How much should installing a new water heater cost?

If you notice your showers are becoming shorter and shorter due to a lack of hot water from the water heater, it's likely you've asked yourself this question.

According to highly rated plumbing companies Angie’s List spoke with, the average lifespan of a traditional tank-style natural gas water heater or electric water heater is only eight to 12 years, making a water heater replacement one of the most common home improvement investments.

So how much should it cost? According to the pros, the actual costs to install a new hot water heater, whether it’s a conventional unit or a more energy-efficient tankless water heater, are highly variable.

Every installation differs

“It can cost anywhere from $700 to $2,000 to install a water heater,” says Jason Hanleybrown, CEO of Fast Water Heater Co. a highly rated water heater installation company with headquarters in Kirkland, Wash., and six locations throughout California and the Pacific Northwest.

Mary Geiger, operations manager for highly rated All About the Pipes Plumbing in Charlotte, N.C., explains it’s hard to provide a reasonable estimate without seeing the water heater installation site first.

“The cost depends on the type of installation and that's unique to each individual project,” she says. “It depends on what type of unit the customers currently have, what they’re replacing it with and what has to change to bring the installation up to current code.”

She adds that for her part of the country, most customers choose 50-gallon natural gas water heaters, which can range from $900 to $1,700 installed.

It pays to hire a professional

“You’re getting a licensed, qualified individual who’s going to install the water heater correctly, make sure all the safety features are in place and that it’s installed to the current local plumbing code,” says Chuck Sauro, a master plumber and manager at highly rated A.B. May Co. in Leawood, Kansas.

Steve Hyde, general manager for highly rated Washington Water Heaters, echoes that sentiment. “Installing a water heater is dangerous and we encounter improperly installed water heaters on a daily basis,” he says.

“On electric water heater installations, you’re dealing with 240 volts of electricity," Hyde notes. "On a gas water heater, if a gas leaks occurs and it’s not corrected, it could result in catastrophic damage to the house or its occupants.”

Other considerations when installing a water heater include making sure the unit is adequately plumbed, including installing it with enough clearance and ensuring drip pans are equipped, if needed.

Hanleybrown says one of the most important elements for gas-fired tank water heaters or tankless water heaters is ensuring the units are properly vented to prevent exposure to carbon monoxide gases produced by combusted fuel.

According to the Centers for Disease Control, unintentional carbon monoxide poisoning causes 400 deaths each year and 20,000 visits the emergency room.

Hiring a licensed plumber with experience in water heater installation - including how to properly vent exhaust gases - and one who pulls a permit, if required, are safety measures every homeowner should take when installing a water heater, Hanleybrown says.

“Because of the carbon monoxide issue, we say people should always question anyone who is not pulling a permit,” he says.

Investing in energy efficiency

If you plan on investing in higher energy efficiency by installing an on-demand or tankless water heater, expect to pay more for its purchase and installation, water heater experts say.

“For an on-demand gas unit, the average price will be in the $3,200-$4,500 range,” Hyde says. Geiger estimates tankless water heater installations start in the low- to mid-$3,000 price range and Sauro estimates the price starts at $2,800 to $3,800.

Installing a tankless water heater takes much longer, a full eight to 10 hours versus the two to three hours a traditional water heater installation takes. And it’s something only professionals should attempt.

This is due to the a number of factors, including the need to install a dedicated gas line that can supply large amounts of gas when the unit is in use, electrical work that may be necessary and special venting requirements, Hyde says.

Editor’s note: The inspiration for this article originated with a reader’s question on Angie’s List Answers, where consumers can find answers to their questions about home improvement, health and auto repair. Have a question you need answered? Just ask.