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I priced my first water heater install by calling a supply house, doubling the unit cost, and adding $200 for labor. The job took five hours, I had to run back for a thermal expansion tank, and I made about $11/hour after expenses. That was the last time I guessed.
Water heater installs are bread-and-butter work for plumbers, but the pricing gap between contractors is wild. I've seen quotes for the same 50-gallon tank swap range from $800 to $2,400 in the same zip code. The difference isn't greed or incompetence. It's that some contractors know their numbers and others don't.
What the equipment actually costs you
Your wholesale cost is your starting point. Here's what you'll typically pay through a supply house in 2026:
| Unit type | Your cost (wholesale) | Typical customer price |
|---|---|---|
| 40-gal tank (gas) | $380-$520 | $550-$780 |
| 50-gal tank (gas) | $420-$600 | $620-$900 |
| 50-gal tank (electric) | $350-$500 | $520-$750 |
| Tankless (gas, mid-range) | $750-$1,200 | $1,100-$1,800 |
| Tankless (electric) | $400-$650 | $600-$975 |
| Heat pump hybrid | $1,100-$1,600 | $1,650-$2,400 |
That markup column represents 45-55% on average. Some plumbers go higher on budget units and lower on premium ones, which makes sense. A customer spending $1,800 on a tankless unit is more price-sensitive on the equipment than someone buying a $380 basic tank.
Labor: the part most people get wrong
A straightforward tank-for-tank swap takes 2-3 hours for an experienced plumber. But "straightforward" has a lot of asterisks. Here's what actually happens on real jobs:
- Drive time to the job (30-45 minutes each way in most markets)
- Drain the old unit (20-40 minutes depending on condition)
- Disconnect and haul out the old tank (heavier than people think, especially from basements)
- Set the new unit, connect water lines, gas or electrical
- Install new flex connectors, shut-off valve if needed, expansion tank
- Test for leaks, light pilot or verify electric, check temperature
- Clean up and haul away the old unit
Realistically, you're looking at 3-4 hours of your time on a clean swap. Tankless conversions (going from tank to tankless) run 6-10 hours because you're running new gas line, venting, and often upgrading the gas meter.
Check what plumbers in your market charge per hour using the contractor rate lookup. National averages for licensed plumbers in 2026 sit around $85-$130/hour, but that varies significantly by region.
The full pricing breakdown
Here's how a real quote should look for a 50-gallon gas tank replacement:
| Line item | Cost to you | Customer price |
|---|---|---|
| 50-gal gas water heater | $480 | $720 |
| Expansion tank | $32 | $55 |
| Flex connectors, fittings, tape | $28 | $48 |
| Permit (where required) | $75 | $75 |
| Labor (3.5 hrs x $110/hr) | - | $385 |
| Haul-away / disposal | $25 | $50 |
| Total | $640 | $1,333 |
Your gross margin on that job is about $693, or 52%. After overhead (truck, insurance, tools, office costs), your net is probably $400-$450. For roughly half a day's work, that's solid.
Tankless conversions: where the real money is
Tankless installs are more complex but the margins are better in dollar terms. A typical gas tankless conversion runs $2,800-$4,200 to the customer. Your equipment and material cost is usually $1,000-$1,600, and labor runs 6-10 hours.
The catch: you need to price in the things customers don't see. Running a new dedicated gas line from the meter can eat 2-3 hours alone. Stainless steel venting runs $15-$25 per foot. And if the gas meter needs an upgrade (common when going from a 40,000 BTU tank to a 199,000 BTU tankless), the gas company handles it but you'll spend time coordinating.
I add a $150-$250 complexity buffer on every tankless conversion. About half the time I use it, and the other half it's pure profit. Beats eating surprise costs.
Pricing by region
Geography changes everything. A water heater install in rural Tennessee doesn't command the same price as one in San Diego. Here are rough ranges for a standard 50-gallon tank swap, fully installed:
| Market type | Total installed price |
|---|---|
| Rural / low cost of living | $900-$1,200 |
| Mid-size metro | $1,100-$1,500 |
| Major metro (coastal) | $1,400-$2,000 |
| High-cost (SF, NYC, Seattle) | $1,800-$2,600 |
If you're not sure where you fall, the contractor rate database breaks down plumbing rates by city.
Common mistakes that kill margins
After years of talking to plumbers about their pricing, the same problems come up over and over.
Not charging for drive time. If you spend an hour round-trip getting to a job, that hour costs you money. Build it into your labor estimate or add a trip charge ($50-$100 depending on distance).
Forgetting the small stuff. Teflon tape is cheap. But expansion tanks, new shut-off valves, permit fees, and disposal fees add up fast. A $75 expansion tank you forgot to include on five jobs this month is $375 out of your pocket.
Quoting over the phone without seeing the job. A "simple tank swap" in a customer's mind might involve a water heater in a crawl space with 18 inches of clearance, accessed through a bedroom closet. Always see the job first, or at minimum, get detailed photos.
Competing on price with the $799 guys. Big box stores and loss-leader operations will always undercut you. You compete on speed, warranty, licensing, and the fact that you'll actually pull a permit. Let them have the race to the bottom.
Building your price list
Most successful plumbing operations develop a flat-rate price sheet for common water heater jobs. It speeds up quoting and removes the temptation to discount on the fly. Start with these categories:
- Tank-for-tank swap (same fuel type, same location): your base price
- Tank relocation (different room or floor): base + $300-$600
- Tank to tankless conversion: separate pricing tier entirely
- Code upgrades during install (expansion tank, pan, seismic straps in earthquake zones): itemized add-ons
Run your numbers through the plumbing pricing calculator to verify your margins before you commit to a price sheet.
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