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Last Revised: 10/15/25
Is your water heater on its last leg, and you’re not sure how much replacing it will cost? Have you been putting the job off for months, or even years?
You might rarely think about that big cylinder thing in your basement, but water heaters have a big impact on your everyday household. The quality of your showers, dishwashers and washing machines are a result of the type and condition of your water heater.
When it’s time to replace yours, you may feel unprepared for the the investment decision, which is why taking some time to learn about your options – and clarify budgeting expectations – is essential to making the right call for your home.
Mattioni has helped homeowners through the water heater replacement process for over 75 years, and while it’s challenging to provide an exact price, understanding how a few factors sway costs up or down can go a long way in choosing a system that best fits your home’s hot water needs – without overspending.
In this article, we’ll walk you through the 9 factors that influence water heater costs and why each of them matters. After reading, you’ll be prepared to make a water heater selection that fits your budget and matches your needs.
What 9 Factors Influence Water Heater Installation Costs?
Here are the 9 variables that factor into your total cost of installing a new water heater:
1. Choosing Which Type of Water Heater to Install
The most significant cost factor is which type of water heater you choose to install. Each type of water heater comes with its own price range, functional advantages, and functional disadvantages. Here are the big three:
Standard Tank Type Water Heaters
Standard Tank Type Water Heaters typically cost between $2,400 and $6,000. They’re the most common type and are typically the most affordable option. They’re less efficient than Tankless and Hybrid Water Heaters, meaning you’ll pay a bit more on monthly utility bills.
Heat Pump (Hybrid) Water Heaters
Heat Pump Water Heaters (commonly called Hybrid Water Heaters) typically cost between $5,800 and $6,400 (50 gallon) or $8,000 to $8,600 (75 gallon). Rather that fuel combustion, they use electricity and refrigerant to move heat from ambient indoor air to heat water, making them incredibly efficient. Heat Pump Water Heaters are a relatively new option that’s gaining popularity and are expected to become commonplace in the future – and here’s why:
Their top-of-class energy efficiency means more money is put back in your pocket, without any drop in quality. While they’re more expensive than Standard Tank Type Water Heaters, they’re also slightly less expensive than Tankless models. With proper maintenance, Hybrid Water Heaters typically last 12-15 years and are considered by many master plumbers to be the superior option of the three.
Hybrid Water Heaters do require access to your basement’s air supply (meaning they can’t be tucked away in a closet or in your attic), which is a minor drawback considering the long-term cost savings they offer.
Tankless Water Heaters
Tankless Water Heaters typically cost between $5,500 and $7,000. They’re a more expensive option, but are known for several key benefits: their high energy efficiency, endless hot water supply, and small spatial footprint.
Tankless Water heaters are between 96-97% efficient, meaning they’ll also give you ongoing savings on utility bills if you’re switching from a Standard Tank Type Water Heater.
They require a gas fuel source, so you’ll have to rely on either propane or natural gas, which can add costs if you’re converting from oil. Tankless Water Heaters can last 15-18 years with annual maintenance.
2. Which Tank Size & Tank Material is Right for You?
For Standard Tank Type and Heat Pump (Hybrid) Water Heaters, the size of the tank directly impact costs.
- 10-gallon tanks are typically ideal for things like under-sink units or point of use applications.
- 30-gallon tanks serve smaller homes or homes with lower hot water demands.
- 40-gallon and 50-gallon tanks are standard for more homes, including family homes.
- 60-gallon to 100-gallon tanks are found in some homes with large square footage, large families, or specific hot water needs.
When evaluating tank sizes, be sure to consider that you can rely on about 70% of the tank for quality hot water at one time, as cold water begins to mix in the tank after you turn on your hot water. At Mattioni, we primarily install either 50 or 75 gallon Tank Type Water Heaters.
The tank’s material also affects the cost and longevity of a water heater.
- Steel Tank: Standard, durable, and commonplace, though they are potentially prone to corrosion over time. Expected lifespan of 10 years with proper maintenance.
