Growing your tankless business

May 5, 2016
Fit problems make tankless water heaters a natural consideration For consumers, the tankless replacement offers a number of advantages Because of the higher material cost, the tankless brings in far more gross profit dollars

Tankless water heaters hold a lot of appeal for homeowners and plumbers, but adoption has been slow due to the cost differential between tankless and storage water heaters. The differential is coming down, creating opportunities for you.

Our friend, the government: With the government’s obsession on minimizing home energy use regardless of the cost to the consumer, the National Appliance Energy Conservation Act resulted in bigger storage water heaters. These cost more, of course, and they take up more space. In some cases, the extra size is merely an inconvenience, adding to the installed cost. In others, fit is a problem, necessitating either a reduction in tank size or carpentry. Ouch.

Tankless option: Fit problems make tankless water heaters a natural consideration. However, the cost of a tankless heater, combined with the complexities of the installation push the price beyond consideration for most homeowners. Until now…

One manufacturer, Noritz has just come out with a tankless water heater that is tantamount to a drop-in replacement for a 40-gal. storage water heater. The water connections are located on the top and it is sized for most existing vent and gas lines. A plumber can replace a storage water heater with the Noritz EZTR40 in a couple of hours. This puts the installed cost of a tankless in the same neighborhood as a storage water heater.  

Consumer benefits: For consumers, the tankless replacement offers a number of advantages. First, they are more efficient because standby losses are eliminated. Homeowners no longer pay to keep 40 gallons of water hot. Second, they take up less space than storage water heaters. Not only does this reduce the potential requirement for carpentry due to the increased size of today’s water heaters, but it allows homeowners to take advantage of the space previously devoted to the tank. Third, a lower water temperature can be used to reduce the risk of scalding without increasing the potential for Legionella. Fourth, hot water is supplied continuously, so homeowners will not run out. Fifth, newer tankless heaters require less frequent maintenance. Sixth, they last longer than storage water heaters. Finally, they might qualify for state tax incentives or utility rebates.

Plumber benefits: The plumbers, who are the first to adopt and promote this product, will gain a competitive advantage until the rest of the market catches up. The bigger benefit is profitability. Because of the higher material cost, the tankless brings in far more gross profit dollars. Because it takes a little less time to install than a storage water heater, the gross profit dollars are spread over fewer hours. The result is much more profit for the contractor.

Carry tankless water heaters in your trucks and you will close more sales.

One on every truck: Carry tankless water heaters in your trucks and you will close more sales. First, with the water heater on hand, it is easier for your plumbers to sell a tankless water heater than a storage water heater. If the water heater is not on the truck, the cheapest water heater becomes the easiest one to sell.

Homeowners are also more apt to proceed with a tankless water heater when it’s right there on the truck and can be installed in a couple of hours. Problem solved.

Canvas around installations: When you replace one water heater, chances are good that the customer’s neighbors will face the need to replace their water heaters.

After the installation, ask the customer for the names of the neighbors.  
Knock on the neighbors’ doors. Explain that you just completed a water heater replacement with a tankless water heater for a neighbor and your experience is that when one house in a neighborhood replaces a water heater, others soon will. If it would be okay, you would like to take a look at their water heater so you can give them a price, just so they will have it in case they need it.  

Matt Michel is CEO of the Service Roundtable. Are you in a plumbing buying group? If not, you are paying too much. Your competitors are paying less. Join the Service Roundtable and the Roundtable Rewards buying group by visiting

About the Author

Matt Michel | Chief Executive Officer

Matt Michel is CEO of the Service Roundtable ( The Service Roundtable is an organization founded to help contractors improve their sales, marketing, operations, and profitability. The Service Nation Alliance is a part of this overall organization.

Voice your opinion!

To join the conversation, and become an exclusive member of Contractor, create an account today!

Sponsored Recommendations