Average Cost of a Tank Water HEater
Getting the right tank water heater for you and your family is of critical importance – no one wants to run out of hot water on a cold December morning, or have to spend thousands of dollars on maintenance and running costs. Instead, you should approach buying a water heater as an exercise in how to deploy your money at the right moment on the right product.
This guide will give you ballpark figures on where your money will go so that you can make the right call on where to spend, and where to save.
THE OVERALL COST
The average range for a tank water heater is somewhere between $300 and $2,880.
Generally, you can expect to pay around $550 for an average-sized tank heater. This, however, does not include installation, which can increase the cost significantly (see the section below on installation).
The factors that shape the cost of a new water heater are:
The type of heater (i.e. what model)
The size of the tank
Whether it takes gas or electric
After that, the key costs are the running costs and the repair costs, both of which are discussed in the sections below.
DIFFERENT MODELS
The different model of tank you install will impact both the initial cost and the subsequent running costs. If you would like to learn more about tankless water heaters, go to our What is a Tankless Water Heater page.
The two main types of tanks you can buy are standard tanks and high-efficiency tanks.
- A high-efficiency tank will have a higher upfront cost, but will then result in a lower running cost, as you’re paying less money to heat the water.
- A standard tank can be extremely cheap in the short-term, but you may end up losing the difference in electricity costs in the long term.
One thing that it is critical to consider is the warranty and lifetime of a particular model. The former varies from manufacturer to manufacturer; the lifetime of the model will vary based on the specifics of the device. Generally, tanks last between 7 and 15 years.
Many running cost calculations work on the basis that a tank will last 13 years. However, a more conservative estimate would be to assume your tank will last for 10 years.
Use the tool in ‘Running Costs’ below to calculate the annual cost of your model and then multiply it by 10. You can then add on the initial cost of the model to give a fuller picture and a better sense of your total outlay over the next decade.
For example, consider the following two models:
| Model | Initial Cost | 10 Year Running Cost | Total |
|---|---|---|---|
| A | $750 | $7,500 | $8,250 |
| B | $1,250 | $5,550 | $6,800 |
As you can see from these numbers, the initial outlay for model A is far less, although, over the course of 10 years, you’ll end up spending nearly $1,500 more over the course of 10 years.
One of the benefits of using a more conservative 10-year estimate is that, if your model lasts longer than expected, the model becomes even cheaper.
For the purpose of comparison, we have taken 50-gallons as the average. If you require a larger or smaller tank, this will impact pricing (see our table, below, for more information). However, a 50-gallon tank provides an easy point of reference for comparing high-efficiency and standard tanks.
STANDARD TANK
A standard 50-gallon tank is likely to cost between $400 and $800 dollars, with the average cost around $550.
HIGH-EFFICIENCY TANK
The cost of a 50-gallon Energy Star-rated tank is usually between $900 and $1,600, with the average price being around the $1,100 mark.
SIZE OF TANK
The size of the tank you buy will depend on your family’s needs.
The table below demonstrates a rough calculation of how you can fit the size of the tank to the size of your family. You can use the tool listed under ‘Running Costs’ (below) to get a more detailed estimation of your water usage.
The larger the tank you need, the higher the cost of the tank (and the higher the annual running cost).
PRICE BY TANK SIZE
| FAMILY SIZE | TANK SIZE (gallons) | PRICE |
|---|---|---|
| 1-2 people | 30 | $270 - $900 |
| 1-2 people | 40 | $320 - $1,600 |
| 2-3 people | 50 | $400 - $2,200 |
| 4-5 people | 75 | $900 - $3,000 |
| 5+ people | 80 | $1,000 - $3,000 |
GAS VS. ELECTRIC
The two main sources of power for tank water heaters are gas and electricity.
Gas heaters work by igniting a stream of (usually natural) gas, which heats the water in the tank. A thermostat regulates the temperature, shutting off the gas when the water has reached the desired temperature and on when it has cooled down too much.
An electric heater follows broadly the same principles, although the heating is done by an electrical element – a coil of wire that is heated using electricity.
Both have their strengths and weaknesses – for more information, see our guide on electric vs. gas water heaters for a detailed breakdown of the differences between the two. A majority of homes (60%) in the US have a gas heating system, with the remainder having an electric system.
A gas heater will cost somewhere between $250 and $1,500 – usually at the higher end of this spectrum. An electric heater will cost between $300 and $2,880. The cost of installation can greatly affect the final total.
INSTALLATION COSTS
As stated above, the cost of installation can be a huge part of the overall cost of a new tank water heater.
A key factor in this is that a gas heater is far more difficult to install – and therefore requires more expertise – than an electric heater. An electrical heater you can install yourself at home with only a small amount of knowledge; a gas heater is more dangerous because of the capacity for both gas leaks and igniting the gas.
As a result, for electric heater installation, you’ll pay between $620 and $1,020 (unless you complete it yourself). For a gas heater, you’ll pay between $1,000 and $3,000.
Labor
To hire a plumber or other contractor to fix your water heater, you will pay an hourly rate of between $45 and $150. In some cases, you may be able to negotiate a fee for the project in advance. This helps you avoid nasty surprises and know in advance exactly how much you’ll pay.
- For smaller jobs, most professionals will have a minimum call-out fee of between $75 and $250. This means that this is the minimum you will pay for a job - however small.
Permit
In some cities and states, all new tank water heaters require a permit to show that they are at the requisite level of safety. Getting one of these will cost between $50 and $500. You can either do this yourself through your local government website or you can get your contractor to do it as part of the final project fee.
Conversion
If you have a gas tank water heater and you want to convert to an electric model, a contractor can do this for you. This will cost between $200 and $500.
Removal of old system
When you are installing a new tank, you will need to remove and safely dispose of the old model. A contractor can take care of this for you, which will cost somewhere in the region of $500.
RUNNING
COSTS
The cost of running a tank water heater depends greatly on two key factors:
- The size of the water heater
- Its energy efficiency
To give a baseline figure – using an average set of figures – you can see that the average cost is $781 per year.
This is for a water heater with the following features:
50-gallon tank
Running at 5,500 watts
EF (Energy Factor) rating of .90
Electricity rate of $.16 kilowatt-hours
You can use the tool here created by the Federal Energy Management Program to calculate your spending on water heating. This will help you to weigh up your options when it comes to different models.
REPAIR AND REPLACEMENT COSTS
Ultimately, buying and maintaining the right water heater is an issue of financial balance – you could spend tens of thousands of dollars and have a water heater that always provides enough hot water, and there is no problem running or repairing it. On the other hand, you could also spend the minimum amount and remain very much within budget.
Naturally, neither option is ideal – spend too little and you’ll not have hot water when you need it (not to mention you may actually end up spending more on maintenance and running costs), spend too much and you’ve wasted your money and you will overspend on heating a tank that’s too big.
See our full guide on water heater repair and replacement costs for a more in-depth breakdown of the costs involved.
Somewhere between the two extremes is the precise optimal amount for your family and your home. Where that point is, is a matter of your own unique requirements. Doing your research and coming up with your specific requirements will show you where you can save money and where you should spend it intelligently.