Sep. 08, 2025
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Thinking about upgrading to a tankless water heater? You’re not alone. More and more homeowners are making the switch from traditional tank water heaters to on-demand models. Why? Because tankless water heaters only heat water when you need it, reducing energy waste and giving you virtually endless hot water. But before you dive in, we’re here to walk you through how to choose a tankless water heater that matches your needs, lifestyle, and budget.
At Simpson Plumbing, we’ve helped hundreds of homeowners across Vancouver, Camas, and Portland navigate their water heater choices. Let’s break it down.
Unlike traditional systems that store water in a tank and keep it hot 24/7, tankless water heaters operate on demand. When you turn on a hot water tap, the unit kicks on, heating cold water as it flows through the system. This gives you hot water on demand — no tank, no waiting, and no standby energy loss.
Because they don’t store water, tankless systems are more energy-efficient. They also last longer (up to 20 years), save space, and provide a steady supply of hot water when sized properly.
But that last part is key: “when sized properly.” Let’s talk about how to find the right fit.
Choosing the right size tankless water heater is crucial to ensure your home has enough hot water when you need it. When asking what size tankless water heater do I need, it’s important to consider factors like peak hot water demand, number of bathrooms, and local climate. Learning how to size a tankless water heater correctly will help you avoid issues like insufficient flow rate or unnecessarily high energy bills. This guide walks you through each key step to help you make an informed decision tailored to your home and lifestyle.
Let’s go over these six steps in more detail.
To size a tankless water heater correctly, you need to understand your household’s peak hot water demand — meaning the maximum amount of hot water your home might use at once.
Think about typical usage scenarios:
So, if someone’s taking a shower while the dishwasher and washing machine are running, you may need 6–8 GPM of hot water output at that time. If your unit can’t keep up, you’ll either run out of hot water or the temperature will drop.
Start by listing the appliances you might use at the same time and totaling their flow rates in GPM. This will give you a good estimate of your needed capacity.
The incoming water temperature — or average groundwater temperature — affects how hard your tankless water heater needs to work.
Here in the Pacific Northwest, groundwater temperatures can hover around 50°F. If you want hot water at 120 degrees, your heater will need to raise the water temperature by 70°F — this is known as the desired temperature rise.
Smaller units may struggle to achieve that increase if demand is high. That’s why calculating both your flow rate, GPM, and temperature rise is essential when shopping.
There are two main types of tankless water heaters: electric tankless water heaters and gas-powered systems (typically natural gas or propane). Each has pros and cons.
British Thermal Units (BTUs) are used to measure gas unit capacity. The higher the BTUs, the more water it can heat quickly. In general, gas units handle higher demand better than electric ones.
Bottom line: If you have a large family or use hot water in multiple rooms at once, gas is probably your best bet. For smaller homes or single-use areas (like a guest suite), electric may be enough.
The cost of tankless water heaters varies significantly. Electric models might start around $500–$700, while gas systems can range from $1,000 to $2,000 or more. But that’s just the unit.
Tankless water heater installation may require electrical upgrades, gas line work, or venting–depending on your home’s current setup.
On the flip side, tankless units are more energy-efficient, especially in homes with moderate water use. Over time, the energy savings can help offset the initial cost.
It’s smart to think about:
Simpson Plumbing always provides transparent estimates and helps you understand what you’re paying for — no hidden fees.
Most tankless water heaters are installed inside the home (usually in utility rooms or garages), but some are designed for outdoor installation. This can save indoor space and reduce venting needs, but you’ll need to protect the unit from freezing in cold weather.
Outdoor tankless water heaters are a good option for homes with limited space, as long as they’re installed correctly and safely.
Tankless systems are known for their long-term durability, but they do need maintenance. Sediment buildup — especially in hard water areas — can reduce efficiency over time.
Here’s how to keep your system running at peak performance:
Simpson Plumbing offers regular maintenance plans to help extend the life of your investment and prevent unexpected issues.
Let’s recap the main differences between a tankless water heater compared to a traditional tank system:
Feature Tank Water Heater Tankless Water Heater Energy Efficiency Lower (keeps water hot all day) Higher (heats water as needed) Lifespan 8–12 years 15–20 years Size Bulky Compact Hot Water Supply Limited by tank size Unlimited (if sized correctly) Upfront Cost Lower Higher Maintenance Less frequent Requires descaling in hard water areasCan I replace my current tank water heater with a tankless model?
Yes, but it may require some upgrades. For example, tankless water heater installation might involve changes to your electrical system or gas lines. A Simpson Plumbing technician can assess your setup and provide a clear plan.
What size tankless water heater do I need for a family of four?
