Water Heater Prices | How To Find The Most Economical Affordable Model


When looking for a new water heater it is always a good idea to compare water heater prices. However, in doing so you need to evaluate the purchase price of each model in relation to its heating capacity, its operating costs, its installation cost and the manufacturer’s warranty coverage. ALL of these factors need to be considered when choosing the best affordable model that will satisfy your water heating needs.

Heating Capacity

Many buyers of tank models evaluate hot water heater prices on the basis of the water heater’s storage capacity. Although the storage capacity of a tank unit is important, its heating capacity is more important. Its heating capicity is indicated by its “First Hour Rating” (FHR), which you can find in the water heater’s specifications. The FHR tells you how much hot water the unit can provide during one hour of use. To be sure that the model that you choose will satisfy your water heating needs, you should not focus on its tank size, but rather determine whether its FHR exceeds your household’s hot water usage during your peak usage hour. The FHR reflects the power of the tank water heater’s heating system, and in some cases larger units have lower “First Hour Rating” than models with smaller tanks.

In the case of tankless water heater models, you should only compare the prices of models that can handle flow rates that exceed your peak hot water demand at the average winter ground water temperature in the area where you live. For a guide to tankless water heater sizing, read the article Whole House Tankless Water Heater.

Efficiency and Running Costs

Electric water heaters are generally cheaper and more efficient than gas models, but because natural gas is much cheaper than electricity, gas water heaters have far lower operating costs. Gas models also heat water more quickly than electric units and consequently have a faster recovery time.

High efficiency tank models achieve their efficiency through the use of better insulation, the incorporation of heat traps and less wasteful heating systems. High efficiency electric water heaters have efficiency levels of over 95%.

High efficiency gas models usually have efficiencies of 63- 64%, and are about 8-10% more efficient than standard gas storage tank water heaters. This modest increase in efficiency alone does not justify the higher water heater cost. However, these water heaters are usually also more durable than the standard models, they often have more advanced features, and they have longer warranties. High efficiency gas models are also eligible for substantial rebates (see below). Electric water heaters do not, however, qualify for these rebates.

Tankless water heater models cost more than standard tank models, but gas models that qualify for a tankless water heater tax credit are about 20% more efficient than high efficiency storage tank gas models. They achieve this higher efficiency because they only heat the water when you need it. With a tankless water heater you do not have to pay to keep a whole tank of water hot twenty four hours a day. A properly sized model will provide the additional advantage of providing you with an endless amount of hot water whenever you need it. For a comparison of tankless water heater prices read the article Tankless Water Heater Prices.

There are tank and tankless gas water heaters that match or exceed the efficiency levels of electric water heaters. They achieve their high efficiency by utilizing the heat that would normally be vented through the flue. These gas models are called condensing water heaters, and they are not only very efficient, but they are more eco friendly and have lower fuel costs. Condensing water heaters can reduce energy bills by more than 40% when compared to standard gas tank models.

Heat pump water heaters extract heat from the surrounding air and solar water heaters use the free energy of the sun. Both of these environmentally friendly technologies are expensive, but they can cut your water heating bills by more than 60%.

Whatever type of water heater that you are interested in, you will find that the lower priced economy models are usually less efficient. Running a low efficiency water heater will result in higher energy bills. The lower hot water heater prices will provide immediate savings, but these units will usually cost you more in the long run.

The more expensive higher efficiency models not only have lower operating costs, but many of them are eligible for an Energy Star water heater tax credit and rebates from local utility companies. The tax credits not only reduce the purchase price of eligible models, but the 30% federal tax credit can also be applied to the installation cost. With the combination of the savings from rebates and lower operating costs the high efficiency models are often more economical in the long term. For a description of the eligibility requirements for water heater tax credits, read the article Energy Star Water Heater.

Energy is wasted when standing water cools in long hot water pipe lines that feed remote areas of your home. You can prevent this energy wastage and reduce your water heating bills by installing point-of-use water heaters in distant bathrooms and laundry rooms in your home. These small affordable water heaters are low capacity electric tank or tankless units that are designed to serve only the hot water fixtures in the area where they are installed.

Installation Costs

Tank-style water heaters are cheaper to install than tankless models, and if you need to replace your tank water heater, the cheapest option is to purchase a tank model that uses the same fuel as your existing water heater. If you plan on replacing your standard tank model with a high efficiency tank model or a heat pump water heater, the connections will be the same, but because of the extra insulation and the space occupied by the heat pump, the new model may not fit into the space occupied by your old water heater. If the allocated space is restricted, you should get the measurements of the new unit prior to purchasing it.

If you would like to replace your tank water heater with a tankless unit, you need to consider the high installation cost. This is especially true for gas tankless models. Except for the very low capacity units, you will need to upgrade your ½ inch gas lines to ¾ inch, and because of the high combustion temperatures you will need to purchase a new venting system. Before purchasing a gas tankless model you should get a quote from your plumber and then decide whether the benefits of the tankless model warrants the higher price and installation costs.

Tankless electric water heaters have high power requirements and you will need to upgrade your electrical supply. These upgrades will, however, not be as costly as upgrades to an existing gas system.

Quality and Warranty Coverage

In spite of the large number of water heater brands on the market, there are surprisingly few water heater manufacturers. In fact many competing brands are made by the same company. For example, A.O Smith not only makes water heaters under its own brand name, but it also manufactures water heaters for Kenmore, American, Maytag, and Whirlpool. Rheem makes its own models and models for General Electric. Paloma, a large manufacturer of gas water heaters, makes models under many brand names.

The prices of water heaters with the same features, made by the same company often vary widely, and it may appear that you have saved a substantial amount of money by purchasing the Kenmore brand from Sears rather than purchasing the same water heater with the A.O. Smith brand name. This may, however, not be the case, for although the advertised features of the two models are the same and they look identical, the less expensive model may have cheaper components and the warranty and customer service may be inferior. For this reason it is important to read consumer reviews about the water heaters you are most interested in. By learning from the experience of other users you can save yourself unnecessary costs.

Water heater warranty coverages are usually for 6, 9, or 12 years. Water heaters that have a longer coverage cost more, but the extra cost is worth it, for they usually have more durable heating systems with more efficient heat transfer. Tank models also have thicker insulation, more corrosion resistant tank linings and larger corrosion protecting anode rods.

A longer warranty coverage does not, however, necessarily mean better warranty service. By reading consumer reviews online you can quickly determine which brands to avoid.

From the above discussion it is obvious that water heater prices when considered in isolation can be very misleading and result in poor choices. It is therefore important to make educated choices by doing diligent research, or by seeking the advice of a plumbing contractor or another authority.


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