Many companies in India manufacture solar water heaters but these are not becoming popular in the domestic sector because of their high cost. The Ministry of Non-Conventional Energy Sources (MNES), New Delhi is recommending flat-plate collectors with copper (Cu) risers, headers and plate, Therefore, their cost is high. Long term studies have been carried out at the Central Arid Zone Research Institute, Jodhpur, to reduce the cost by replacing copper tubes with galvanised steel (G.S.) tube and copper plate with aluminium (Al) plate. The aluminium plate is wrapped over the G.S. tube by a special wire wound technique so that good contact of plate with risers and headers has been maintained. In this paper performance and testing of solar water heaters having G.S.-Al fin, Cu-Al fin and Cu-Cu fin in flat-plate collectors have been compared. It has been found that performance of all the three heaters is almost similar. The heater can provide 100 litres of hot water at an average temperature 62.0degreesC at 4 pm that can be retained to 50.4degreesC when average tap water temperature was 23.9degreesC. The efficiency of the heater is 51.9%. The cost of the heater with G.S.-Al collector is only Rs. 8,000.00 while it is Rs. 10,250.00 for solar water heaters with Cu-Cu collectors. The payback period of a solar water heater with G.S.-Al collector has been worked out by considering 10% compound annual interest, 5% maintenance cost, 5%, inflation in fuel prices and maintenance cost. The payback period varies between 2.92 years to 4.53 years depending upon which fuel it replaces. The payback periods are in increasing order with respect to fuels: electricity, firewood, LPG, charcoal, and kerosene. (C) 2002 Elsevier Science Ltd. All rights reserved.