What will you pay for a new hot water heater?  Many factors are involved in the determination.

1) Traditional or Tankless.
The new tankless water heaters are great for providing you with hot water instantly by heating the water right inside of the pipe as soon as you turn the faucet on. While tankless units are more expensive than traditional units, the amount of money you’ll save on your water bill and your electricity or gas bill will be well worth the extra investment. Most times, they are not that much more money.

2)  Fuel Source
The two main sources are electric and gas – either propane or natural.  Usually, the gas versions are a little more costly but the difference is minor enough that you should base your decision on which fuel source to go with on factors other than initial cost. What do the utility companies in your area charge for the different fuels?  Natural gas is usually the cheapest fuel but really depends on your location.

3) Warranties and Service Plans.
Over the life of the water heater, it will need repairs.  That is a given.  An extended warranty will cover you for a longer time but add to the costs. Most companies offer many different options for warranties and the more options you choose, the costs will increase initially. The same is true for service plans. Many experts say that these service plans are mostly unnecessary but, of course, the option is yours.

4) The GPH Recovery Rating
The gallons per hour recovery rating provides a measure of how quickly hot water will return after it is used.  The better the rating, the more you will pay. Make sure to choose a unit that has a gph that fits the usage in your home. If you choose a GPH too low, you’ll run out of hot water.  You’ll spend a lot more than you’ll have to if you get too high a GPH.

5) Installation
For those handy with plumbing and electrical/gas skills, replacing a water heater is fairly easy if you are replacing it with an identical unit.  Moving from a traditional to tankless heater requires much more knowledge.  Many of the prominent manufacturers have detailed selection procedures on their websites.  For most homeowners, it is always good to call in a professional.