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How Much Does a Replacement Water Heater Really Cost?

Published May 3, 2023
Written by Eric Smith
How Much Does a Replacement Water Heater Really Cost?

Straight talk from our Wisconsin Master Tradesman unpacking water heater replacement costs to reflect the market conditions of 2024.

Whether your hot water heater has given up the ghost or you’re in the market for a new water heater upgrade, wondering what a water heater replacement costs is sure to be top of mind! We unpack this common question and break down all of the associated costs of getting a new hot water heater in 2024. We know the internet is full-to-bursting with articles on this topic, but ours is better—and the information here is specific to our lovely state of Wisconsin.

Before we look at the present cost of a water heater, let’s take a trip down memory lane… Back in 2003, our Team installed 40-gallon water heaters out the door for just $617, and 50-gallon water heater for $722 flat. It’s hard to believe that was 21 years ago! The market has changed so much since then.

Today, in 2024, installing a residential replacement water heater can cost between $1,800 at the low end and $8,000 at the high end with the average 40-50 gallon water heater landing around $2,500.

We know, we know: a range that broad doesn’t tell you nearly enough to make a decision and you may not have a 40 or 50 gallon water heater. Just sit tight while we peel back the price onion and uncover all the hidden layers that can turn a budget of $1,800 into a total investment of $8,000. And no, you don’t have to invest $8,000 in a hot water heater!

Note: As we move deeper into 2024, we are seeing the cost to replace a water heater to be reliably flat and inline with the cost to replace a hot water heater towards the end of 2023.

What factors determine the true total cost of a water heater replacement?

Before any work begins, we provide our clients with a precise, transparent, bottom line cost of their water heater replacement. Although we don’t sell all of the different installation components individually, this guide offers an itemized breakdown of the main cost factors of a water heater replacement service so that customers know what they’re paying for.

Here are the three major items that combine to total the cost to install a replacement water heater.

Water Heater Equipment & Materials Cost

Largely, you’re in control of what type of water heater you decide to replace your existing water heater with. Of course, a small portion of that decision will be swayed by your existing plumbing system and what you’re hoping to gain with your new water heater installation. If you’re planning on a “like-for-like” water heater replacement, there won’t be as many modifications as, say, converting to a completely different type of water heater. Understandably, installation and material costs can vary pretty significantly between such different situations.

Water Heater Installation & Permits 

The installation is all of the work required to take the new water heater and adapt it to your existing plumbing system in a workmanship and code compliant manner. Speaking of being code compliant: Permits are not the most expensive contributing factor—usually not even by a long shot—but it is a necessary cost. We pull permits on all water heater installations with the relevant local governing institutions before we install or upgrade your water heater. After the installation, the plumbing inspector will come in and inspect our work to ensure that we’ve been code-compliant and thorough about your safety. This inspection is included in the permit that we pull.

Water Heater Accessories

Some things are just nice to have. Some examples of completely optional accessories you can purchase with your new water heater are: water heater drain pans, emergency shut off valves, water leak detectors, recirculation pumps, tank capacity boosters, water heater expansion tanks, and extended warranties. 

Now, it’s time for the nitty-gritty! Let’s look a little closer at each of these categories.

Potential Water Heater Equipment and Materials Cost: ~$950–$3,700

This is the lion’s share of the tangible costs associated with a water heater installation and covers both the water heater itself (equipment costs) and the materials required to complete the installation. The variance in water heater costs as well as materials required to install them are based on:

  • The kind of water heater you select to replace your old one
  • The efficiency rating of the replacement heater
  • The fuel source required to power it

(Check out our guide, Water Heaters 101, for a complete write-up of the different types of water heaters available.)

Specific Water Heater Costs

Austin Plumbing, Heating & Air is not a retailer, so we do not sell water heater equipment separately from our hot water heater installation services. However, as a purchaser and installer of water heaters, our due diligence involves an understanding of the market in which we participate. The following estimates are based on more than eight decades of experience and research.

