If you're looking to improve your home's efficiency, installing a tankless water heater can be an excellent way to do so. Tankless water heaters take up far less space in your house and use less energy to do the job of heating up your bathwater, resulting in noticeable savings on your monthly utility bills.

This May Also Interest You: What’s the Difference Between Tank and Tankless Water Heaters?

As with most home improvements, there's a startup cost before you can get to the savings, so it's important to know what you're getting into.

How Much Does a Tankless Water Heater Cost?

Before you can answer this question, you've got to know what heat source you'll use: electric heat or natural gas. If it's electric, HomeGuide says you might pay a little bit less than you will with a gas heating source. In either case, the average cost of a tankless water heater is $1,400 to $5,600 (CAD 1,891 to CAD 7,562) for a tankless water heater, depending on the size of your home.

In general, the larger your home is, the harder your water heater must work. That means you'll need a stronger water heater that can handle the job. In most cases, that leads to a higher price when you actually go through the process of installing a tankless water heater.

How Does the Price Compare to a Traditional Tank Water Heater?

Typically, tankless water heaters are more expensive than traditional, tank-style water heaters of the same size.

In many cases, you'll start to notice a return on your investment in a tankless water heater after about six years. That's around when traditional tank water heaters start to lose some of their efficiency. You may need to replace a traditional water heater after eight to 12 years. Because of that, if you're not planning to live in your current home for at least six years, you're probably better off sticking with a traditional tank water heater.

But if you do plan to live in your current home for longer than six years — and especially if you plan to stay longer than 10 years — you'll really start to notice the savings. That's because tankless units are set to last for around 20 years, slightly more than double the length of time a traditional water heater is expected to work.

More Related Articles:

• Why Is My Tankless Water Heater Banging?
• How to Flush Your Tankless Water Heater: A 7-Step Guide
• A Tankless Job? Decide Whether a Tankless Water Heater Works For Your Home
• How to Install a Tankless Electric Water Heater: A 10-Step Guide
• What’s the Deal With Self-Cleaning Water Heaters?

How Much Does Installation Cost?

Costs can vary depending on the type of unit and whether you're connecting it to gas heat or electric heat. According to HomeGuide, in general, you can expect to pay somewhere between $1,400 and $3,000 (CAD 1,891 and CAD 4,051) for an electric model or $1,600 to $5,600 (CAD 2,161 to CAD 7,562) for a propane or natural gas unit, including labor. If you're installing a unit for the first time as opposed to replacing a tankless heater, your price is likely to be closer to the higher end of that scale.

However, depending on the cost of energy in your area, you could see savings on your energy bills. Those do take time to add up but can eventually make a difference. If you've got the money to pay for a tankless water heater and the time to reap its benefits, the costs may work themselves out in the long run.

Other Costs Associated With Tankless Water Heaters

Much like draining and flushing a traditional water heater, a tankless water heater has its own maintenance costs. Unless you're skilled at taking care of a tankless system, you'll need to call someone in to clean out sediment from your tankless heater at least once a year, which can cost around $75 to $250 (CAD 101 to 338), according to HomeGuide.

Otherwise, the net result is mostly positive. Tankless water heaters can qualify for a tax break, and energy bills may start to drop for the majority of families. If you're interested in making the switch, the benefits will usually outweigh the costs in the long run.

All CAD conversions are based on the exchange rate on the date of publication.