They are just as prone to failure as a conventional water heater, more so if you do not have proper filtration ahead of them. By the way Tankless heaters despite the hype are not instant hot water at the fixture unless you have a recirculating system piped in. And a recirculating system on a conventional water heater will give you instant hot water also.
It's been a few years since I was in the trade but it used to be that when you added up the price tag of the Tankless, material, filter, having to add a receptacle if one isn't there and labor, the payoff of a Tankless was kind of far down the road. Oh and if it's a gas fired unit add the cost of piping a larger gas line to suppl it. These are some of the things that sales people neglect to mention while they try to hook you. Of course one of the other major benefits to a Tankless is the reclaimed space taken up by a conventional water heater.
Still the price the poster quoted seems high even it the heater had to be relocated or installed on a raised platform and new double walled vent, etc. There is always someone out there whose main business is to shear sheep.
you save big time by not heating water when not in use, and like you said it takes time to get to the outlet but so do take systems, and i would NEVER use a recirculating system no matter what system i had