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How Much Does it Cost to Install a Tank Water Heater in Phoenix?

November 18, 2021

Plumbers inspecting a water heater

Updated September 2022

Need a new tank water heater for your Phoenix home? You’re probably wondering how much it’ll cost you.

In Phoenix, the cost to install or replace a tank water heater usually ranges from $1,800 to $2,800, with an average of $2,200.

Some factors that go into the cost include:

  • Tank size
  • Gas vs. electric fuel
  • Efficiency rating
  • Installation

Below, we'll take a look at each cost factor to help you make the best investment possible for your plumbing replacement.


Want an expert opinion? Contact Patrick Riley, and we'll help you go over our innovative water heater options. We offer clear and upfront prices, as well as flexible financing options.


Tank Size

The more gallons of water your tank can hold, the more money it will cost you.

Although some people may want to save money and buy a smaller tank, it’s important to find the right one for your household’s needs. If your tank is too small, you’ll constantly be running out of hot water. Worse, you’ll also pay higher utility costs to heat water repeatedly.

Once you use up all the hot water, the tank has to refill with cold water that needs to heat up to a much higher temperature. This process consumes fuel, which you’ll end up seeing on your monthly utility bill. If you happen to need a larger sized tank, the investment will pay for itself.

On the other hand, if you purchase a tank that’s too big, you’ll waste money heating water you won’t even use. You could also experience problems related to infrequent use, which also have their associated repair costs.

So, to avoid wasting money or energy, you’ll want to find a tank size that fits your household’s needs. You can do this in two ways:

1. Estimate by matching your household size with gallons

To get a reasonable estimate, take a look at the below chart to match your household size with the appropriate tank water heater size:

What size water heater do I need with household size?

In the chart, you’ll see that tank estimates are provided depending on the number of people living in your home. For example, if you have more than 2 people living in your home, you’ll probably want a 40-gallon tank at the very least.

2. Calculate your “peak hour demand” for accuracy

Some households will be running multiple hot water activities simultaneously. For this reason, it’s even more important to select a water heater that can keep up with your peak hour of demand. You might only have a 2 person household, but if you use more than 30 gallons of hot water all at once, you’ll run out of hot water the same way that a 3-4 person household would.

The good news is that there’s an easy way to calculate your peak hot water consumption to find the right size of tank water heater to accommodate your needs.

First, fill out the worksheet below from Energy.gov to estimate your “peak hour demand," which refers to how many gallons of hot water your household uses at the peak of use during the day.

Worksheet for estimating your water heater’s peak hour demand and first hour rating

After you’ve determined your peak hour demand, make sure that the water heater you purchase has a “First Hour Rating” (FHR) within 1-3 gallons of that number.

“First hour rating” refers to the amount of hot water your water heater can produce in a given hour. Although you might think, “If I’ve got a 40-gallon tank, shouldn’t it be able to produce 40 gallons of hot water all at once?” — that’s not the case.

Here’s why:

Once you turn on the hot water tap and hot water flows to your appliance, new cold water will begin to flow into the tank to refill it. Once the tank is more than two-thirds empty, the majority of the tank will probably be too cold for your liking, which means you’ll have to wait for it to re-heat.

The reason “first hour” ratings are so important is because it gives you a realistic estimate for how many guaranteed gallons of hot water you can use within an hour.

When shopping for a new tank water heater, you’ll notice that most have an “EnergyGuide” label attached that clearly states the FHR rating.

Gas vs. Electric Fuel

Tank water heaters use either gas or electricity for fuel. In general, gas-powered water heaters are more expensive to install, given that they require additional venting and safety precautions from a licensed gas technician. However, your monthly energy costs will be lower, given that gas tends to cost less than electricity in most areas.

Depending on where you live, gas may not be an available fuel source. So if this is the case, you may end up having to go with an electric water heater.

That said, many Phoenix homeowners have solar panels installed, making an electric water heater a great option for fuel efficiency and savings.

There are some other pros and cons to gas vs. electric regarding replacing your water heater. For a quick reference guide, see the below chart:

Pros vs. cons of gas and electric water heater

Efficiency Rating

Most tank water heaters you find will have an “Energy Factor” (EF) rating assigned to them. The ratings usually judge how well insulated the tanks are for heat retention and how efficiently their heating mechanisms can consistently heat new water flowing into them.

In general, the higher the EF, the more efficient the water heater— and the more expensive it will be.

For gas-powered water heaters, we recommend you select a water heater with an EF of 0.60 or higher.

For electric water heaters, we recommend an EF of 0.90 or higher.

You can find the EF ratings on the product listing or description. But if you can’t find them there, check the manufacturer’s label.

Note: Electric water heaters generally have higher EF ratings, which is great news if your home has a solar system installed! However, for homes connected to the grid, an electric water heater with a higher EF rating doesn’t necessarily guarantee lower operating costs, given that electricity tends to be more expensive than gas.

Installation Costs

Aside from the purchase price of your new tank water heater, it’s important to budget for installation because that’s where the majority of your cost will be.

Two significant cost factors come into play while replacing a water heater:

1. The difficulty of installation.

The more labor your tank water heater installation requires, the more expensive it will be. Some examples include:

  • Plumbing that isn’t up to code and needs to be updated
  • New gas lines or venting need to be installed
  • Tight spaces or areas that take more time to access
  • Potential space modifications to accommodate the size of your tank

2. The plumber/contractor you hire.

In general, more experienced plumbers will charge more for their services because they have years of experience and deliver superior quality labor. Rather than risk paying twice to have a professional fix a shoddy installation, it pays to have peace of mind knowing that your water heater will be replaced safely and correctly the first time around. When searching for a trustworthy plumber or contractor, look for the following signs:

  • Proof of licensing and insurance
  • 10+ years of experience
  • Recent, positive online reviews on sites like Google, Angi, and Facebook
  • Upfront, transparent pricing
  • Written guarantee of work to be completed

Need a new tank water heater? Hire the best in Phoenix: Patrick Riley!

For a free quote on what tank water heater is best for your Phoenix home, give us a call, and we’ll send one of our expert plumbers straight away. We offer upfront prices, so you’ll never get a surprise bill!

Are you looking for another plumbing service? We offer a full suite of plumbing replacement and repair services. Visit our plumbing services page to learn more.

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