Tankless gas water heater - Cost?

The cost of a tankless unit is about double that of a conventional unit, and you need extra pieces such as a surge tank. The circulation system, is self-defeating with a tankless water heater. That is my opinion, your contractor should be your guide. If in doubt, get a second opinion from another local plumbing contractor. Rather than a circulatory system, consider a filtration or softener system to extend the life of your new system.