Tank vs. Tankless: Which Water Heater Should You Choose?

August 18, 2022
Water Heater in Detroit, MI

Water heaters are so integral to modern life that they’re easy to take for granted, but they become impossible to ignore if they run out of hot water or break down. If the time has come to replace the water heater in your home, then you may be debating whether to replace it with a traditional storage tank water heater or upgrade to an on-demand system, which are becoming increasingly prevalent.

Initial Cost

Tankless water heaters cost more to purchase and have installed. You should expect to pay at least 50% more for an on-demand system, and costs can be up to three times as high depending on the home and other factors. Many homes require an upgrade to their electrical systems before a tankless water heater can be installed. It is worth noting that these averages at the higher end account for that. This is still an initial cost but one that you will not have to pay again when the system is replaced.


The ENERGY STAR Rebate Finder is an online tool that you can use to find rebates available in your area for water heaters and other large home appliances. A rebate can help offset your upfront expense, and while there are rebates available for traditional water heaters, rebates for tankless water heaters are more prevalent and tend to be more lucrative.

Month-to-Month Costs

Traditional water heaters store water and have to keep it warmed to a particular temperature so that it’s available when you need it. That results in a lot of wasted energy while you are, for instance, asleep and away at work. Tankless water heaters only heat water when you need it. The U.S. Department of Energy estimates that on-demand systems are up to 34% more efficient and that the average home will save $44 annually with an electric system and $108 annually with a gas-fired system.

Equipment Lifespan

Another factor to consider is how long the water heater will continue to run at peak efficiency. The average tank water heater will last between eight and 12 years, and the industry recommendation is to replace it proactively when you reach the 12-year mark. The average tankless water heater will last 20 years. These systems can often last much longer with regular maintenance, and if an older tankless system is running well, it is advisable to continue using it and enjoying those savings.

Electric vs. Natural Gas

The general rule with water heaters is that gas units will cost more to purchase and install than electric units but will cost less over the life of the equipment due to the lower month-to-month costs. This is due to natural gas being significantly cheaper than electricity. If you need your home converted, that is another consideration. It would be a one-time cost but still an increase to your initial expense. When it comes to tank water heaters, another pro for electric is that larger tanks are available, and another pro for gas is that it allows for faster hot water recovery. Of course, neither of those advantages are relevant when discussing on-demand systems.

Total Cost of Ownership

Tankless water heaters and gas on-demand systems, in particular, will have the lower total cost of ownership. But that does not necessarily mean real savings in the short term. For instance, if you converted from a gas-fired tank water heater to a tankless gas water heater, you may be able to save more than $500 annually over the life of equipment but may not recoup your initial investment until about the 20-year mark. The benefits therefore lie in the increased home comfort and the very long-term potential savings.


Another advantage of tankless water heaters is how compact they are. You can install an on-demand water heater in an attic, in your garage or on a wall in a room that is used for different purposes. Tank water heaters have a much bigger footprint and often require a small room that is dedicated to them or will take up an entire corner in a garage or similar area.

Hot Water Supply

Whether you opt for tankless or a storage-based water heater, it is imperative that it be appropriately sized for your household. Assuming that is the case, an on-demand system is superior as it provides you a virtually limitless supply of hot water. Typical water heater tank sizes range from about 25 to 100 gallons, and when usage spikes, you run the risk of running out of hot water no matter the size.

Recovery Rate

Among tank water heaters, recovery rate indicates how fast the water heater can restore its hot water supply, and it depends on a number of factors, including whether the unit is gas fired, wattage for electric water heaters and the average ground water temperature in your area. Recovery rate is not a consideration for tankless systems as there is no water supply to recover.

Hot Water Waiting Time

Hot water waiting time depends not only on the water heater you choose but your home’s plumbing system. The general rule is that less than 10 seconds is ideal, less than 30 seconds is borderline acceptable and greater than 30 seconds is unacceptable. A common perception is that tankless water heaters can provide instant hot water. This is true for point-of-use systems. For most residential systems, it is not. In fact, traditional water heaters tend to have a lower waiting time by a few seconds or less, but in a well-functioning plumbing system, the difference is generally negligible.

Recommended Routine Maintenance

The industry recommendation is to have your tank water heater inspected once a year. You should also flush the water heater once or twice a year if you have hard water. We recommend that your on-demand system be inspected once a year. You may also need to call professionals to descale and flush it.

Leak and Water Damage Potential

Tankless water heaters can leak, but due to the design, such leaks are generally minor in nature. They are simple to repair and do not result in serious water damage. Tank water heaters can have minor leaks too, but they can also experience much more substantial leaks. Depending on the size of your tank, that can mean significant water damage. This is among the primary reasons that the industry recommends proactive replacement as tank systems get older.

Your Local Water Heater Experts in Greater Metro Detroit

C & C Heating & Air Conditioning has served Detroit and all of Southeastern Michigan since 1948. We have been an established and trusted company in this region for more than 70 years. Our company installs, maintains and repairs both traditional and tankless water heaters, and we’d be happy to help you determine which approach is best for you and your home. We also provide installation, maintenance and repair services for cooling systems, heating systems and indoor air quality equipment. Call us today or contact us online to schedule an appointment. We have licensed and skilled technicians who will be happy to take care of all your heating or cooling needs.

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