Tankless water heater installation costs $800 to $3,500 on average, depending on the brand, fuel source, flow rate, and labor rates. Tankless hot water heater prices are $300 to $2,100 for a gas or electric on-demand system, plus $300 to $2,500 for installation labor.

Tankless water heaters save $40 to $200 per year on energy costs and are 8% to 34% more energy-efficient than traditional water heaters.

Tankless water heaters last 10 to 20 years on average. In comparison, traditional tank water heaters last 8 to 15 years on average.

A tankless water heater is worth it for homeowners who want an endless hot water supply and increased home value. Tankless water heaters are more energy-efficient and save $40 to $200 per year on energy costs, but cost more to install. Most homeowners see a total return on their investment after 20 years.

Tankless water heater installation takes 3 to 10 hours for a new install or 2 to 4 hours to replace an existing tankless unit. New tankless water heater installs require upgraded gas supply lines, new venting, and a new electrical outlet.

Plumbing companies install gas and electric tankless water heaters. Home Depot and Lowe's also offer tankless water heater installation through their network of licensed plumbers.

A tankless water heater provides hot water on demand, heating water only when needed rather than continuously using fuel to heat water in a storage tank. When a hot water tap is turned on, cold water travels through the heat exchanger in the tankless unit and is warmed instantly.

• Whole-house tankless systems deliver hot water to all the fixtures and appliances throughout the home.
• Point-of-use tankless models are smaller units designed to provide hot water to a single fixture or appliance.

Plumbers can install tankless water heaters on inside or outside walls, including utility rooms, attics, garages, or basements. Tankless water heaters can also be installed in place of an old tank water heater if the area provides enough combustion air. Tankless units installed outside can freeze and needs protection from the weather, direct sunlight, rain, and bugs.

Signs a water heater is going out:

• Rusty, discolored, or metallic-tasting water
• Loud clanging, knocking, gurgling, or whining noises
• Hot water that runs out quickly
• Low water pressure
• Foul odor coming from hot water
• Low or irregular water temperature, or no hot water at all
• Leaks at the base of the tank or around the pipes at the top of the tank

A tankless water heater does not work without electricity. Natural gas and propane tankless water heaters need electricity to operate the internal PC board, ignition, and thermostat.

Gas tankless water heaters have many advantages over electric on-demand systems.

Gas tankless systems are:

• More energy-efficient and saves $150 to $300 in annual operating costs
• Warranty lasts up to 5 years longer
• Provides a higher gallons-per-minute (GPM)
• Most gas units are eligible for a $300 federal tax credit

Electric tankless water heaters are:

• Cheaper to install
• Easier to repair

Finding reputable contractors requires planning, researching, and asking questions. To hire the best:

• Get at least three estimates from plumbers to compare.
• Look for plumbers with experience installing tankless water heaters.
• Select companies that are licensed, insured, and bonded.
• Check out their reviews and previous work on HomeGuide and Google.
• Make sure the quote includes removal of the old water heater.
• Ask about their guarantees.
• Get an itemized estimate, contract, and warranty in writing before the work begins.
• Avoid making payments upfront. Pay after installation is completed.

When looking to hire a plumber near you, ask them the following questions:

• Which type of water heater do you have the most experience installing?
• What flow rate and temperature rise should my tankless water heater be able to handle?
• Would a gas, propane, or electric tankless water heater be best for my home, and why?
• Which tankless water heater brands do you offer, and why do you recommend those brands?
• Are there any manufacturer rebates available?
• Does your estimate include removing and disposing of the old water heater? If not, how much extra will that cost?
• What additional costs should I expect?
• What permits do I need, and will you obtain them?
• How long will the installation take?
• How long is the warranty, and what does it cover?
• How long will the water heater last, and what can I do to make it last longer?
• What kind of maintenance will my new tankless water heater require?
• What payment methods do you accept?
• What do I need to provide to get started?