hot water heater

Believe it or not, choosing the best hot water heater for your family is a very personal choice.

Because we are all humans and we all tend to project our preferences, beliefs and values onto others, we tend to think choosing such things as water heaters would result in a pretty standard result.  “Of course Sally would choose a 40 gallon storage type water heater, wouldn’t everybody?”

The fact is that if we all had the same tastes, needs and preferences there would be very few water heaters from which to choose. 

From a macro view, water heaters come in basically two types—storage tank types in which hot water is heated and stored for future use in a quantity large enough to satisfy the demands of the family to which it belongs, and tankless types in which no reserve water is stored and cold water is “instantaneously” heated to satisfy those demands.

So the first choice you need to make is “tank” or “tankless.”

In order to make that decision we need to know the attributes of each, to determine if one or the other satisfies our particular needs and desires.

Let’s go ahead and get down to the micro level to see what will fill your needs and desires.

Of course for most folks the most important consideration is budget.  You can only afford what you can afford, right?

Let’s try to look at this from all sides and maybe we will find that more is actually less. 

A storage (tank type) heater has a lower outlay up front until you start getting into really big water heaters (around 100 gallons). Until then, the storage water heater will have an up front cost about ½ of the installation of a tankless heater.  That’s more or less, depending on the difficulty of installation and the work required to bring your new heater up to code.  

But that’s not all you need to consider to make your correct choice. You will also want to factor in the operational costs of both heaters over the expected life of the heater.  So let’s dig right in and get down to the nitty gritty.

Total Cost

Operational costs is one of the areas where tankless heaters really stand out but maybe not for the reason you would think. 

So let’s compare operational costs for both tankless and storage type heaters. Only then will we be able to determine which is the best value.  We’ll tackle storage heaters first.

Storage (Tank Type) Heaters

Storage heaters in the Illiana area have an average life expectancy of around 8 to 10 years.  Some are longer, some are shorter depending on water characteristics and heater quality.

So the first operational cost is replacement cost.  If you have to replace the heater every 8 years, it will cost you 1/8 of the purchase price every year as a very real expense. For the purposes of ease of calculation, let’s say the heater cost $1,600 installed.  Then every year, the replacement cost of the tank type heater will be $200 

Next, you have fuel usage which will vary by family and heater size, as well as fuel type, so for this example we’ll use a 50 gallon gas residential tank heater. 

Let’s say you use $50 worth of gas per month with this heater. Now, $20 of that is for keeping the water hot all the time. And $10 more is to pay for the gas that goes up the chimney because the storage type heaters only absorb about 60-70% of the heat created when burning fuel.  

You spend $240 per year heating the water, another $240 per year keeping the stored water hot and $120 per year goes “up in smoke” so to speak.

But wait, storage heaters have a dirty little secret that they would rather have you forget. That is that they become less and less efficient every year and have to burn more and more fuel every year to produce the same amount of water. 

Why? Because every day, more and more sediment builds up and burns onto the bottom of the tank, right where the heat comes from. So by the time your heater needs replacement (if the gas price stays the same) the efficiency is so low your monthly fuel burn will be more like double what it was when new. 

Accounting for the decreasing efficiency due to sediment buildup every month, let’s just agree that the real average cost of fuel is more like $75 per month over the life of the heater.

Of course all new storage heaters require that filters and screens be cleaned every 6 months and the heater needs to be flushed every 6 months so if you can’t do that yourself, add the price of a service call into the maintenance cost.  For our purposes we’ll assume the owner does his own maintenance.

Adding all these costs up (replacement and fuel), the operating cost of a tank type heater of this size can be reasonably estimated at $1,100 per year.  

Tankless Heaters

It’s pretty common knowledge that an initial tankless heater installation costs roughly twice that of a tank type heater and can be up to 3 times as much for premium heaters and/or difficult installations. 

So is it possible that a tankless heater could have operating costs close to storage heaters?

Well, let’s run the same numbers and see. 

Using the same formula as above and figuring twice the initial cost of the storage heater, $4,000 – it would seem at first glance that the replacement cost per year would be double also, correct?  

The fact is, quality tankless heaters actually have a life expectancy of up to 25 years in this area.  

So if you take that initial cost of $4000 and divide by 25, the replacement cost per year is $160 per year.  That’s a savings of $480 per year over the storage heater.

But wait a minute, you say, what if I want the premium tankless water heater and it costs me $5000??? 

Excellent question! That water heater installation has a replacement cost of $200 per year which is pretty much a wash with the tank type.

But — if you figure in escalating labor costs and water heater price inflation over the next 25 years, you would probably save much, much more.  

Then, there’s fuel cost.  In our example from above, the storage heater cost $50 per month as a fuel cost.  And remember with decreasing efficiency every month it’s really more likely closer to $75 per month over the life of the heater.

With Yes! Plumbing tankless heaters the comparable fuel burn would be around ½ of the tank type when the storage unit is new.  

Using the figures from the tank type heater example above, you would have fuel costs on the tankless heater of 25 per month. But it gets better.

Tankless heaters never lose efficiency because they don’t create build up on the heating surface.  The cost remains constant throughout the life of the heater. Because of this feature alone, your operating costs are $50 per month less than with a storage heater.

As a result the cost of fuel (again with no price increases) is expected to be $300 per year vs $900 per year for the tank type.

Adding it all up the total operating cost of an average tankless heater (including replacement) would be projected at $500 per year.  That’s a savings of $700 per year over storage type heaters.  

So if you have the money available and it’s sitting in the bank “earning” less than 1%, a better use for that money would be to use it to invest in your tankless system and let the gas company “pay you” over $700 per year in the form of a lower gas bill and operating costs.  At least then you’re making over 12% on your money. No brainer, right?  

And if you don’t have enough for that and want to finance it (Yes! Plumbing offers financing to qualified clients), you are still making the 12%+ on your investment towards finance costs, and you have the advantage of never running out of hot water — even if you leave a faucet running while you’re on vacation for 2 weeks.


The last consideration is capacity.  How much water do I need on a daily basis?

For a family of four or less, a forty gallon will be sufficient most of the time. When aunts and uncles come over to stay for a week or so you will probably run a little short.  A fifty gallon would be better if you foresee this occurrence, but consider a tankless if you have doubts.  

Tankless heaters come in a few sizes and are designed to never run out of hot water.  Ask your friendly Yes! Plumbing technician how that can work for you and your family.

Getting the Best Value

Obviously the tankless choice is the best value but at the same time the up-front cost of tank or tankless has to be considered, right?  

At Yes! Plumbing, we’ve got you covered there! We provide zero down financing for qualified homeowners with several plans to fit each homeowners’ unique needs. 

Payments can be as low as $40 per month for brand new installed heaters so when you are ready, give us a call to arrange a visit from one of our highly trained techs.  

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