Tank Vs. Tankless: Choosing the Right Water Heater

When it’s time to replace your water heater or upgrade your home’s hot water system, one big question tends to come up first: tank or tankless? While both systems have their benefits, the best choice depends on your household’s size, hot water usage, energy efficiency goals, and long-term budget.

At our plumbing company, we help homeowners make informed decisions every day. Here’s a breakdown of the key differences between traditional tank water heaters and modern tankless models—so you can choose the system that keeps your showers hot and your energy bills in check.

Consideration #1: Household Size & Hot Water Usage

Tank heaters are great for larger households that use hot water simultaneously (multiple showers, dishwashers, and laundry machines) or homes with existing tanks that meet current usage demands.

Tankless heaters are ideal for smaller households or families with staggered hot water needs or homes looking to eliminate “running out of hot water.”

Important Note: If your household has high peak demand (e.g., three people showering in the morning), you may need a higher-capacity tankless unit or multiple units installed in parallel.

Consideration #2: Energy Efficiency

Tankless water heaters win here. Because they only heat water when it’s needed, they’re typically 20–35% more energy efficient than traditional tanks, especially for homes that use less than 40 gallons of hot water daily. No standby heat loss = lower energy bills.

Tank models continuously reheat stored water, even when not in use—leading to more energy consumption over time. However, newer high-efficiency tank models with better insulation and smart controls are improving in this area.

Consideration #3: Budget & Installation Costs

Tank water heaters boast a lower upfront cost, are easier and quicker to install (especially as a direct replacement), and typically last 10 to 15 years.

Tankless water heaters have a higher initial investment (equipment and installation), may require upgrades to gas lines, venting, or electric service, and also boast a longer lifespan—15-20 years with proper maintenance. Over time, the energy savings from a tankless system can offset the higher installation cost, especially in homes with moderate to low hot water usage.

Consideration #4: Space & Flexibility

Tankless systems are compact and wall-mounted, freeing up floor space in garages, utility rooms, or closets. This is ideal for smaller homes or those looking to reclaim space.

Traditional tank heaters are bulkier and need more room for installation and clearance, though they do double as small emergency water reserves in case of outages.

Which Is Right for You?

Choose a tank water heater if:

• You need a budget-friendly, straightforward replacement
• You have a large family, and simultaneous usage is high
• You’re not ready to retrofit your home for a tankless system

Choose a tankless water heater if:

• You want high efficiency and endless hot water
• You have limited space and want a more compact solution
• You’re investing in long-term performance and energy savings

Regardless of the type of water heater you choose, you can count on us for professional installation.

Since 1943, it’s been Automatic in Memphis! Contact the experts at Automatic Air Conditioning, Heating & Plumbing to get started on your water heater installation.