Water Heater Pricing

When purchasing a new water heater, homeowners can expect to pay about a thousand dollars for the cost of the equipment and installation. However, there are ways to reduce this cost and it’s possible to reduce that cost to a couple hundred dollars.

Equipment Cost

A new water heater should cost anywhere between one hundred and one thousand dollars. Most products fall on the lower end of this range though: somewhere around three hundred dollars.

There are a few features that can affect the initial cost of the unit:

  • Capacity: Larger heaters will use more energy (to heat more water), but offer more water on reserve for times when the shower is in use and dishes are being washed. Residential water heaters range in capacity from about 20 to 80 gallons, with the average between 30 and 40 gallons.
  • Rate: Different heaters can refill themselves at different speeds. Needs may vary, depending on whether a household tends to use hot water in concentrated bursts.
  • Warranty: A water heater with a longer warranty typically costs more. This corresponds partly to the value of the warranty itself, and partly to the claim that the warranty makes about the likely longevity of the product: better products have longer warranties because the company believes they will last longer. A warranty can be very useful, so conditions of the warranty should be reviewed carefully. It can also be useful to read online about other people’s experience with the same product.
  • Features: Different companies advertise a variety of different features that contribute to the lifespan or flow rate of their water heaters. For example, the interior tank might be lined with glass or some other anti-corrosive material. Ultimately, the length of the warranty may be the best indicator of a unit’s lifespan.


Installation costs can vary widely, and many people report being overcharged for water heater installation. Only a few hours of labor are required to set up a water heater. Maintenance and installation costs increase significantly when performed on weekend days.

Many homeowners successfully install their own hot water heaters, usually without incident. The process involves removing the old unit, connecting the new one to water (input and output) and then to power. It’s important to know the steps involved before undertaking the work. Some warranties are voided when homeowners install units themselves.

Find a Certified Heating & Cooling Professional In Your Area

Contact a top-rated local expert to help with all of your home’s HVAC needs.


Energy efficiency can have a large impact on the cost of your water heater. More efficient heaters tend to be more expensive upfront, but may save money in the long run. According to the US Department of Energy, water heating represents between 14% and 25% of the overall energy consumed by a household.

There are many different ways to achieve energy efficiency in water heating. Many people opt to change the source of fuel for their heater — for example, by installing a separate array of solar panels connected specifically to the unit. Replacing an old oil heater with a gas heater also constitutes an improvement.

Another option is a special tankless water heater that heats water on demand rather than heating up a reserve. This option will indeed save energy, but has some drawbacks. The parts are more complicated, and so the unit may require more maintenance; additionally, the maximum output volume is usually lower. There are a few different variations on this type of heater, with different capacities and outputs. If you are getting a non-traditional heater, you should make sure you know how much water you’re going to get out of it.

Careful installation and maintenance also contribute to a water heater’s efficiency.

Tax Credit

The US government offers tax credits for water heaters that meet certain efficiency standards. Purchasing a traditional water heater (powered by fossil fuel or by electricity) that meets the government’s standards qualifies homeowners for a $300 credit when you do your taxes next year. The threshold is 90% thermal efficiency; that is, 90% of the energy that goes in to the heater should end up as thermal energy within the water. This credit is in effect for 2011.

Solar water heaters receive a tax credit worth 30% of their overall cost (including installation cost) with no upper limit. This credit remains in effect through 2016. The initial cost of solar panels is much higher: materials and installation will cost several thousand dollars. However, solar panels can save large amounts of money over the course of a decade. If everything works properly with a solar water heater system, monthly energy costs for hot water will go down to zero.

Best Heating & Cooling Products

See ratings and reviews for the best in furnaces, air conditioners, heat pumps, boilers and more.

HVAC Brands

Learn more about your home's heating and cooling system with our guides, how-to's, FAQ's, tips and more.

Trane American Standard Lennox Carrier Goodman

Ready to get a quote from an HVAC contractor?

Let us know what type of service you need and we can connect you with a certified local HVAC contractor.

Please enter a valid name

Please enter a valid phone number

Please enter a valid zip code

Please enter a valid email address

Please select repair or replace

Please select heating, cooling or both