- Plastic Tank: Corrosion-resistant, lighter, and often more expensive than steel tanks. Expected lifespan of 20 years with proper maintenance. Many plastic tank units (like the Rheem Marathon) include a lifetime warranty, meaning you’ll never pay for a water heater again.
3. How Flow Rate Affects Tankless Water Heater Costs
When it comes to Tankless Water Heaters, system size is measured by flow rate instead of tank size. Flow rate is measured in gallons per minute (GPM), with higher GPM Tankless models coming at a higher installation cost.
It’s important to understand that while Tankless Water Heaters provide endless hot water, they don’t supply unlimited hot water. It’s smart to have a detailed conversation with a certified plumber about your household’s water demand so that you choose a Tankless Water Heater with the appropriate flow rate.
In other words, if you simultaneously have more than two hot showers, your washing machine, and dishwasher all running at the same time, you could potentially run into a drop off in hot water quality, but we’ve found that this almost never happens.
4. Choosing a Fuel Type for Your Water Heater
The fuel source used to power your water heater is a significant variable, as it affects not just installation costs, but also the long-term operational savings you’ll see from your system.
Oil Water Heaters
Oil-based Water Heaters are becoming less common as they require more regular maintenance and offer lower efficiency levels. They’re also less affordable, however they do support higher levels of hot water demand compared to some options. In other words, they recover hot water faster, but you’ll pay more on utilities.
Gas Water Heaters
Gas-based Water Heaters (both propane and natural gas) typically cost less than oil systems and hybrid systems.
For Mattioni Members, Standard Tank Type Natural Gas & Propane Water Heaters typically cost between $3,200 and $4,800 (50 gallons) or $4,000 and $6,000 (75 gallons).
Tankless Water Heaters (which must be fueled by natural gas or propane) typically cost between $5,800 and $6,400 (50 gallons) or $8,000 and $8,600 (75 gallons) for Mattioni members.
Electric Water Heaters
Electric Water Heaters are one of the more affordable options, with typical costs of $2,4000 to $3,000 (50 gallon) or $4,300 to $4,300 to $4,900 (80 gallons) for Mattioni members. Despite their lower installation costs, homeowners who opt for Electric Water Heaters should expect higher monthly energy expenses.
Heat Pump (Hybrid) Water Heaters
Hybrid Water Heaters typically cost $5,800 to $6,400 (50 gallons) or $8,000 to $8,600 (75 gallons) for Mattioni members. While they come at a higher initial cost than other options, they offer heightened energy efficiency that leads to lower monthly expenses.
5. Why the Efficiency of Your Water-Heater Matters
Fuel type and energy efficiency are directly related, however you’ll still want to evaluate the something called Uniform Energy Factor (UEF), which measures how each system expends energy. The higher the UEF, the more energy-efficient the water heater is. Here’s some context as to just how much more efficient Hybrid Water Heaters are:
- A Navien Tankless Water Heater (which is much more efficient than standard tank types) has a UEF of 0.97
- A 50-gallon Rheem hybrid water heater has a UEF of 3.75, or nearly 4 times the efficiency of a tankless model.
Think of your water heater’s UEF like your car’s miles-per-gallon rating. The higher the MPG, the more savings you’ll see at the pump. Similarly, a higher UEF means your water heater uses less energy to heat the same amount of water, saving you money on utility bills over time.
6. Do You have a Functional Chimney?
Homes without a functional chimney will likely require a power-vent system, which usually comes at a higher cost.
To find out if this applies to you, look for a metal pipe extending from the top of your water heater that heads towards your chimney. If you have this pipe, you’re set up for another chimney system.
If this pipe is made of PVC and not metal, it means that you already have a power-vent system and will need to purchase a similar unit. Power-vent systems are gas-only water heaters, meaning you’ll need to stick with either natural gas or propane as your fuel source.
7. Long-Term Benefits of Performance and Safety Features
At the time of purchase, you’ll have the option to include some extra features that can enhance your water heater and household experience in different ways. Many homeowners find these features worth the investment, particularly those who value improved performance, safety, and convenience.
