According to tech company Sense, the average American home uses 80-120 gallons of hot water a day. On average, this costs each household $267 per year. That might not seem like a lot, but it adds up over the years, especially if your water heater isn’t in the best condition.

There may come a time when it’s very inefficient and you keep needing to call for water heater repair services. In that case, you’re better off buying a completely new appliance.

Appliances don’t come cheap, though, so you might be worried about the water heater replacement cost. This article will explain the cost of a new water heater and the factors that can impact the total paid.

Average Water Heater Replacement Cost

The cost of a new water heater can be anywhere between $600 and $9,000. As you can see, this is a huge range, and one household may shell out $600 while another pays 15 times that amount.

Chances are, you want to narrow down the range for your personal circumstances so you can have better expectations of what’s coming out of your bank account. So let’s go over the factors that will make estimates go up or down.

Type of Water Heater

There are four types of water heaters:

1. Tank
2. Tankless
3. Hybrid/heat pump
4. Solar

The most common option is the tank water heater. It has a lower upfront cost, plus it’s easier and faster to install, so initial costs will be much lower. However, do note that it’s less energy-efficient since you have to continuously heat up the water inside.

Tankless water heaters will require a higher upfront investment. Factors here that drive up costs include:

• Advanced technology
• Electrical or gas line upgrades
• New venting systems

Hybrid/heat pump water heaters use electricity and ambient air to heat water, which reduces energy use. They’re significantly more expensive, but ultimately, you can cut operating costs by up to 70%.

Lastly, solar water tanks can have a high initial investment, as you’ll need solar panels and storage tanks. They also often need a backup tank system, which will add to your costs.

Size and Capacity

Typically, most households of 2-4 people will require a tank of 40-50 gallons. But larger families may need a tank of 75-80 gallons, which costs significantly more. Not only do larger units cost more, but the installation process is also more difficult, so installers will charge more.

As for tankless water heaters, a whole-house one will cost more than double a point-of-use one. The former is 6+ gallons per minute (GPM) while the latter is only 1-2 GPM.

Keep in mind that sizing is pretty important when replacing your water heater. If you get an oversized unit, you’ll have higher upfront and energy costs. But if you get an undersized unit, then you’ll run out of hot water, and you’ll likely need upgrades later on.

Energy Source and Venting

Electric heaters have the simplest installation process since there’s no venting required. But while they have cheaper upfront costs, they’re usually more expensive to operate, depending on electricity rates.

On the other hand, natural gas/propane heaters are more efficient for ongoing costs. However, the installation process often requires venting through the following:

• Chimney
• Roof
• Wall

Also, if you need to convert from electric to gas (or vice versa), there are additional costs for new wiring, breakers, or gas lines.

If you’re interested in water heaters with venting, then atmospheric venting is the cheapest (basic chimney style). Power venting will cost more because of the equipment and wiring needs since there’s a fan. Another option is direct venting, which is pricier but safer and more efficient.

Labor and Installation Complexity

Your water heater installation costs will heavily depend on what your current situation is like.

In general, a straight swap where you replace “like for like” is the cheapest scenario. But these situations will require extra hours of labor:

• Moving a water heater
• Upgrading old plumbing
• Converting from tank to tankless

Also, if installers have to get into spaces like the attic, crawl space, or tight closets, then their job will be harder. Therefore, they’ll increase labor charges.

Disposal and Permits

Not all installers will include disposal in their prices, so make sure to ask. Some will charge between $50-$150 to haul away your old tank.

In addition, in Salt Lake City, you’ll need a building permit to replace your water heater, which will add to your total cost.

Quality, Warranty, and Brand

Economy models will be cheaper, but do note that they often have shorter lifespans. Ultimately, you may be paying more to frequently replace these cheap water heaters.

Premium brands will cost several hundred dollars more, but they often come with:

• Longer warranties (9-12 years)
• Better energy efficiency
• Higher quality parts

So if you can afford it, we’d recommend opting for premium brands, as they’re more cost-efficient.

Efficiency and Rebates

Generally speaking, higher energy factor (EF) units will cost more upfront, but you’ll save on utilities. It’s likely that the unit will pay for itself within a few years.

Plus, there are federal, state, and local tax credits and utility rebates available. Take advantage of these to offset your costs.

Regional Variation

Installers in rural areas will often have cheaper prices since the cost of living is lower. While SLC is the largest metropolitan area in Utah, costs are still lower than in metro areas like California or the Northeast.

In addition, SLC is in an earthquake zone, so water heaters must be secured with seismic straps.

Know What to Expect for Your New Water Heater

By now, you should have a better idea of what the water heater replacement cost will be for your household. But to avoid any surprises, the best thing is to consider your options and request quotes. Not only does this allow you to familiarize yourself with local companies, but it also prepares you for what the cost of this project will be.

Would you like to replace your water heater? Then make an appointment with us today. Stallion Plumbing and Drains has over 18 years of experience, and we offer free estimates.