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Tankless Water Heater Payback Calculator
Tankless costs $1,500-$2,500 more than a tank upfront but saves 20-30% on water heating AND lasts 20+ years vs 10-15. This calculator runs the ROI.
Payback years
14.4
Annual savings
$125
Upfront premium
$1,800
Net lifetime benefit (20yr)
$2,550
Total tank cost over tankless life
$3,200
How the math works
$3,400 tankless vs $1,600 tank = $1,800 premium. 25% × $500 = $125/yr savings. Payback 14 years. Over 22-year tankless life: $2,750 in savings + $1,600 avoided second tank replacement = $2,550 net benefit.
Tankless wins for long-term holds. If you'll sell in 5 years, stick with tank — premium doesn't pay back. Match strategy to hold period.
How to Use
- Enter tank vs tankless installed costs and annual water heating bill.
- Enter expected savings %.
- See payback years and lifetime NPV.
Frequently Asked Questions
Is tankless really worth it?
Yes for long-term holds. Upfront $1,500-$2,500 premium recovered in 7-12 years via savings. After payback, net cash flow is ~$100-$250/yr. Plus a second tank-life cycle saved (tankless lasts 20+ yrs).
Do I need bigger gas line?
Often — tankless pulls more gas when running than a tank. Upgrade from 1/2" to 3/4" gas line: $400-$800. Factor in when estimating.
How much do I actually save?
20-30% on water heating portion of gas bill. Water heating = 15-20% of total utility bill. On $3,000/yr gas + electric, saves $60-$180/yr. Your mileage varies.
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