  • Standard gas WH equipment costs: $700$1,400
  • Standard electric WH equipment costs: $700$1,500
  • Heat-pump (hybrid) WH equipment costs: $2,000$3,200
  • Power vented gas WH equipment costs: $1,400$2,000
  • Tankless gas WH equipment costs: $1,800$2,500

Water Heater Installation Materials: ~$150–$500

Even the most basic installation or replacement takes certain fittings and materials to make it happen. Because water heaters don’t come with these materials automatically, and because the prices of high-quality materials have gone up substantially over time, these overhead costs are also factored into your quote.

What Are the Most Common Materials Required for Hot Water Heater Replacements?

These often include:

  • Hot/cold water shut-off valves
  • Dielectric unions, which connect the copper water piping to the heater
  • Electrical fittings 
  • Gas pipe fittings
  • Incoming gas shut-off valve
  • Flue and vent pipe fittings
  • Relief valve tubing 

Relocation, a change in fuel type, and upgrades in venting can be some of the costliest aspects of replacement. These factors alone can account for roughly $500 in material cost, sometimes more.

Water Heater Installation & Permits: ~$800–$2,125

For reasons of compatibility, your existing water heater, home plumbing system, gas or electrical system, and exhaust all play a role in determining the cost of the installation. In addition to the examples mentioned earlier in this article, this also includes infrastructural considerations like the shape of your flue piping, the desired location of your new heater (if changed), and any venting, intake, or drains that need to be installed.

In short, the more dramatic the change, the more complex the installation must be—and therefore the greater impact it will have on your total cost.

What Does Typical Water Heater Installation Include?

Ultimately, our job is to adhere to legal codes while adapting your replacement water heater to your home’s systems. Examples of normal installation items that are commonly included in our water heater replacement pricing:

  • Delivery of the new appliance
  • Floor protection materials (drop cloths or other methods)
  • Removal, haulaway, and disposal of your old heater by a secondary support technician
  • Connecting the new water heater to your existing hot/cold water piping 
  • Connecting the new water heater to your electrical or gas system
  • Connecting the new water heater to your current flue, venting or exhaust system
  • Installation of any accessories purchased
  • Completion of any necessary plumbing code updates 
  • Customer training and install overview
  • Warranty registration and post-installation followup

Water Heater Permit Costs- $125

In most of the Southeastern Wisconsin communities we serve, permits are required even to perform a like-for-like replacement. This assures our customers that their new water heater was installed to code and to the highest standards of craftsmanship, because the local building inspector will be back to confirm that everything is perfect.

The permit itself almost never exceeds $125 in price. However, there are rare cases in which a building inspector requests additional modifications to the existing gas, electrical, or plumbing system upon inspection, which may incur additional costs not predicted before the initial replacement.

Potential Cost of Water Heater Accessories: $100-$2,000

We and many of our customers consider this the fun part of the process. Here, our goal is tailoring to your personal wants and needs, which means finding solutions that don’t leave you beholden to your current plumbing, gas, or electrical systems.

For example, if you find yourself running out of hot water before you’re done using it, but your system won’t support a larger water tank, we have accessories that can boost tank capacity. There are also add-ons that can help prevent flood damage, like leak alarms.

Most Commonly Purchased Accessories for New Water Heaters

These include:

  • Instant hot water heater pumps, also known as recirculation pumps. These are one of the more expensive examples, and they can take a toll on your heater over time, but some customers find them necessary to their daily work. 
  • Emergency drain pans. If your water heater were ever to spring a leak, having invested in a drain pan would prevent that leak from turning into a house flood. The biggest factor in this accessory’s cost will be the location of the drain. Ultimately, a water heater drain pan can add as little as $100 or as much as $400 to your total, but it’s easy to see why they’re so popular despite that.
  • Emergency shut-off systems. These wonders of modern technology can detect problems with your water heater before you notice them, because that might be too late! To protect your home and safety, this accessory shuts off the appliance altogether the moment something starts to go wrong. A state-of-the-art system like this can be well worth the cost, but if you’re intent on equipping yourself with one, be prepared to budget between $900 and $1,400 for it.
  • Extended warranties. The difference between a water heater with a six-year warranty and one with a 10-year warranty is a simple matter of purchasing an extended warranty directly from the manufacturer. The choice to extend the warranty of your new heater by an additional four years, bumping it from six to ten years, could add around $300 to the total cost of replacement, but could save you thousands in the long run.
  • Expansion tanks. These extend the life of the water heater by mitigating the stress of constant expansion and contraction in response to significant temperature changes. An expansion tank can add $500-$700 to the water heater replacement cost, but it is designed to add years of use to your residential water heater.

