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last_updated_date Last updated: September 11th, 2023

What Are The Different Types Of Water Heater And Their Replacement Cost?

PUBLISHED: June 21, 2023 • 6 MINS READ

Imagine taking a shower on a cold day or trying to clean your utensils but not being able to get hot water due to a malfunctioning water heater. Such breakdowns are common with homeowners who don’t regularly invest in water heater maintenance. Irregular or lack of maintenance can cause the water heater to malfunction, increasing repair or replacement costs.

In this article, we write about the water heater types, their replacement costs, and some hacks to save money. So, If you are also looking to replace your water heater, this article is a must-read.

How Long Does It Take for a Hot Water Heater to Heat Up

Types Of Water Heater And Their Replacement Cost

The replacement cost of the water heater can be different depending on the heater’s type and your requirements. You can replace the water heater by choosing the same model or upgrading the existing one. As a homeowner, you should consider the unit’s life expectancy, safety features, and energy compensation before making the right choice. Listed below are the popular options available for U.S. homeowners, along with the average replacement cost:

Electric Water Heater

Cost of Electric Water Heater Replacement: $600-3,500

Who is it suited for: People living in small apartments

Who is it not suited for: People looking to save on electricity cost

Alternative to electric water heater: Gas water heater

Electric water heaters are well-suited for small apartments as they don’t need different venting forms. They are safer than gas-powered water heaters as there is no chance of gas leakage. Along with all these benefits, the electric heater has some drawbacks, including higher utility bills, slow water heating, and longer recovery time. Also, the heater won’t work in case of a power outage.

Gas Water Heater

Cost of Gas Water Heater Replacement: $700-$2,700

Who is it suited for: Homeowners living in an area with high electricity costs

Who is not suited for: Homeowners worried about safety and affordability

A good alternative: Propane water heater

Natural gas water heaters are among the most chosen in areas with high electricity costs. They heat the water faster than the electric units and work even if there is a power outage at your place. However, the installation and maintenance cost of the unit can be very high, and this unit can be unsafe for the users.

Propane Water Heater

Cost of Propane Water Heater Replacement: $700- $2500

Who is it suited for: Homes where natural gas is not accessible

Who is it not suited for: Homeowners looking for an affordable option

A good alternative: A high-efficiency water heater

Propane water heaters come as an option where it is not possible to have natural gas. They are most common in areas where natural gas lines are not accessible or in off-grid homes. It is a great alternative to heat the water quickly and has a longer lifespan than the electric and gas water heater. However, it does have a risk of explosion and is expensive, and needs extra maintenance.

Indirect Water Heater

Cost of Indirect Water Heater Replacement: $1,200- $3,500

Who is it suited for: People living in colder climates

Who is it not suited for: People living in warmer climates

A good alternative: An electric water heater

Indirect units are advantageous and efficient in colder temperatures. They have low operating costs and can be easily used with different energy sources. However, it is not an option for people living in warmer climates and looking for a safer alternative to electric options.

High Efficiency Water Heater

Cost of High-Efficiency Water Heater Replacement: $1,500-$3,000

Who is it suited for: People looking for energy-efficient heaters

Who is it not suited for: People living in Areas experiencing extreme cold temperatures

A good alternative: Gas water heater

High-efficiency units are more energy efficient and environmentally friendly than traditional water heaters. Its installation costs are mainly dependent on the unit’s size.

Initially, the water heater has a higher cost, but you can save on utilities with time. The unit might struggle to keep water warm and quickly run out of hot water during the cold weather.

Solar Water Heater

Cost of Solar Water Heater Replacement: $1,700-$5,500

Who is it suited for: People with access to sunlight all around the year

Who is it not suited for: People living in areas with less than average sunlight

A good alternative: Hybrid heat pump water heater

Solar water heaters are usually expensive, which can even rise to $13,000, mainly dependent on model, maintenance, and more. These water heaters have an expensive upfront cost; however, they are a cost-friendly option in the long run and can last up to 20 years with minimal maintenance.

The solar unit is not a good choice for areas with less than average sunlight or without roof access.

Hybrid Heat Pump Water Heater

Cost of Hybrid Heat Pump Water Heater Replacement: $1,200 to $3,500

Who is it suited for: Homeowners with bigger homes looking for an environment-friendly alternative

Who is it not suited for: Small homes and apartments

A good alternative: Solar water heater

Hybrid heat pump water heaters are energy efficient, environmentally friendly, and suitable for temperatures over 40 degrees F. However, they require 7 feet of floor clearance and 1,000 cubic feet of surrounding air, which is not a viable option for small homes and apartments. It is also more costly (30-40%) than traditional water heating systems.

