How Much Does a Water Heater Cost?

Water heater cost is a key factor in an Indianapolis homeowner’s decision to upgrade their hot water system. While you consider other factors to make a decision between a tank or tankless water heater, such as comfort and installation space, for many, the decision comes down to the matter of water heater cost – budgets are important!

To determine water heater cost when it’s time for an upgrade at your Indianapolis home, many factors come into play here, too! Water heater style, efficiency, capacity, fuel type, installation concerns – these all play a part in the final water heater cost you pay. To help you avoid any sticker shock where water heater cost is concerned, we have taken the time to outline how these factors affect water heater cost and give you a better picture of what price to expect.

Mr. Plumber of Indianapolis is here to help you plan your water heater replacement upgrade project! Get an estimate for water heater cost and find the right model that fits your needs with the help of our water heater experts. Our licensed Indianapolis plumbers provide safe and effective installation for your new water heater to ensure it performs as expected. Get started on your next plumbing project – request a quote for water heater quote from Mr. Plumber today!

Water Heater Cost: Tank Versus Tankless

If you have already decided to forego water heater repair service and replace your system, there are two types of water heaters to choose from: tank water heaters and tankless water heaters. These are two completely different types of systems that supply your home with hot water:

  • Tank water heaters heat water and store it in their tank, where it is ready for use as soon as your hot water taps and appliances call for it.

  • Tankless water heaters produce hot water on an as-needed, or on-demand, basis. This means that water is not preheated – as soon as a hot water tap or appliance calls for hot water, the tankless water heater gets to work to warm the water that is sent out your spouts.

As these are different systems, expect a different water heater cost between tank and tankless water heater models. In general, tank water heater equipment and installation are lower in cost than Indianapolis tankless water heater equipment and installation.

Water heater cost is made up of two components: equipment and installation. Equipment prices vary based on fuel source, features, energy efficiency, and capacity. Once you know the type and model of equipment you want, the water heater cost for equipment is straightforward. Installation needs are not always the same in each home, so water heater cost for the total finished project is variable from one home to the next, even if you choose the exact same model as your neighbor.

On average, tank water heater cost for equipment and installation comes out to around $900. Tankless water heater cost for equipment and installation averages around $3,000. Remember, these numbers are just averages to give you an idea of water heater cost – your actual water heater cost is often higher or lower based on the decisions you make regarding equipment selection as well as installation needs necessitated by your home.

Water Heater Cost: Fuel Source

The type of fuel a water heater uses to heat water affects the final water heater cost for both equipment and installation. For tank as well as tankless models, gas water heater cost is usually higher than electric water heater cost. If your home uses liquid propane or oil for water heating, the water heater cost for equipment compatible with these fuel sources is typically higher than natural gas or electric water heaters.

Gas, and even oil or liquid propane, water heaters are typically more affordable to operate even though the initial water heater cost is more expensive than electric models. This due to the fact that these fuel sources have a lower cost than electricity, as well as the fact that the units themselves are typically more efficient than electric water heaters.

Water Heater Cost: Features

Just like your other household appliances, there are a number of different features available to homeowners through different water heater models. Many features are designed to improve user experience, enhance the water heater’s function, and protect the equipment.

Like other appliances and even things like vehicles, there are basic models of water heaters and then there are models with all the bells and whistles. Water heater cost is more for a model with upgraded features than a basic model. Some of the features that are found on different models that bump up the water heater cost include:

  • Digital display, which allows a homeowner to more easily adjust water heater settings as well as monitor system function and usage.

  • Condensing gas models, which capture gas exhaust and utilize its energy to heat cold water. In a regular gas water heater, exhaust gases are vented through the system’s flue, which wastes the energy within the exhaust.

  • Anti-scale components, which work to reduce sediment and mineral scale buildup in a hot water tank to improve efficiency and service life.

  • Brass valves, that offer more durability and longevity than plastic valves, and make it easier to drain the tank for routine maintenance.

  • Glass tank lining, which fights against the corrosive effects of water to preserve the tank and reduce cracks that cause leaks.

  • Warranties, which commonly run from three to 12 years for water heaters.

Water Heater Cost: Energy Efficiency

Many homeowners choose tankless water heaters because they offer higher energy efficiency – approximately 24% to 34% more than a tankless water heater if your home’s hot water consumption is 41 gallons or less in a day. As a water heater is the second largest consumer of energy in the average home, the more efficient your water heater, the less you pay in water heating bills.

The more efficient a water heater, the more the water heater cost. High-efficiency units utilize many of the features mentioned above and more to deliver more water heating per unit of energy consumed. Water heater efficiency is measured with an EF rating, which stands for energy factor – the higher the EF, the more efficient the unit is, and typically increased water heater cost for the unit.

Water Heater Cost: Installation Needs

Tank water heaters require a larger volume of space for installation, while tankless water heaters are low profile and can even be installed on walls. Space is of course a consideration for water heater installation, but there are other installation factors that affect water heater cost.

Fuel Lines

If you want to upgrade to a gas water heater but don’t have gas lines in your home or run to the proper installation area, water heater cost is higher because your plumber must run new lines or run an extension to accommodate installation.


Depending on the unit you select, it may be necessary to have wiring upgraded in your circuit breaker panel to accommodate the new water heater. Or, a dedicated circuit needs to be installed to ensure the unit is safely and adequately powered.


When you switch from a tank to a tankless water heater, this is called a retrofit. Water heater cost for a retrofit project is usually increased because plumbing lines must be altered to accommodate the new unit, whereas this problem is less likely to occur if you just switch out one style with a new unit of the same.

Water Heater Cost: Capacity

For tank water heaters, capacity is measured in gallons. Residential water heaters range from 20 to 80 gallons, though most Indianapolis homes use 30 to 50-gallon tank water heaters. The higher the capacity of your new unit, the higher associated water heater cost, both for equipment purchase price and operation. Higher capacity units use more energy than lower capacity models simply because they heat more water.

Tankless water heaters aren’t measured by their capacity to hold hot water, because they don’t operate that way. Instead, we look at flow rate and needed temperature rise. To size a tankless water heater, we consider the number of applications that may run at the same time and their total collective flow rate in gallons per minute. Then we evaluate the temperature rise needed for comfortable hot water, which is the desired output temperature minus the temperature of incoming water. The higher the flow rate and temperature rise your home demands, the higher water heater cost associated with your new equipment.

Get a Quote for Water Heater Cost from Mr. Plumber

All the factors we reviewed above play a part in the total water heater cost of your installation project. Each home and household have unique needs that must be accounted for to determine both the right equipment and total water heater cost – simply looking up equipment prices online does not reflect the true water heater cost when you need professional installation.

Luckily, Indianapolis homeowners have a pro to turn to for reliable water heater cost estimates and quality installation of water heaters – Mr. Plumber! For more than 70 years, your local friends, family, and neighbors have turned to our team for plumbing help, and we hope you will, too! Contact us today to discuss your upcoming plumbing projects and to schedule a free estimate for water heater cost.

Related Reading