Discounted water heaters can be found at home improvement stores such as Lowes, Home Depot, and local appliance stores. Ebay is another source of discounted hot water heaters. Craigslist.org and stores such as Habitat For Humanity can sometimes have hot water heaters for a sale price.
Many online retailers sell discounted on demand or tank style hot water heaters. Shipping costs can be higher on tank-style heaters so this needs to be accounted for when calculating how much of a discount a consumer is getting. Sometimes large home improvement stores such as Lowes have a surplus section where deeply discounted water heaters can be found.