Most families of four need a unit with a flow rate of 8–10 GPM, depending on how many appliances are used simultaneously. The exact size depends on your desired hot water usage habits and incoming water temperature.
Are tankless water heaters really more efficient?
Yes. Since they only heat water when needed, tankless systems avoid standby energy loss. They’re typically 24–34% more efficient than traditional tanks, especially in homes that use less than 41 gallons of hot water per day.
Do electric tankless water heaters work well in cold climates?
They can, but they often struggle with a high temperature rise in homes with cooler groundwater temperatures. Gas models generally perform better in areas with colder climates.
How long does it take to install a tankless water heater?
Most installations take one full day, depending on the complexity of the job. Simpson Plumbing works quickly and cleanly to minimize disruption.
Choosing the right water heater is a big decision—and we’re here to make it easier. Whether you’re comparing models, sizing your system, or curious about the cost of tankless water heaters, Simpson Plumbing is your go-to local expert. We’ll walk you through every step, from choosing the best unit to professional tankless water heater installation, and we’ll do it with the honesty and transparency our customers expect and deserve.
Call today to schedule a consultation, or just reach out with your questions. We’re here to help you get the perfect system — and the perfect hot shower.
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Tankless water heaters are growing in popularity because they eliminate the need to continually heat water in a tank, meaning your energy costs remain the same throughout its lifespan. In addition to the cost savings, tankless water heaters are compact, and your hot water will have less of a chance of running out.
In this guide, we’ll explain how a tankless water heater works and the advantages of using one. We’ll also compare a tankless water heater to a conventional storage water heater. Then, we’ll provide you with the tankless water heater brands we recommend, helping you make an informed decision.
A tankless water heater, also known as a demand-type or instantaneous water heater, provides a household with hot water as needed. It doesn’t require a tank to store water like a conventional water heater because it doesn’t continually heat water. Instead, it heats water on demand so you won’t run out of hot water.
When you turn on your hot water faucet, water flows to your unit’s heat exchanger, and either a gas or electric component heats the water, which then travels through the pipes.
Here’s an in-depth description of how a tankless water heater delivers hot water to your faucet:
Your hot water needs and budget will help you determine which tankless water heater type to choose, but other factors play a crucial role in the selection process, including:
A condensing tankless water heater traps condensation and then recycles it to heat water rather than releasing it into the atmosphere. It can also collect the heat from exhaust gasses by using an additional heat exchanger. The benefit of using a condensing tankless water heater is greater energy efficiency, resulting in lower costs. Another advantage is that your options for ventilation are less expensive since the exhaust from the system is cooler.
Non-condensing tankless water heaters have a single heat exchanger. The water flows through the exchanger, and any unused exhaust heat releases through a vent. They’re less of an investment upfront, but the metal venting they require because of their higher exhaust temperatures can be expensive. They also aren’t as efficient as condensing heaters because they don’t use recycled heat from the exhaust to warm your water.
The more energy-efficient your tankless water heater is, the less it will cost to heat your water. The energy efficiency ratings for these water heaters are determined by their uniform energy factor (UEF). The UEF measures how much energy your tankless water heater uses and how much energy is required to power the heater itself. A higher UEF means the water heater is more efficient.
You can learn the estimated UEF of your water heater by checking its Energy Guide’s yellow label. Every residential water heater should have one. Compare your current UEF with other models to learn which ones provide the proper energy output for your household.
The fuel type affects the water heater’s size, capacity, and operation costs. There are also some differences in efficiency.
Electric tankless water heaters heat water using thick copper wire rods. They’re less expensive than gas-powered ones but aren’t efficient if you run multiple hot water devices. They may struggle to keep up with multiple appliances at the same time.
Installing an electric water heater is easier than a gas heater, but you might have to upgrade your electrical system. Your water flow may be weaker, but they’re quieter, smaller than gas-powered water heaters, and more eco-friendly.
Gas tankless water heaters are powered by natural gas or propane tanks. They’re more expensive than electric ones, but part of the reason is that the installation process is more complex. Installation requires access to a natural gas line and ventilation. Gas tankless water heaters are more efficient and heat the water faster than their electric counterparts. They can also service several appliances at the same time.
A plumber can install an instant hot water heater inside or outside. Outdoor tankless water heaters have vents with free airflow. They’re designed to be outdoors, but you must drain them if you live in an area that drops below freezing in the winter. Existing homes benefit from outdoor installation since indoor units require plumbing adjustments.
Indoor units require some ventilation piping and must connect to a drain to pull away water caused by condensation. Indoor water heaters aren’t exposed to the elements and don’t need as much maintenance and care. You might need to upgrade your existing gas line or electrical system to install an indoor tankless water heater.
