Tankless Water Heater Prices



Why are Tankless Water Heater Prices so High?

I get this question asked often "why are the prices of tankless water heaters so high?"

There are multiple reasons for it, as listed below.

Distribution Model

Tankless Water Heater Manufactures sell only to a tight knit distribution. The Manufacture selects a Representative called Manufacture's Representative for every geographical area. I call them their bullies.

They in turn sign up and manage wholesalers and try to keep them on a short leach in terms of pricing. Should the Wholesaler not abide by their rules and pricing that were laid down by the manufacture they will be then taken off the list and won't be able to buy.

Next the wholesaler then sells usually to local plumbing companies who in turn install or sell to the public. At each of these steps the price goes up without any real value being added.

The wholesale distributor carries usually the biggest burden as he is the only one stocking the items and has the largest profit margin.

Internet Sales

Because the Manufacture wants to keep the pricing high, it prohibits the sale through the internet. Through the serial number of the units the manufacture can pin point to the wholesaler who sold the unit which is being offered online. At this time the Bully (Manufacture's Rep.) is let loose. It may first threaten the wholesaler or just simply stop delivery to that wholesaler. Personal and physical threats are not uncommon.

MAP Pricing

MAP pricing stands for Mutual Agreed Pricing. Here the manufacture and wholesaler through the Manufacturer's Representative agree to the lowest price that the units can be sold, essentially price fixing, just another name for it.

Should the wholesaler break that price fixing agreement then it be left out dry without any products to sell.

Tax Credits and Rebates

Tax credits and rebates are a form of subsidy that manufactures love, that is why they lobby for them. The Tax Credits and Rebates enable them to price their products higher for greater profit at the expense of tax payers and the general public.

Let's say when the local utility offers a $ 200 rebate for going tankless that money is coming from all its customers and is an expense on their balance sheet.

Tax credits are pretty much the same. All these credits essentially benefit the manufacture since the consumer sees the final after the rebate or tax credit price and makes purchasing decisions based on that.

Certified Installers and Companies

Manufactures routinely insists that their products be only installed and sold through their certified installers and companies. This is also done to control prices. A tankless unit like many other appliances can be installed by state licensed contractors.

It is the Federal and State governments that set qualifications and standards through National Building Codes and state licensing bodies. That is not something private companies are entitled to do.

This is more of an intimidation than anything else and no company can deny warranty of their product if it was installed according to building codes and their recommendations, although they may try it, see companies like http://www.Noritz.com

The Japanese Company http://www.noritz.com Noritz for example routinely practices all of the above and have threatened us at http://www.justtankless.com directly and through their legal counsel with legal action as a form of intimidation.

All of these practices may be illegal and against the fair trade laws and prevents the market to act freely and offer the lowest price to consumers.

Al Sagafi has extensive engineering and field experience in energy conservation and renewable energy production. He is actively involved at http://www.JustTankless.com and http://www.allied-solar.com. He holds California State General Building and Electrical Contractor licenses.

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