For that kind of price, it's not worth it to me! What kind of payback are you talking? Multiple decades, if not a lifetime?

We had a gas fired tankless installed in a different location than the ancient electric it replaced. The result was a long run of pipe from the new unit to the kitchen sink. It meant waiting for the cold water to be pushed out each time you wanted to wash your hands in the kitchen. I hated that aspect. We saved $$ on energy costs and of course, never ran out of hot water. If I had to do it over, I'd either re-think the location or re-plumb the hot water line that ran under the house.

What is it that you are trying to accomplish by installing a tankless water heater?

Obviously this is a pretty pricey solution. If the intent is save money - it's not going to happen. If your goal is not to have 150 gal of hot water in tanks on the 3rd floor, this could be a solution.

They are making plenty of money on this install. There's about $1,500 in parts for the water heater part of this - the other $3k is labor and markup. If it takes 2 guys 8 hours @$100 an hour each you are only at $1,600. Assume another $400 markup on the heater and you still are looking at another $500-1,000 of "extra".

Looks like you are replacing two tank heaters and eliminating a circulating pump. It's not clear they intend to remove the tanks, you want to clarify that. Don't let them abandon them in place. For $500 they can haul them out too. You don't want a buyer insisting on their removal when you eventually sell the house - just get rid of them now.

Make sure the gas supply and GPM throughput is fully thought through. I know that unit is set up for 1/2" gas line... sort of. They require 200k btu/h gas input - which is a lot of gas. If they don't get it, you will have lots of problems.

As for my experience with them: I've installed one in each of my two homes.

Mine didn't have the recirculation pump that yours has.

They solved a specific problem for me - how to avoid lining a masonry chimney in an old house. It improved the energy efficiency and I had continuous hot water. I was also able to move the water heater much closer to the point of use. That said, it takes longer to get hot water (without the circ pump) and you do have to de-lime them. I could probably accomplish all of my goals with a hybrid electric heater now (except continuous hot water) at a lower cost. I did the install myself - so the the cost wasn't anything like what you are seeing.

My understanding is that tankless systems make the most sense when one has several units, each close to where the hot water is being utilized. To replace a central hot water tank unit with a tankless unit, still distant to where it's being used, doesn't make much sense even at half the price of what you were quoted.

Trey, it has an integrated circ pump and the homeowner has an existing circulating system.

So do I need to get two tankless instead of one?

No, you don't need two units. My neighbor has one unit for his rambling, 2-story, 3600 sqft house and it works just fine. I have a small studio adjacent to my house and it has a tankless water heater to supply a 3/4 bathroom. Total costs were about $700 for the tank, the copper plumbing, and the electric cable. I did the work myself. Now my tank is smaller than yours, but my point is that the materials aren't very expensive...it's the large labor charge that is driving up your bid. I have another neighbor who had two tankless units installed -- one for his house and one for a mother-in-law apartment adjacent to the house -- and he told me that the total cost was about $4000 to have both units installed. If you want to put in a tankless unit, get some more bids: yours seems rather high.