Factors Affecting The Cost Of Water Heater Replacement

On average, the cost for replacing a water heater can be somewhere from $847 to $1704, with an average cost of $1,275. The cost depends on different factors, including the water heater’s type, size, and location. Here are some major factors that will affect the replacement cost:

Type of Water Heater

A significant factor affecting the water heater replacement’s price is its type. You will need to choose between a tank and a tankless model. A tankless model comes in handy in compact spaces but is also expensive.

The tank-style water heater system works in cold climates and has an average lifespan of 8-15 years. The tankless water heater might not be suitable for colder climates but has an average lifespan of up to 20 years, depending on maintenance and other factors.

The top types of water heaters include electric, gas, and solar. However, it mainly depends on the available energy source, and the pricing for each differs. Mostly, solar-powered water heaters are more expensive as compared to other options.


The water heaters come in various sizes, which are measured by gallons. The tank-style heaters can hold somewhere between 20 gallons to 100 gallons. The price will increase according to the size of the unit.

Labor and Installation

Labor is a vital part of replacing your water heater, with costs varying on the time required for installation. Generally, the plumbers can charge around $45 to $200, and electricians can charge around $50 to $100 per hour. The labor prices can vary according to the technician’s experience and residence area.


A water heater replacement can cost up to $1500, mainly dependent on the work and local laws. You will also need permission to install a gas appliance and alternation in plumbing and electricity.


Another factor that will impact the water heater replacement cost is the location. The installation costs will go high if you replace a water heater in an area that is difficult to reach. For instance, if you want a gas-powered water heater installed in your garage, you must raise some inches off the floor, increasing the installation cost.

Other factors worth considering include the number of people/bathrooms and the number of appliances requiring hot water.

Let’s proceed with the details of when you must replace the water heater.

When Do You Need To Replace The Water Heater?

From being unable to get hot water to leaks, there can be different circumstances under which you will require replacing the water heater. Generally, water heaters can last up to 10 years or more, depending on the usage and maintenance. While some issues can be fixed, other problems will indicate a replacement.

Here are some of the signs that show it is time to replace your water heater:

The Water Is Too Cold

Water heaters come with an expiration date, and one factor that shows it is time to replace the unit is when you don’t get warm water. It can happen during any time of the year, especially after the unit has crossed its average lifespan of between eight and ten years.

Rusty Water

It is time to replace the unit if there are signs of rusting in the hot water. If you see rust around the water inlet, it is likely inside the tank. If so, you must replace the tank as soon as possible.

Water Heater Noise

Another thing that determines that it is time to replace the water heater is the noise. As the unit ages, loud noises can help you determine when to replace your unit.


There can be an increased chance of seeing water on the floor once the unit passes its life expectancy. When there is a water buildup around the unit, it generally means that the water heater is leaking.

These are some of the signs that show that it is time to replace your water heater. But, replacing it can get expensive, and as a homeowner, you might look for ways to save on replacement costs.

Replacement of water heaters can get quite expensive for homeowners. By reading the next section, you will know how to save money on the water heater replacement cost.

How To Save Money On Replacement Cost

Regular and proper maintenance by expert technicians will increase the water heater’s life expectancy. However, if the water heater requires replacement, going for a home warranty will be of the most significant help. A home warranty covers replacement costs if the damage is due to normal wear and tear.

Many home warranty companies offer coverage in their plans to some extent, while some cover water heaters as an optional add-on. So, reading the terms and conditions before investing in the company is advisable to get the desired coverage.

Does Home Warranty Replace Water Heater?

Are you considering a home warranty to replace your water heater and unsure whether it covers water heaters? Well, the short answer to this question is “Yes.” Major home warranty companies cover the replacement and repair of the water heater system, such as Choice Home Warranty, American Home Shield, Select Home Warranty, and ServicePlus Home Warranty

A home warranty includes all the parts of the unit, but there can be certain limitations, so ensure to read the terms and conditions before proceeding with the home warranty company. Also, some companies provide customized warranties for appliances and systems, which can help homeowners save money.



Why Is Installing A Water Heater So Expensive?


The higher labor cost and nature of installation can make the water heater installation more expensive. Also, in the case of an electric tankless heater, there will be a need for new electric wiring.


How Many Years Does A Hot Water Heater Usually Last?


Tankless water heaters have a lifespan of around 20 years, while traditional water heaters can last up to 10 years, as per maintenance and usage.


Should I Replace My 15-Year-Old Water Heater?


Yes, you should replace your 15-year-old water heater, as the average lifespan of this unit is approximately 10-12 years. There will be a decrease in the water heater’s performance after this period. The replacement cost can get even more expensive if you don’t replace it on time.

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