A water heater is undoubtedly an essential appliance in a house. Generally, a heater lasts 10 to 15 years — providing you comfort and amenities. Obviously then, installing a new one or replacing an old heating system should be on top of your home improvement list. So, how much does a water heater installation cost?

On average, a whole-house tank water heater installation cost comes out to $600–$800 for a 1,500 square foot home. Such a type is perfect for three to four people. 

Fortunately, there are various options available for water heaters in the market. Homeowners can choose from traditional storage tanks or tankless devices to their preferred source of power such as gas, propane, electricity, or solar energy.

Average water heater installation cost

The national average to install a new water heater across the US is $850-2,500. This amount includes professional labor as well. 

The reason for such a wide price range is that the total cost depends on a lot of factors. It could be the type of heater you choose (tank vs. tankless), the size or capacity of the heating system, the power source you prefer (gas, propane, electric, or solar), and also the location of the house. 

Do you want to know the cost to replace a water heater? Try our estimator tool.

In this water heater installation cost guide, we will break down the total expenditure into these factors in order to help you make informed decisions for your home renovation.

Check our guide on ways to repurpose your old water heater.

Water heater installation cost factors

  • System size: whole house systems vs single point systems

A whole-house heating system supplies hot water to the entire house and hence requires more power to run, and a larger area to operate. Such a system is more expensive than single-point systems that are installed to provide hot water to a particular area or room.

Let’s take an example of a 1,500 square foot home. Here, a whole-house system averages at $600 to $800 while a single-point system ranges between $200 and $400

Furthermore, the latter tends to be more efficient because the water doesn’t have to travel as far through long pipes — giving it a smaller chance of heating unnecessary water and losing heat.

How to Select A Quality Bathroom Heater? Take a look at our guide.

  • Types of heater: tank vs tankless systems

tankless water heater

Tankless heaters, also known as instant heaters, only heat water as and when required. Therefore, are more energy efficient. However, these heaters tend to be much more expensive than the tank heaters. 

If the installation of a tank system costs $600, a tankless heating system starts at $ 1,200. Also, such heaters are more difficult to service. For instance, the installation of a tankless gas heater might go as high as $2,500 because the process is more tedious and time-consuming.

You might have energy savings averaging $70-$80 a year, but the initial high cost is not easy to bear for most homeowners. Another downside is that a tankless heater isn’t the perfect choice for bigger families. If you require hot water for different tasks at the same time, for instance, washing dishes while doing the laundry — a tank heater will serve you better.

Tank water heaters, on the other hand, have a reserve of hot water. They are much cheaper to install and maintain. Tank water heaters also tend to provide hot water more quickly than tankless ones. However, the costs to run such heaters might be very high. 

Whether tank or tankless water heaters, whole house or single point, you may find the following water heater options for your home:

  1. Natural gas heater (40 gallons): $500-$700
  2. Propane heater (40 gallons): $700-$900
  3. Electric heater: $350-$550
  4. Solar heater: $6,000-$17,000

Read more: Types of water heaters

  • Scope of installation

Your water heater installation cost also varies on the kind of work you have in mind. If you want a regular gas storage tank or are just replacing your old one with a new model, the installation is fairly easy. You should expect to pay about $300-450 for it.

If you have a tank unit and want to switch to a tankless gas heater, you should be prepared to spend $1,500-3,5000 for labor. The reason is that you will also have to factor in additional labor such as retrofitting the existing gas line or putting in a new line, installing a proper venting system, hiring an electrician for additional electrical wiring. 

Similarly, if you are installing an electric tankless device, an electrician will have to rewire and upgrading your home’s existing electrical panel to at least 200 amps in order to handle the high power usage from the heater.

On average, this will cost an extra $1,000-1,500 — going as high as 3,000

  • Capacity or size of water heater

The size of a water heater has a direct impact on its cost and installation. The bigger the tank, the higher the price. The size you choose depends on how much hot water you use. Some people like 30-minute showers and long baths, while others are in and out in 5 minutes. 

How to choose the right size for your water heater?

