water heaterLandlords and Home Owners–get ready to open your wallet deeper if you need to replace that Hot Water Heater.

All water heaters available for purchase after April 16, 2015 will be taller and wider than prior models in order to achieve the required efficiency ratings ordered by The Department of Energy (DOE) back in 2010.  The law is now in effect.

Most manufacturers report that the retail price will increase 25%.

But that’s not the only cost you could be incurring.  The new sizes of the tanks will make replacement a logistical challenge in tight spaces.  It may require reframing a utility room, doors, and HVAC run changes.

So be prepared for the new costs and inconveniences, swallow hard, and realize there is not a dag nabbit thing you can do except stomp your feet and pay up.

So, how much is it going to cost?

On average, the cost to replace a water heater is $1,200, including the price of the new unit and labor. At the low end, bargain hunters can get it done for as little as $815. High-end systems can cost up to $10,000 or more, depending on the water heater type, location of the installation and other variables that we’ll explore just ahead.

If you’re thinking about buying a propane tankless water heater, you may be overwhelmed by the choices. We created a top-five list here based on factors like pricing, customer rating, max GPM, heating capacity (BTUs) and Energy Star certification.

Hot Water Heater Installation Prices

Replacing a water heater involves a range of variables that affect the final project cost, beginning with the size and type of unit.

Tank vs. Tankless

Tank-type water heaters have been the industry standard for more than a century. They store the hot water in 30 to 80-gallon tanks. This style represents more than 85 percent of all household water heaters in the United States. Tank-style hot water heater installations average between $650 and $2,100, including the new water heater, materials and labor. They run on electricity, gas, propane or fuel oil, and last 10 to 12 years.

In the past few decades, tankless water heaters have proven to be highly efficient. They provide an unlimited supply of hot water on demand by heating it as it flows through the waterline, rather than storing hot water and burning energy to keep it hot. Tankless water heaters run between $1,000 and $3,500 installed. They can be powered by gas, or electricity and often last longer than 20 years.

Tank Size or Tankless Water Heating Capacity

The size of the water heater also plays into the cost. Tank-style heaters range in size from 20 to more than 80 gallons of storage, with most homes using either a 40 or 50-gallon size. Tankless water heater size is measured in a flow rating of between two- and six gallons-per-minute (gpm). A higher flow rate of four- to six-gpm is recommended for most homes.

Be sure to choose a new unit that will supply enough hot water for the number of individuals in the house. The average prices shown below reflect the unit price only, not including labor or additional costs.

Number Of PeopleTank PriceTankless Price
1 to 2 people20 to 30 gallon tank, $270 to $9002 to 3 gpm tankless, $250 to $600
3 to 4 people30 to 50 gallon tank, $320 to $2,2003 to 5 gpm tankless, $400 to $700
5 or more50-plus gallon tank, $400 to $3,0006+ gpm tankless, $500 to $900

Gas vs. Electric

Water heaters are powered by either gas (natural gas or propane) or electricity. Heat is delivered either by a gas flame or an electric coil. Electric water heaters cost $100 to $200 less than gas water heaters.

However, due to the higher cost of electricity and lower cost of natural gas and propane in much of the country, gas water heaters are often more affordable over the life of the unit. Electric water heaters are still a great choice for small or confined locations because they do not require venting.

Direct Vent vs. Power Vent

Gas water heaters produce exhaust that must be discharged either directly overhead through a vent flue, or by a power vent blower. Direct vent water heaters discharge exhaust through a flue pipe above the unit. If you replace an electric water heater with a direct vent gas model, expect to pay an additional $500 to $1,000 to install the vent pipe.

Power vent water heaters use a fan to force exhaust out through vent pipes. They can discharge exhaust horizontally or vertically, utilizing inexpensive PVC pipe instead of more expensive metal flue pipe. This system offers more flexibility in locating the unit compared with a direct vent model, and it is more energy-efficient. Power venting units cost $300 to $600 more than direct vent units, and the wiring and electrical work adds another $300 to $500 to the installation cost.

Labor Cost to Install a Hot Water Heater

In addition to the price of the unit, a major portion of the installation cost is the labor charge. Labor costs could be as low as $150 or up to $1,000 or more. They vary based on the installer’s hourly rate, the size and type of water heater and the location of the installation.

Cost Per Hour

Plumbers can perform most of the work of installing gas or electric water heaters. Their labor rates range between $45 and $150 per hour. If the job includes major electrical work, such as adding a new circuit or converting from gas to electric, you’ll also need to hire an electrician at $50 to $100 per hour.

Average Hours Per Water Heater Type

Tank type water heaters, both gas and electric, typically take three hours to replace. Installing a tankless water heater requires eight to 10 hours. If you are converting from gas to electric, or vice versa, or if you are moving the water heater to a new location in the house, these can add significantly to the length of the job and may even require additional types of labor, such as carpenters or drywall installers.

Additional Water Heater Replacement Cost Factors

Beyond the price of the appliance and the installer’s labor, other costs may be involved in replacing a water heater. These could include permit fees, installation of an expansion tank, removal and disposal of the old water heater, installation of water or gas lines, electrical or carpentry work and materials costs.


Most jurisdictions require a plumbing permit to replace a hot water heater. The permit is required so that an inspection can be done to ensure the work was performed according to current safety and quality standards. Multiple permits may be required, depending on the project details, with total permit costs between $50 and $500, and possibly as high as $1,500.

Expansion Tank

An expansion tank is a safety system that prevents pipes from bursting in the event that the water heater’s tank fails. Many older homes do not have them, but in many places building codes require that one be installed when water heaters are replaced. Installation of a new expansion tank will cost $40 to $350.

Tank Removal

Before the new tank can go in, the old one must come out. Removal of the old tank will cost $100 to $500, depending on the contractor’s rate, size of the tank and ease of access. If it’s big and hard to remove, expect to pay more.

Relocating the Unit or Fuel Conversion

Moving a water heater to a new location in the house, changing from one fuel type to another, and even upgrading to a larger tank could add significantly to the cost of installation. You may need to reroute a water line ($350 to $1,700), frame a wall ($200 to $400), install drywall ($800 to $2,500), add a gas line ($250 to $800) or extend electrical wiring ($500 to $1,500). Consult your installer if you are considering anything more than an exact replacement.


Replacing a water heater requires additional incidental materials such as solder and pipe thread compound, and possibly other items like venting pipes, connectors, water or gas piping, pipe fittings and more. Depending on the project details, these items may be anywhere from minor to significant added costs.

Replacing a water heater is not a DIY project, and runs a bit more expensive than other appliances. The good news is that it’s a once in a decade project that you can plan for. Installation involves a variety of different variables including the price of the water heater and materials, permitting, labor of a licensed plumber, removal of the old unit, ease of access and other variables that may increase the time it takes to finish the job.

At Polaris Property Management, we have a team of experts that can help the landlord with this tasks.  Contact us today for more information