According to a report by Jay Burch, gas tankless water heaters can reduce energy costs 25 to 45%. Tankless units are smaller, so they occupy less room. Since they provide hot water only when it's needed, they control the temperature better.
ConsumerReports.org says tankless heaters have a minimum flow requirement to gauge how much hot water is needed, which means waiting 15 seconds for hot water. On top of this, a tankless unit can cost over $1000. They are more complex than tank systems, which means higher maintenance costs. As well, electric units cannot deliver hot water fast enough compared to traditional heaters.
Traditional water heaters are often under $1000, and installation and maintenance are easy. Unlike tankless heaters, they do not require any special parts, like printed circuit boards.
A big, heavy tank needs lots of room, which limits where it can be placed. While they're insulated, there is a constant bit of heat loss to surrounding air. Plus hot water tanks will leak, and while they're cheap to repair, if the leak isn't caught in time, it can cause damage that results in extra costs.
While tankless heaters may save money, in the long run, the upfront fees and maintenance costs are higher. A consumer needs to consider their budget and household water needs when deciding on a tankless or traditional water heater.