Traditional water heaters typically offer the lowest initial costs. They are also easier to install, repair, and replace than tankless options. Most conventional water heaters have a capacity of 30 to 50 gallons. The water is preheated ahead of time and held in the tank until it is needed. As the hot water is used, the tank refills and the new water is preheated.
Since conventional water heaters hold a set amount of preheated water, regardless of how much is being used, they also have the highest operating costs. The amount of hot water that you have at any given time is also limited by the capacity of the tank. This means that you could run out of hot water during periods of heavy use. Conventional water heaters also typically have a shorter lifespan than tankless models, which means that the lower price is offset by replacement costs. Conventional water heaters also take up more room than tankless versions and cannot be installed outdoors.
Tankless water heaters use gas or electricity to heat water on demand, so no water is stored. Tankless water heaters do come with a higher price tag; however, the higher cost is typically offset by lower operating costs and a longer lifespan. Since water is heated as needed, you never have to worry about running out of hot water. Tankless water heaters may be more complex and expensive to install, but they can be placed virtually anywhere and take up less room than conventional models.
Deciding which type of water heater is right for you is a matter of balancing budget against the pros and cons of each type of water heater. If you have a large family that requires large amounts of hot water, a tankless model may be your best option. If budget and ease of maintenance are your primary concern, a conventional water heater may be the best choice for you.