The correct size water heater will meet your household’s hot water needs and work efficiently. Tankless water heaters are rated by temperature rise at a given flow rate, and they’re calculated in British Thermal Units (BTUs). You can find a water heater’s BTUs in the specifications and compare that number to your household’s total BTU needs. If you find that one water heater isn’t enough to meet your demands for endless hot water, you can install two or more tankless systems.
Most homes have tank water heaters, but tankless are gaining in popularity. Tankless heaters use less energy, resulting in lower costs, but they aren’t ideal for every home. In comparison, you can install tank water heaters in any home, and the tank water heater installation cost is lower than its tankless counterpart. Yet the average tank water heater has a lifespan of 10–15 years and is generally less efficient toward the end of its life, using a lot of energy to heat water and costing you more money.
Tankless and tank water heaters serve the same purpose, but they have several key differences. Below we’ve compared the differences between the two:
*Cost data in this section from Fixr and HomeAdvisor.
This is definitely a job for a pro, as it involves making leak-free water, vent, and gas connections, in the case Tankless water heaters have many advantages, but there are also a few disadvantages to choosing a tankless over a tank water heater. Below we cover the pros and cons of instant hot water heaters.
The average tankless water heater cost is $2,600*, but the range is anywhere from $1,300–$3,900. High-end brands can cost up to $6,000. Your on-demand water heater’s cost will depend on factors such as brand, model, and installation complexity.
Instant hot water heaters can work as single-point systems or heat water for the whole house. Single-point water heaters, or point-of-use water heaters, usually service a showerhead or faucet and heat 0.5–2 gallons per minute (GPM). They cost between $100 and $300.
The tankless water heater installation cost varies because you may have to upgrade your gas line or electrical system to accommodate a tankless system, but the national average is $2,500. Keep in mind that these are estimates and that installation pricing also depends on how much hiring a plumber costs in your area.
*Cost data in this section from Angi and Fixr.
As previously mentioned, selecting the correct size tankless water heater ensures your system will work efficiently. By learning your total BTU needs, you can compare it against a water heater’s specs.
Your total BTU output requirement is your household’s temperature rise at a given flow rate. The flow rate is measured in GPM and your temperature rise is the temperature at which your water initially runs subtracted from your desired hot water temperature.
You can get an accurate rating of your heater output. To determine your desired temperature rise and flow rate requirements and then compare them to tankless water heater specs, take the following steps:
If you don’t want to do the math, below are average BTU estimates according to how many people live in a household:
If you have difficulty determining your temperature rise or water flow rate, contact a plumber or home improvement professional who can help you figure out which tankless water heater size is right for your household.
BTUs Per Gallon by Region
A tankless water heater’s performance depends on the quality of the system. Some brands are designed with performance and efficiency in mind. In this section, we’ll introduce some manufacturers known for quality and reliability, but we recommend you find a local plumber for professional guidance. They’ll help you to select the best brand and model for your specific needs.
Our top pick for a tankless water heater is Rinnai. It makes both condensing and non-condensing tankless water heaters, specializing in gas or propane systems. It also provides guidance if you want to convert to an electric water heater. Rinnai tankless water heaters last twice as long as other brands and some connect to WiFi, which allows you to control your heater with an app. It also has technology that helps the heater learn your water usage patterns so that you get your hot water faster.
If you can’t find what you’re looking for from Rinnai, we have a few other trusted brands that sell premium tankless water heaters. Those include the following:
When installing a new tankless water heater, there are a few things you need to consider. If you had a tank water heater, you may need to retrofit a tankless heater. This could mean upgrading your electrical system or gas lines. You’ll also need to ensure your unit is properly ventilated and consider installing more than one, depending on your hot water needs.
Installing a tankless water heater requires an advanced do-it-yourself (DIY) skill level, as well as some plumbing and electrical experience. In addition, some tankless water heater brands may require proof of professional installation to secure your warranty. Since they’re complex systems, we recommend hiring a plumber near you and contacting an electrician to ensure proper connection to your water supply and setup installation.
Although installing a tankless water heater may be difficult, you can maintain your system yourself. Maintaining your tankless water heater will prolong its life and ensure efficiency. Some steps you have to take to maintain a tankless water heater include the following:
Opting for a tankless water heater is worth it for several reasons, including:
Tankless water heaters are energy-efficient and compact. They provide hot water on demand, which could result in lower utility bills. Consider switching from a traditional tank water heater to a tankless system if you don’t have many hot water demands or want to lower your energy consumption. Remember to find the correct size tankless water heaters to meet your household needs and properly maintain your system to ensure it works efficiently. We recommend you get quotes from reputable plumbers in your area for installation estimates.
Contact us to discuss your requirements of outdoor electric tankless hot water heater. Our experienced sales team can help you identify the options that best suit your needs.
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