How Much Does It Cost to Replace a Water Heater?

Water heaters are important as the source of all hot water for bathing, clothes washing, dishwashers, and cooking. It is time to replace a water heater when it has reached the end of its lifespan or when it is no longer functioning properly. The average cost of replacing a water heater ranges from $848 to $1,709. Labor costs for water heater replacement projects range from $45 to $150 per hour.

Water heater replacement costs are variable and depend on factors like the type of water heater, fuel source, and tank volume. New gas lines or tankless models will increase the project cost. 

Water Heater Replacement Cost by Type

Tank vs. Tankless

When replacing a water heater, you'll need to decide whether you want a tank water heater or a tankless water heater. The average cost to replace a tank water heater ranges from $975 to $2,400, for an average cost of $1,700. The average cost to replace a tankless water heater begins at $1,200, with a high cost of $4,250, for an average of $2,750.

Tank, or storage tank, water heaters centralize water-heating operations in one place, like a storage cabinet, pantry, garage, or basement. Cold water is heated by a gas flame or an electric heating coil, both located at the base of the tank. Storage tank water heaters are expected to last about 10 to 15 years. 

Tankless water heaters heat water on demand. There is no storage tank. Turning on the hot water faucet activates the tankless water heater. Gas or electricity heats the water to deliver a constant flow of hot water. Though the flow is steady, the output rate is less than with storage tank water heaters. Tankless water heaters are expected to last 20 years or more.

Gas and Electric Heaters

Most water heaters are fueled either with natural gas or with electricity. Both fuel sources have their advantages and disadvantages, but usually the choice is determined by the type of fuel that the existing water heater uses. Gas water heaters cost between $600 and $2,700 to replace, for an average cost of about $1,650. Electric water heaters cost between $600 and $3,500 to replace, for an average cost of about $2,100.

Gas water heaters burn municipal natural gas at the base of the storage tank or within the tankless unit. Uncombusted gasses must be vented for safety. At a cost of around $30 per month, gas water heaters are less expensive to operate than electric water heaters.

Electric water heaters use a heating element at the base of the tank, powered by a 240-volt dedicated circuit on a 30-amp double-pole breaker. Electric water heaters are clean, and neither tank-style nor tankless water heaters require venting. This makes electric water heaters ideal for apartments, condos, or any residence where venting to the exterior is an issue. Electric water heaters cost an average of $42 per month to operate.

Water Heater Size

The water volume of the water heater directly impacts the cost of water heater replacement. Water heaters are rated by capacity in gallons. Larger-volume water heaters generally are more expensive than smaller water heaters. Price differences between capacity tiers range from $50 to $100.

Water heaters range in capacity from 10 gallons to 120 gallons. Water heaters at the extreme ends (10, 20, 100, and 120) are for specialty or commercial use. Most water heaters are either 40 gallons or 50 gallons.

Smaller homes are best served with a 40-gallon water heater and medium or large homes usually need a 50-gallon water heater. Homes with many residents may need an 80-gallon water heater. Thirty-gallon water heaters are sized right for households with two to three residents or where the shorter lowboy tank size is needed for smaller mechanicals closets.

• 30-gallon capacity: $400 to $800
• 40-gallon capacity: $450 to $1,250
• 50-gallon capacity: $550 to $1,600
• 80-gallon capacity: $1,250 to $2,250

Labor Costs

A plumbing company or water heater specialist will quote a single flat price for the water heater replacement. This price typically will include the water heater, delivery of the heater, installation by a local licensed and insured plumber, hauling and disposal of the old water heater, and all required permits.

If you decide to replace your own water heater, you may want to hire professionals for some aspects of the project. Plumbers and electricians charge by the hour.

• Plumber hourly rate: $125 to $350 per hour, for an average hourly rate of $250
• Electrician hourly rate: $45 to $135 per hour, for an average hourly rate of $90

DIY vs. Professional Installation

You may be able to install your own water heater if you have the appropriate experience with plumbing, gas, and electrical systems, but replacing a water heater is not a simple DIY job . Water heater installation is a multi-trade project that includes plumbing, gas or electrical, venting, hauling of old water heaters, light carpentry for securing the heater, and permitting and inspection.

Water heaters must be installed correctly to avoid the risk of fire, explosion, or carbon monoxide poisoning. Gas water heaters must be plumbed (both water and gas) and must be properly vented. Electric water heaters pose the risk of shock. All water heaters need to be strapped down.

Most homeowners decide to have a professional install the water heater. Call a qualified plumber or a combined plumbing/heating/air company for water heater replacement. Some companies specialize in water heater installation and maintenance. They still should hold plumber's and electrician's licenses or should be able to contract out the work to subcontractors. So, always check for licenses and make sure that they are current.