When your water heater needs replacing, you can stick with a tank or switch to tankless. Each has clear trade-offs in cost, efficiency, and how it delivers hot water.
How they work
A tank heats and stores a set volume of water, ready to use but slowly losing heat (standby loss). A tankless unit heats water on demand as it flows through, so it never runs out — but its flow rate (gallons per minute) limits how many fixtures can run hot at once.
Cost and lifespan
Tanks are cheaper to buy and install. Tankless costs more upfront and may need venting or gas-line upgrades, but it's more energy-efficient (no standby loss) and lasts about twice as long — 20 years versus 10–12. Over its life, tankless can pay back the difference, especially with efficient gas.
Which to choose
Choose tankless for endless hot water, energy savings, and longevity if you can absorb the higher install cost. Choose a tank for lower upfront cost, simpler installation, and high simultaneous demand. Tankless sizing matters in cold climates where incoming water is colder.