Here is an easy way to select your tank water heater as per your requirements:

  • 30 gallons tank — one to two people in the house
  • 40 gallons tank — two to three people
  • 50-60 gallons tank — three to four people
  • 60-80-gallon electric system or a 50-gallon natural gas or propane — more than four people

The difference between a 40 and a 50 gallons heater is about $150-$250, while the difference between a 50 and a 75 gallons heater can be as high as $400-$600. Needless to say, 100 gallons tanks are very expensive. In fact, they are often double or triple the cost of a 50-gallon tank of the same brand.

Read more: Hot water heater financing for good & bad credit

  • Location of the house

Contractors’ rates vary depending on where you live. In most expensive cities such as Boston, San Francisco, New York, Miami, etc., a homeowner must be prepared to shell out 15-25% more for labor as compared to areas with lower incomes.

  • Labor

Licensed plumbers typically charge $45-$65 per hour. A heater is installed in six to eight hours– making the total labor cost $260-$530. Water heaters that are difficult to access or that are in tight enclosures can take an extra two to three hours to install or $90-$195 more.

Planning for water heater replacement? Get the best estimate with our tool!

  • Requirements for a water heater expansion tank 

If you have a closed water supply system, having a water heater expansion tank is necessary. You don’t want your heated water to burst your tank, do you? When the water in your tank gets heated, there is thermal expansion. As a result, pressure builds up, and this water needs somewhere to escape. An expansion tank comes handy here.

In an open system, the water will simply flow into the city’s water supply so there is no hazard to the safety of the house. 

  • Hiring professionals or a DIY project 

We strongly recommend paying for professional installation, as opposed to doing it yourself. Dealing with gas and electricity can be very dangerous. For instance, when it comes to electric water heaters — you are dealing with 240 volts of electricity. Even in a gas water heater, a leaking gas could mean catastrophic damage to the house or its occupants. A risk best avoided.

A qualified person will make sure that all of the safety features are in place, and that the heater (whether running on solar power, propane, gas, or electricity) is installed to the current local plumbing code. 

When you are clueless about heater installation cost, it’s best to get estimates from three to four local professionals, conduct your own research online, or ask your neighbors for a clear idea. If you have done your research, chances are, the plumber will ask for a fair price. 

You can always find out the approximate water heater installation cost through a reliable estimator.

Improvement or enhancement costs

solar water heater

Back-up heating system

If you have a solar heater, you may need a backup hot water system for days when there’s not enough sunlight to work with. A standard backup system costs about $200-$300.

Flat plate solar collectors

Heating a swimming pool, for instance, requires larger heating systems. In such a case, flat plate solar collectors are the perfect choice for collecting more heat. Their cost starts at $7,000.

Energy-efficient water heaters

A water heater with an energy-efficient label costs 10%-20% more than ordinary water heaters. If energy efficiency is important to you —  be prepared for the extra cost.

Other cost considerations

  • You can save money if you purchase the water heater yourself instead of buying a package deal of the water heater and installation services.
  • The cost to replace a water heater and dispose of it may add up to $500 to the overall cost.
  • If you require new piping for the water heater installation — the pipes will cost you $8-$10 per linear foot.
  • In case a permit is required in your area for a new water heater, especially if you are changing your entire heating system — be sure to check with your contractor or plumber for a clarity. You need to factor in its cost too. 

Signs that you need a new water heater or must call a plumber

  • Leakage around the water heater tank may mean serious internal damage.
  • If the water temperature is not as hot as it used to be.
  • The color of the water coming through the heater is rusty or smells.
  • If your device is making loud crackling sounds.

Read more: Tankless water heater maintenance


Having a functional water heater is important for every household — keeping the daily routine organized and convenient.

If your water heater is more than 10 years old, maybe you shouldn’t wait for it to leak or break before replacing it. And, if you’re contemplating installing one, our water heater installation cost guide will help you get better clarity for your home improvement.  

A Comprehensive Water Heater Installation Cost Guide was last modified: August 29th, 2022 by Ramona Sinha
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Great article. Thank you for share this step by step instruction about water heater installation.

Stefan Bradley
Stefan Bradley

Thank you for mentioning that the location of your house might affect how much your water heater installation will cost. My wife and I just inherited some property from her aunt, and we are looking into installing a water heater. We will look for a service that offers installations at a reasonable price.