Thermal Expansion Tanks
Thermal expansion tanks are a necessity with many water heaters but are still technically an additional item. When water increases in temperature, it expands and that extra pressure needs somewhere to safely move into. The thermal expansion tank absorbs this pressure and prevents tank damage.
Additional costs tied to expansion tanks are typically minimal, and they can be essential to long-term safety and system health.
Water Heater Pans & Leak Breaker Valve
Installing a pan underneath your water heater is a great way to collect any small leakage (rather than it spilling onto your floor), but their key advantage is actually to provide diagnostics to potential issues when they come up. It’s one of the simplest and most cost-effective long-term investments to make, as it can alert you to any small leak before it becomes a massive problem that causes major water damage to your entire basement.
Leak breaker valves are another useful safety feature that works together with the pan and shuts off the cold-water supply if it detects a leak. Together, a pan and leak breaker can prevent potentially devastating basement flooding.
Hot Water Recirculation Systems
Hot water recirculation systems reduce the time needed for hot water to reach your faucet. These systems are an additional expense but save water and improve convenience throughout your household.
8. How Your Home’s Location Impacts Installation Costs
While this factor is out of your control, your geographical location plays a part in the expected cost of your water heater installation.
Urban and suburban homeowners should expect to pay more than those in rural areas, as the costs of all goods and services are typically higher in those areas.
9. The Complexity of Your Installation Matters
If your water heater will be installed in a tight corner of your home or your attic, there’s the possibility of increased costs due to the added complexity of the job.
On the other hand, if it’s going to be hooked up in an open area of your basement then it’ll likely be a straightforward installation, and you shouldn’t run into any additional costs.
Other Pricing Considerations to Make: Rebates & Tax Credits
If you opt for a high-efficiency water heater, such as a Hybrid Water Heater, you may be entitled to rebates and tax credits made available by local utility companies and the federal government.
When evaluating the pricing of different systems, be sure to factor these rebates and tax credits into your decision as they can offset some of the installation costs.
What’s the Total Expected Cost of a Water Heater?
As you can see, there are several factors that cause your water heater installation costs to go up or down. As you start to make decisions about which water heater is best for you, you’ll start to get a good sense of what you can expect to pay.
At the broadest level, you could pay anywhere from $2,400 to $8,600 for your new water heater depending on the system type, size, and fuel. Generally, Standard Steel Tank Type Water Heaters will fall at the lowest end of this range, while Hybrid and Tankless Water Heaters are at the high end.
The Importance of Quality Installation and Routine Maintenance
No matter what type of water heater you choose for your home, properly vetting your installation company and moving forward with an experienced professional is of the utmost importance.
Small installation problems, such as an unsupported thermal expansion tank, can turn into a major and costly issue over time. By choosing an expert plumber to install your system, you’ll have peace of mind that your system will function properly for years to come.
Regular maintenance is also a big factor as water heaters naturally lose efficiency if not maintained once per year. Annual tune-ups also prolong your water heater’s lifespan and prevent potential plumbing emergencies like basement flooding.
You should have a professional tune-up every 12-18 months, depending on the hardness of your water.
Making the Right Water Heater Choice for Your Home
Now that you understand the key factors that influence water heater installation costs, you’re in a strong position to make an informed decision that fits both your budget and your household’s needs. Whether you’re considering a budget-friendly Standard Tank Type Water Heater or looking into a high-efficiency Hybrid or Tankless options, each choice comes with its own trade-offs in terms of upfront costs, long-term savings, and space requirements.
Your next step? First, evaluate your home’s hot water demands. Next, determine which system offers the best balance of efficiency, performance, and affordability for you. Finally, select a qualified installation professional as this is crucial to ensuring your water heater runs safely and efficiently for years to come.
Your water heater is an essential part of your home, so take the time to make a well-informed decision that will meet your needs both now and in the future.
Call the friendly team at Mattioni at (610) 400-8510 to discuss the best water heater options for your home and get a personalized estimate. Or, book your appointment with one of our pros online. With expert advice and professional installation, you’ll have peace of mind knowing your home will have reliable hot water for years to come.
