Tank VS Tankless Water Heater, Which to Choose

Water heating is a base requirement for every house, so you must learn about tank vs tankless water heater to choose from. Here, you will get the basic differences and benefits from both to choose yourself.

Tank water heater is here for over a century and it will not go away in next few decades. However, tankless water heater is fairly new and technologically advanced.

Therefore, we must make a choice whether use the old tank water heater or change into the new and advanced tankless option. We will elaborate the cost and benefits from both of these. After that, you can decide easily.

We all need hot water daily and whatever we do, its must be done. However, we must know which is most suitable and appropriate based on our need, budget and circumstances.

Lets discuss about what tank and tankless water heaters are. Then, how do they work. Cost of them including installation and regular servicing cost. Moreover, don’t forget the warranty and service life.

Tank Water Heater

We all know about tanked water heater that is installed in our basement. We have seen them since we born. Our family have that heater long before we were born.

Tank heater has a tank, a heating source and water transporting pipe added with. Usually, water comes to water heater. Then the heater heat it inside the storage water tank all the time at the set temperature.

After that, we get continuous hot water all the time. The usual tank capacity is around 40-60 gallon. So, what will happen if we need more hot water at a time. We have to wait till the water becomes hot enough to use.

This may cause some serious damage when we need instant hot water. Also, we don’t need hot water all the time. However, tank water heater keeps boiling the water all the time. In other words, waste of energy.

Tankless Water Heater

Tankless or more commonly known on demand water heater is a new version of heater. Where, you will get hot water when needed only. Moreover, it only starts when your faucet or shower starts. In other words, save a lot of energy.

In a tank water heater, always heating run whether you need hot water or not. So, being idle most of the time. However, burn energy all the time. Nowadays, its a waste of energy.

Being new to market, tankless water heaters are becoming popular day by day. Moreover, replacing tank heaters market share gradually. Now, tankless on demand heaters have a market share about 20%. And increasing its use daily.

However, tankless water heating technology is new and costly too. Average tank heater price is $450, where tankless average price is $600. In addition, tankless installation fees are higher than tank heater installation fees. Therefore, we have to be mindful about that too.

Not all plumbers know how to install tankless heaters (specially the older ones). Moreover, while operating tankless heaters burn similar amount energy as tank heaters. So, if you need hot water most of the time, having tankless heaters will not make much differences.

How to Start

Changing from storage tank heater to tankless option isn’t an easy fit. Its a major change. In order to do that, you have to make change to your current plumbing settings along with electric connection capacity or gas lines capacity.

According to an ACEEE research, almost 90% of hot water installations or repair or servicing done on emergency. Therefore, you have less time to negotiate the installation fee with the plumber. Thus decreases the chance to get a discount from them.

However, if your current tank water heater is having last year or two of its service life, then you will have enough time to negotiate with the plumber. Therefore, you can get a discount or rearranged fee amount to make the change.

At the beginning few years ago, when tankless was a still new type heater on the market, consumers were not fully happy with it. They often showed excuse about less amount of hot water comparing storage tank heaters.

This may be true. However, changing storage tank into tankless means a lot. You have to change your daily lifestyle according to it. Therefore, being flexible with newer system will take time.

In addition, tankless heaters have a fixed volume that they can heat at a time. So, you may use 2-3 faucets or dishwasher at a time. However, you can’t use 2-3 showers for hot water at a time. Water temperature is also a problem. In the winter, you can’t get fast hot water. However, other seasons, you will get instant hot water.

Tank VS Tankless Water Heater

Tanked Water Heater

Usually, storage tank water heaters come with a capacity of 30-60 gallon. If you do an average then 45 gallon. Its enough for single family of 4 people (2 adult and 2 child). However, when the usage amount change then you need storage capacity accordingly.

If you are installing a huge bathtub or walk-in bathtub or corner tub for 2 people with a capacity of 50-70 gallon. Then, you will need higher capacity storage tank. For this problem, a perfect solution is the tankless on demand heater. This heater will produce unlimited hot water.

Storage tank heaters use electricity, liquid gas, natural gas, propene or fuel. Moreover, they always keep the storage full and heating ongoing. Whether you need hot water or not. Therefore, it engages it waste of energy.

Average storage tanks are 5 feet long and 2 feet wide. Dimension can change according to storage capacity. Older storage tanks take less spaces. However, modern storage tanks take more spaces. Because, recent Federal Energy Regulations makes it mandatory for high level insulation for storage tanks.

This size may not be a problem if you have basement. However, if you don’t have basement, then its a huge space you will be wasting to set the storage tank. If you need more capacity tank, then more spaces. Therefore, space is a cause of concern for storage tank.

Tankless Water Heater

Tankless or known as on demand water heater doesn’t use any water storage tank. These heaters heat water as the water passes through the heating unit. Therefore, enough space saves for the storage tank.

Usually, tankless heaters are 2 feet long and 1 feet high. For this dimension, its easy to carry and install. Moreover, it uses propene, natural gas, electricity as power source. In other words, similar power source like your old tanked heaters. Simultaneously, decreases the overall installation and maintenance cost.

On demand means when needed. That is to say, it only produces hot water when asked for. Therefore, no standby energy loss meaning extra savings from energy cost.

Easy installation on wall or floor and takes around 2-3 square feet space only. Thus freeing all the space, your storage tank heaters took previously.

