When making long-term investments for your home, every decision is a big decision. In this article, we’d like to help make one of those decisions a little easier for you: should you invest in a tankless water heater or stick with a traditional model? We examine the facts as well as the pros and cons of each. While we talked about which water heater was right for you earlier this month, we’re focusing on traditional vs. tankless today.

The Facts on Tankless Water Heaters

So what is a tankless water heater exactly? Well, to better understand a tankless water heater you need to understand a traditional water heater. In a traditional heater system, there’s a large tank that stores and heats your water. To give you hot water when you need it, the tank continually heats the water to maintain a constant temperature. Meaning, even when you’re not using hot water, you’re using (and losing) energy. Tankless systems (as you probably guessed) don’t have the large storage tank. Tankless water heaters avoid wasting energy by heating incoming water on an “as-needed” or “on-demand” basis by using high-powered burners to quickly heat the water as it runs through a heat exchanger.

The Pros and Cons of a Tankless Water Heater


As we explained before, tankless water heaters use far less energy than traditional water heating systems. In fact, they can cut your water heating costs by up to 40% each billing cycle. The Department of Energy estimates tankless heaters can be 24%–34% more energy efficient than conventional storage tank water heaters for homes that use 41 gallons or less of hot water daily and can be 8%–14% more energy efficient for homes that use more — around 86 gallons per day. This translates into an average annual savings of around $100 for a typical family. As we also mentioned before, tankless water heaters provide “on demand” hot water, meaning that you won’t run out of hot water mid-shower or with a pile of dishes to clean. Typically, they are able to provide 2 to 3 gallons of hot water a minute. As you’d imagine, tankless systems are also much more compact than their bulky cousin, which you may find more suitable if you have a smaller home. Tankless water heaters also last about 20+ years, which is close to double that of traditional.


Though they last longer and save energy, tankless water heaters have much higher upfront costs. Bob Vila estimates that a typical tankless heater will cost between $800 to $1,150 for the unit—compared to  around $450 to $750 for a traditional system. The installation costs of tankless heaters are also more expensive than those of traditional.

The Pros and Cons of a Traditional Water Heater


Traditional hot water heaters are less expensive than tankless water heaters, and therefore if something goes wrong they are less expensive to replace. It’s important to take into consideration the cost of your water heater (tankless or not) and how it will compare to your energy costs and the cost of replacement. While they do waste energy, the extra energy cost may or may not be comparable to the cost of replacing the entire system. You have to take in your family’s needs when choosing a water heater. To get the most out of either style system, regular maintenance is your best bet, it helps both extend the life and better the quality of life of your water heater.


As we mentioned before, traditional hot water heaters have to keep hot water constantly heated to have it on hand when you need it. Plus, the supply of hot water they can provide is limited to the size of the tank. They are also quite bulky and take up a lot of space, as well as having a shorter lifespan (10-15 years).

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