Additional Considerations in the Cost of Water Heater Replacements

Easier Said Than Done

We make water heater replacement look easy, but it’s not. Our team members are just extremely competent at their jobs. When you hire Austin Plumbing, Heating & Air for professional water heater replacement services, the entire process really will appear awe-inspiringly simple—but make no mistake: there is a lot going on behind the scenes!

Staying in Business

Margins and markups are never randomly decided. The most operationally-efficient of plumbers still strive for a net profit of 10-20% when replacing a water heater and must price all aspects of the installation in this article accordingly. This is why, when comparing the retail value of materials and equipment to the price you pay for installation, there is usually a 40-50% discrepancy. Some companies may exceed the reasonable limit, but we don’t. Charging a respectable price for all it takes to install a replacement water heater enables us to stand behind our work and continue serving you happily for years to come.

Water Heater Prices Have Stabilized Early in 2024

Water heater replacement services don’t exist in a realm that transcends the surrounding economy. Every component of the process, from equipment and materials to labor and permits, has skyrocketed—resulting in increased and fragmented pricing for all of us. 2023 was a fairly volatile year for water heater heater pricing. For much of the water heater replacement industry, especially its humble contractors, water heater prices have seemed to peak in 2023 and are staying flat into 2024. Of course, only time will tell if this trend will continue. One thing is for sure: The cost to replace a water heater will not be going down, so if you need one now, get one installed now.

Water Heater Replacement Freebies for Choosing Austin Plumbing, Heating & Air 

The “Austin Factor” is elusive to describe, but is clearly seen in the results we bring you. Though most plumbers can perform a basic install—heck, even some laypersons know their way around a water heater—we provide a range of professional resources that no one else can, including:

  • Same-day water heater replacement: In an emergency, you don’t have to wait.
  • Fully stocked warehouses: Gas, electric, and tankless models ready before you even call.
  • We truly honor warranties like no other plumbing company in business.
  • Financing for water heater replacements: One way many clients help reduce the overall cost burden of getting a new water heater is to take advantage of one of our many financing programs. 

The Simplest Breakdown of Water Heater Replacement Costs

In short, it’s both accurate and useful to think of a 50-50 split between the tangible parts of a water heater replacement (materials, equipment, parts) and intangibles such as the service, installation and backend work required to complete the water heater installation. 

The calculus used to derive the selling price of our services is a bit too sophisticated for a guide, and it would do nothing to illuminate the service as a function of its parts. For example, we don’t sell a “pulled water heater permit” service: it wouldn’t make sense for us to pull permits unless we were preparing for an install. But the price of a permit is a necessary factor in price determination.

Overall, we find it more helpful to go out on a limb and show you all the factors of water heater replacement in simple English. This gives you the chance to do the math and verify our claims yourself, so that you can have greater confidence in your choice to go with us.

Austin Plumbing, Heating & Air: 80 Years of Satisfied Customers & Water Heater Replacements 

If you live in Wisconsin and are wondering who the best choice is for water heater replacement, think Austin Plumbing, Heating & Air. We install more replacement water heaters in our market than any other service contractor—literally. We’ve amassed hundreds of five-star reviews for our water heater replacement services alone, and that’s just the beginning of the list. Want to experience a 5-star water heater replacement or installation? Just call (262) 367-3808 today!

About The Author: Eric Smith
Eric Smith is a 3rd generation State of Wisconsin Master Plumber, Water Well Pump Installer, Plumbing Contractor, Water Well Contractor, HVAC Contractor and Water Treatment Expert and the owner of Austin Plumbing, Heating & Air.