Cost: Unit Price, Installation and Service

Unit Price

Storage tank water heaters usually cost around $400-$600 for standard size. These storage tanks capacity around 50 gallon. However, the price can vary depending on models and manufacturers. Moreover, if you want larger storage capacity the price will increase accordingly.

Tankless on demand heaters have higher price comparing with storage heaters. Because of modern technology and high level performance. The usual tankless heaters price ranges $500-$2000. For an output of 2-3 GPM around $500 price. However, if you need 4-5 GPM output, the price can be over $1000.


Storage tank water heaters are in the market for over a century. All plumbers have experience working with many models and sizes. Therefore, they know everything and can do it fairly easily. That’s why, the installation fee for a tank heater around $500-$800 in most states.

However, when it is tankless, you need special plumbers with previous installation experience and if possible certified. Moreover, manufacturers always recommend trained and certified plumbers. Some manufacturers might ask you to use their factory trained and certified plumbers only to be fully eligible for the warranty.

Usually, tankless heaters installation cost can be $700-$1600. This fee may be a bit more for many. However, it depends on many things. If the current water and gas pipeline diameter doesn’t set with the heater then change accordingly.

Electric tankless water heaters require 120-160 Amp. Therefore, you also have to change the your home electric connection over 200 Amp or accordingly. Some, electricity provides rebate if you change as needed. Check that, before changing the electric setting. So, that you can get rebate from them.


Both storage tank and tankless water heaters comes with 10-15 years warranty. So, its not logical to change if your current water heater already have warranty. Therefore, you can only change, if you want to buy a new one for new setting. Moreover, you can also change if current one running its last days only.

Usually, tankless heater manufacturers recommends to preventive and regular maintenance done to their heaters. However, storage tank heaters also need regular cleaning and drain to get sediment flushing out.

Many areas have hard water problem. You need to flush the heat exchanger time to time to remove the hard water agents or deposits. Its also recommended that cleaning sediment filter regularly.

Usually, these servicing tasks require plumber supports. Based on the time and effort required, this may cost around $200-$400. Depending on the water quality of your area, you may need yearly servicing.


You need water heaters for hot water. Therefore, you must check their performance first before checking other characteristics. Comparing the performance, you may decide what to choose and which to avoid.

If we set the output hot water temperature to 120° F like the standard for all types of heaters. We found that, almost all storage tank heaters and on demand tankless heaters provide similar result. Where the base water temperature is 74° F.

However, the result may change a bit if the base water temperature is low like 55-60° F. Most gas tankless heaters provide similar support, but electric ones takes more time to heat the water. So, if your area groundwater temperature is low then you choose either storage tank water heaters or gas tankless water heaters instead of electric ones.

The main performance problem of storage tank water heaters is storage tank capacity. If you need more hot water at a time than the tank capacity, then you have to wait to boil next batch water in the tank. However, tankless option solves this problem completely. Unlimited hot water all the time.

Energy Efficiency and Cost

After calculation we find that gas tanked water heaters annual energy cost is around $250. However, for electric tanked water heaters energy cost around $550.

If we do same calculation for tankless water heaters, then gas powered heaters energy cost is around $190 and electricity powered heaters energy cost is around $500.

This cost is based on same amount of hot water for a family of 4 persons. However, the cost will be same for tanked heaters if you use more or less hot water.

For tankless, the energy cost will fully depends on use of hot water. If you use more, it costs more. If less, then the cost will  go down proportionately.

As we see, gas energy cost is lower than electricity cost. Because, current price of gas is way lower than electricity. However, if you have slightly concern about global warming, you must use electric option.

Service Lifetime

According to our research and other researches about the same thing, we think you can get service from a tankless water heater with payback for 10-25 years.

Based on the price of the unit and installation charge along with servicing charge for its lifetime. We can assume a tankless heater will cost around $3000 in its lifetime.

Now, if you calculate the energy efficiency and other costs it save, you can get your money back within 10-14 years for electric tankless heaters. For gas tankless heaters, the duration can be 15-20 years.

However, if you are installing a new storage tank vintage water heater. Then, you need 22+ years to get your money back. Longer than any tankless option.


When do we need hot water? Immediately. However, with storage tank heaters, it can be immediately if the tank is full of hot water. However, when you start the heater or the tank just emptied minutes earlier. Then you have to wait till the water becomes hot enough.

While having rain shower cost a lot water. And if the tank run out of hot water, you have wait till the water becomes ready to use again. This same cause may occur while using a bath in a bigger walk-in bathtub or 2 person corner tub.

Moreover, modern large freestanding bathtub and outdoor hot tub uses more than 50 gallon hot water at a time. In other words, its become uncomfortable.

In addition, if you are using RV lifestyle where the space is limited. You can’t use regular tanked heaters in the congested space. You need specific RV tankless water heater for that. So, we can easily say that, tankless on demand hot water heaters will high your comfort level.

End Words

So, which do you pick for you new home or old renovated home or as a replacement? Its your decision and we always respect that.

We just tried to give you enough information about both tankless and tanked heaters. You must decide based on your current home condition, financial condition and other important things. Don’t just follow what we said other said blindly.

Therefore, check the full tank vs tankless water heater comparison. Moreover, try to understand what we and the manufacturers said. After that, contact the manufacturers or experts if you need to know more to make your decision.