How Much Does It Cost to Replace a Hot Water Heater?

A hot water heater is an essential home appliance that lasts an average of 8 to 12 years before it needs to be replaced. However, the life span can vary widely depending on appliance type, capacity, energy source, and maintenance schedule.

So, how much does it cost to replace a water heater? The total price for each household depends on the type and size of the heater, fuel source, labor costs, the location of the water heater, and permits and inspections. Here’s what you need to know to determine how much it costs to replace a water heater, including important pricing factors and money-saving tips.

Hot Water Heater Replacement Costs

“The average cost for a water heater replacement ranges from $600 to $3,500, with tank-style water heaters priced between $600 to $2,500, and tankless water heaters from $1,200 to $3,500,” says Danny Margagliano, a real estate agent and co-owner of a home improvement website. However, additional expenses may include permits, labor, and additional venting systems needed for proper installation.

Several factors influence the replacement costs of water heaters. The critical cost components include:

Type of Water Heater

The two major types of water heaters are tank and tankless, and both have their pros and cons. For example, a tank-style water heater is a traditional option. It stores anywhere from 20 to 100 gallons at a time and constantly heats the water, even when it’s not in use. These typically cost between $600–$2,500 to replace.

Tankless water heaters don’t have a water storage tank and provide warm water on demand. They are efficient because they only heat water when you need it, but it can take a few minutes for the water to reach the desired high temperature. These are ideal for compact spaces. However, high-end tankless models can cost twice as much as conventional tank-style water heaters. Tankless water heaters typically cost between $1,200–$3,500 to replace.

Water Heater Size

The size of a tank-style water heater is measured in gallons, while the tankless type is measured in gallons per minute. The larger the tank or the more gallons per minute, the higher the cost. The appropriate water heater size for your home depends on the number of people in your household and the demand for hot water. For example, for a three-person household, a 40–50 gallon tank or a 3-5 gallons per minute tankless model would be ideal.

Fuel Source

Different fuel sources for water heaters include electricity, natural gas, propane, and solar power. Installing electric, natural gas, or propane water heaters may range between $600 and $3,500. Solar water heaters generally cost between $1,700 and $5,000, but the final cost can go as high as $13,000+ for large homes.

If you plan to switch between gas and electric models, it may cost an additional $300–$1,500 to install gas lines or $500–$1,000 for electric lines.

Ventilation System

While electric water heaters typically don’t need venting, gas or propane ones do. The two types of venting systems are direct and power. Direct vent heaters use an exhaust pipe or chimney to exhaust gas directly outside your home. Power vent heaters use a fan or blower. “Venting system installations cost an additional $300 to $600,” estimates Margagliano.

Parts and Materials

Replacing a water heater includes minor items you may not have considered, such as discharge pipes, pressure release valves, and connectors. If you convert from tank-style to tankless or from electric to gas, more materials and parts may be needed to get the job done.

Labor

Labor costs for water heater replacement range from $50 to $150 per hour. “Labor accounts for 50 percent of the budget,” Margagliano says. The labor costs vary based on the scope of work, the time needed to complete the job, where you live, and the installer’s experience level. Experienced contractors tend to charge more.

Another consideration is the location of the water heater in your home. If it is located in a hard-to-reach place, like a tight closet, crawl space, or basement, the labor costs will be higher because of the skill and time needed to complete the replacement job. Other expenses could include the removal and disposal of an old water heater, additional handy work (drywall installations, wall framing, new gas line installation), and expansion tank installation.

Permits and Inspection

Some local building codes require homeowners to get permits before replacing water heaters. These can be as little as $25 in some places, but expect a bigger bill when switching between fuel sources. Many municipalities require verification from a city building inspector to ensure the installation was done correctly.

Tips for Saving on a Water Heater Replacement

One way to save costs is to replace your old model with the same type of water heater. Another is to choose a brand that gives you value for money. For example, opt for a mid-range model with the same features instead of a high-end brand with more bells and whistles you may not use. Also, research deals and discounts from the manufacturer and retailer. Last, think about utility efficiency. Some models are more energy- or water-efficient, so they may be worth a higher upfront cost.

What to Consider Before Replacing a Water Heater

Trying to get the most you can from your current water heater makes sense. Repairs usually cost less than replacement. So, if your model is less than ten years old, you may want to invest in minor repairs and maintenance to prolong the life of your existing model. For example, if your area is prone to hard water, try a water softener and replace any internal rods that might have been damaged. This may give you a few more years of life on your current model while you save up for the eventual replacement.

Before buying a one-for-one replacement, seek help from a professional to determine the appropriate heater type, capacity, unit size, and ideal fuel source for your current needs. New heaters may offer efficiencies that were not available when you bought the last one.

This article was written by Nafeesah Allen from Better Homes and Gardens and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.