It can be an annoyance for any homeowner, but one that inevitably happens — a broken water heater. Heating water is the third largest monthly home expense, just after heating and cooling. In fact, in most homes, it makes up approximately 13-15 percent of your utility bill.

Buying a new water heater is a burdensome expense, so naturally we look for the best deal possible — but it’s important to keep in mind that the cheapest water heaters to purchase are usually the most expensive to run. Here’s what you need to know before you go shopping:

Save on purchasing a water heater

When the time has come to shop for a new water heater, there are online options (in addition to your local home improvement stores) that you should browse and compare. In addition to water heater tax credit information, here are a few water heater suppliers that often run discounts and low prices:

  • Sears Outlet Online – Check out Sears Outlet online before making a trip to your local store. You can even type in your zip code, and they will show you discounted units available in your area, some discounted between 60 and 70 percent!
  • TanklessKing– For those who are interested in tankless units, you may want to browse around this website.
  • Heater Outlet – Another site to search for water heaters…or anything heating/cooling related!
  • Tax Credit – Click here to learn more about tax rebates and credits you may be eligible to receive if you install a specific water heater in your home. Tax credits can be as high as $300.

Here are some tips to keep in mind when purchasing a new unit:

  • Determine your fuel type – oil, propane and natural gas are cheaper to run than electric water heaters. If electric is among your considerations, call your utility company and ask about their off-peak electric rates when it comes to heating water. This is available through some utility companies and can make purchasing an electric unit more advantageous.
  • The efficiency of a water heater is measured by its EF, or energy factor. The higher EF on the water heater, the more efficient that particular model is.
  • Consider purchasing a Heat Pump Water Heater. Though these units are more expensive upfront, they can reduce your water-heating bill by up to 50 percent and are a great option for those who live in moderate climates.
  • If you plan to purchase oil-fired or gas water heating units, be on the lookout for units that have sealed combustion or power venting features. These will prevent combustion gases from seeping into your home.
  • If at all possible, do not put a water heater in an unheated basement. If this is the only location to install the unit, consider insulating the water heater. There are many techniques online to insulate, and most are quite inexpensive!
  • Try to shorten the length of the pipes from your water heater to your kitchen and bathrooms as much as possible.
  • FHR is the measure of how much hot water the heater can produce during a high-usage hour. Before you buy, Google "Estimating Peak Hour Demand/First Hour Rating," and look for a unit in the range of your worksheet total. Remember, water heaters with the biggest tanks do not always come with the highest FHR.

Save on running a water heater

Once your water heater is installed, follow these helpful tips to lower your usage:

  • Check for any leaky faucets, showerheads and bathtub fixtures – you will pay $1 more per month for every leak that produces a drop per second.
  • Decrease your water heater's temperature setting to 120°F. Also, keep an eye on temperature settings if you have an electric water heater; these usually contain two thermostats that control the lower and upper heating elements. Keep settings at the same level to prevent burnout or too high a workload for one element.
  • Purchase and install low-flow showerheads or faucet aerators – these could potentially decrease your consumption of hot water by 50 percent.
  • Approximately every three months, you should drain at least a quart of water from your tank. This will help remove any sediment that has collected (which causes the interruption of heat transfer, thus lowering the efficiency of the unit).
  • Consider taking a shower over a bath; showers generally use less than 10 gallons of hot water per five-minute shower, whereas a bath uses between 15-20 gallons of hot water.
  • Consider installing a hot water heater timer that shuts off your system at night and turns it back on in the morning. Within a few months, your timer has paid for itself!


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3 thoughts on “How to Save on Water Heating Costs”

My family owns a water heating company. Another way to save if you’re looking to purchase a new water heater, think used. Many companies have used water heaters that others have discarded in order to upgrade, etc. I know that we have a couple dozen in the garage. They are often willing to sell for cheap and they are up to code. Obviously, Sears and Lowe’s wouldn’t have these, but you could always try a local company.


One thing people should be aware of is if you are having problems with your water heater, it could cause a spike in your electric bill. Ours kept tripping itself off because it was heating the water up too much, and we reset just a few times until it could be fixed correctly. That really make our electric bill the next month a lot higher. After being fixed, it went back to normal, of course.


Pizzaz lives in Arizona where you can literally fry an egg on the sidewalk during the HOT summer months. I turn off my water heater during the summer and the water still comes out very hot. WooHoo?