How Much Can I Save With Water Heater Replacement?

Water heater replacement can save you money, depending on the cost of repairs and the system’s age and condition. Unless your water heater has failed, you may have the option to repair or replace it. Initially, it may seem cheaper to fix a unit, but savings are often measured over time. Here’s a look at the cost of water heater replacement and some repair costs and factors to help you make your decision.

The Cost of Replacing a Water Heater

According to 2024 data from Angi, it costs $1,304 on average to replace a water heater, with a range of $880 to $1,778. It’s not impossible to install a small basic model for as low as $350. However, a larger, more complex installation can cost as high as $13,000.¹

Factors that affect the cost of water heater replacement include:

• Type of Water Heater: An electric water heater costs $600 to $3,500 to install, on average (including materials and labor), while a gas unit costs $700 to $2,700. High-efficiency water heaters can cost as much as $3,000. Tankless water heaters average $1,200 to $3,500 to install (more if you’re converting from a tank-style water heater to a tankless system).¹
• Water Heater Size: A small, 30- or 40-gallon tank water heater averages $550 to $2,100, while a 50-gallon model can cost up to $2,400. A 75- or 80-gallon water heater costs $1,350 to $3,500 on average.¹
• Labor: Labor is a factor with any water heater repair or replacement. It can account for 50% of the replacement cost, depending on the contractor’s labor rate and how long the job takes. You could pay up to $450 in labor to replace a tank-style water heater and up to $1,850 for a tankless water heater. Contractor rates range from $45 to $200 per hour for plumbers and $50 to $100 per hour for electricians.¹
• Brand: The brand of water heater affects its price significantly. A Whirlpool or Kenmore model may cost $350 to $1,000. However, a higher-end brand like Rheem may cost up to $2,300, while an A.O. Smith water heater can cost as much as $3,500.¹
• Additional Expenses: Water heater installation often involves expenses such as installing new electrical wiring, updating a main breaker panel, or installing a sub-panel. Electrical work can add upwards of $2,300 to the project. Installing a gas line can cost $260 to $820 while installing a water line can range from $400 to $2,000.¹ Also, consider the costs of installing an expansion tank, wall framing for the water heater, and drywall as well as removing and disposing of your old water heater.

How This Compares with Average Water Heater Repair Costs

Water heater replacement isn’t cheap. You could end up paying thousands of dollars more than the cost of materials and labor alone. By comparison, water heater repairs average $599, according to Angi, and can range from $90 to $1,703.² A simple repair is worth it, especially if your system doesn’t need to be serviced that often.

Most water heater parts aren’t expensive. For example, an anode rod costs $25 to $75, a dip tube costs $25, and a gas burner costs $175 on average. A heating element costs between $15 and $60, while a gas valve can range from $70 to $200. A basic thermostat can cost as little as $20, but an advanced programmable or smart model can cost $400 or more.²

For these types of repairs, it pays to keep your old water heater going. However, other factors besides your system needing major repairs can impact whether you’ll save by replacing the unit. Here are some of the primary considerations:

• Labor: A plumber may charge up to $150 per hour to repair a water heater.² That means you can end up paying hundreds of dollars to replace a $20 part (that’s still less than water heater replacement). However, paying the cost is typically the only option; incorrectly diagnosing the problem and making a mistake can lead to a flood, a carbon monoxide leak, or voiding the warranty.
• Type of Water Heater: If you have a gas water heater, a pilot light issue can be caused by a faulty thermocouple or gas control valve. These don’t involve expensive parts, but replacing the valve can cost $350. And, if an issue requires replacing a thermostat, installing a simple one can cost upwards of $200.²

Electric water heaters also have common repair expenses. For example, heating elements can fail and it usually costs $200 to $300 to repair one professionally.² Even here, the occasional repair shouldn’t cost you too much. But if your water heater needs a new heat exchanger or other major component, a repair can cost you thousands of dollars.

• Frequency of Repairs: Water heaters generally last about 12 years. The older the unit, the more repairs it’s likely to need. Every time your system is repaired, you’re going to pay for materials and labor. Consider water heater replacement if you need more than two repairs per year and fixing the unit costs over 50% of the cost of a new one.

Energy Efficiency Can Also Help You Save

According to the U.S. Environmental Protection Agency, an Energy Star-certified electric water heater can save about $470 per year on electric bills (for a household of four).³ Assuming an average cost of $1,304 to replace a water heater, you can make up the difference in under three years. A tankless water heater can cut your electric bill by up to 50%.⁴

That’s just considering lower energy bills, aside from saving hundreds of dollars in repairs with each visit. The average repair bill is just under $600; that already amounts to $1,200+ annually if your water heater needs two repairs. Higher energy costs and spending more on maintenance and upkeep for an older unit means water heater replacement can save you substantially.

Contact Monarch Home Services

We install water heaters across Central California. Whether you prefer the same type of water heater or a tankless unit, our experienced plumbers help you find the right model and size for your home. Our team provides high-quality installation and service throughout the life of your system, including maintenance and repairs. To request your free water heater replacement quote, call (661) 215-6737 today.

Sources:

1. https://www.angi.com/articles/how-much-does-water-heater-installation-cost.htm 
2. https://www.angi.com/articles/how-much-does-it-cost-repair-water-heater.htm 
3. https://www.energystar.gov/products/energy_star_home_upgrade/super_efficient_water_heater 
4. https://www.forbes.com/home-improvement/plumbing/tankless-water-heater-pros-cons/