankless vs Tank Water Heaters

Comparison: tankless water heater vs tank cost.

The average initial cost of installing a water heater is $825 and $1,600. Labor costs and parts can amount to $1,200 on average. If you’ve been wondering how much do tankless water heaters cost, you should know that tankless heaters are a bit more expensive than tank water heaters, with average prices between $1,000 and $3,000.

On average, Tank water heaters cost $300 to $2,000 for the tank itself, and the plumber can ask about $45 to $150 per hour, which you’re advised to hire for this job.

Labor rates for a tankless water heater installation can range from $300 to $2,500 compared to $100 to $450 for a tank water heater.

What Is a Tankless Water Heater?

Tankless water heaters are also labeled as on-demand water heaters. That’s because they persistently deliver hot water to your home, no matter what your utilization needs are.

It’s powered by electricity or gas and uses high-powered burners to heat water quickly (within minutes) by taking it from a heat exchanger to your faucets or shower without keeping it in a tank. Tankless water heaters are often powered with electricity or gas, and we’ll examine both types below:

Gas-Powered Tankless Water Heaters

Using natural gas or propane-powered tankless water heater, you’ll pay about $1,000 to $1,500 to install. If you’re lucky that your home is situated near a natural gas line, it’ll be relatively cheap for you to tap into existing lines.

But if you don’t have gas in your area, you’ll need to purchase propane on your own.

Electric-Powered Tankless Water Heaters

An electric tankless water heater is somehow less expensive than a gas model. On average, an electric water heater costs about $800 to $1,500 to install.

It is less expensive because the installation is simpler. Electric-powered heaters are commonly criticized for their delayed heating time and increased utility expenses.

What Is a Tank Water Heater?

Storage tank water heaters are commonly found in about 90% of homes in America. One of the most significant differences between a tankless and a tank water heater is the presence of a huge water tank.

These tanks need ample unused home space because they typically hold between 40 and 120 gallons of water. The pipe leads from the top of the water tank to your home’s faucets.

Similar to a tankless water heater, tank water heaters usually use either natural gas or electricity for their fuel.

Other Considerations

Purchase Price

A storage-tank water heater is often more affordable than a tankless water heater when considering purchase price alone.

The storage tank water heater’s capacity, fuel source, warranty, brand, and dimensions will make a difference in the price. You can pay between $300 and $1,500 for a water heater, but some models and brands can run upward of $2,000.

You can purchase tankless water heaters to heat a single sink, tub, or shower (known as point-of-use tankless water heaters) or heat water for the whole house. Purchasing a tankless water heater can be as low as $150 or as high as $2,500. Solar-powered tankless water heaters are even more expensive, costing as much as $6,000.

You can use online calculators trying to size both types of water heaters. You can also calculate your anticipated energy cost for an electric or gas water heater then compare.

Installation Cost

How much do tankless water heaters cost to install? Same as the purchase price, installation costs vary widely, and your location matters too. Installing a point-of-use tankless water heater can be cheaper, followed by storage tank water heaters and whole-house tankless heaters.

Installing a storage-tank water heater ranges from $400 to $1,000. On average, installing a tankless water heater can cost about $2,500, or as low as $1,000, and high as $6,000.

Other homeowners can use a DIY route with storage tank water heaters and save on the installation costs. For tankless water heaters, it’s advisable to leave it to a professional, as the setup is more complicated.


If you choose a suitable capacity for your storage tank water heater, you can be sure not to run out of hot water. This is why the storage tank is favored over the tankless water heater.

A tankless water heater may struggle to keep up with demand if you run the dishwasher and washing machine simultaneously.

On the other hand, this can be resolved by installing more than one tankless water heater to keep up with your household needs or installing a point-of-use model where the water is being used a lot at the same time.

Energy Efficiency

Tankless water heaters are a more attractive alternative to storage tank water heaters for energy efficiency. Standby heat loss is a significant factor in more energy costs and efficiency in storage tank water heaters, but purchasing an insulated unit can reduce heat loss.

Life of the Unit

If you’re thinking about the life expectancy of each type of water heater, tankless heaters take a significant share. Estimates for storage tank water heaters range from 10 to 15 years per unit, while tankless can last for more than 20 years.

However, there’s a way to extend a storage water heater’s life by replacing the anode rods. This is a component that helps slow rust and corrosion. The frequency can depend on the type of heater and whether it’s hard or soft water in the home.


The battle for storage tank water heaters vs. tankless water heaters shows that tankless wins in almost every category. However, you’ll find out that you pay more to purchase and install the tankless water heater.

Calculators are recommended to determine capacity needs and energy usage to find the break-even point for the initial cost between tankless water heater and energy efficiency savings.

For families with simultaneous hot water needs, they need to consider the cost of installing two tankless heaters to keep up with demand or installing a higher capacity storage-tank water heater. If you choose a storage tank model, enquire about the cost of repairing the anode rods and when it must be done to extend its life expectancy before purchasing and installing it; alternatively, learn more about Tankless Water Heater.