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This is the question which everyone wants an answer for. Once you know what type of a water heater is good for you, the next thing you need to know is how much gallon of hot water heater do you need.
Sizing is the technique that matches the capacity of the hot-water source to the needs of the homeowners.
For tank water heaters, the key criterion is hot water storage capacity
For tankless water heaters, the key criterion is hot water flow rate
Incoming water temperature is a critical consideration, which varies by region and season. That is, a water heater in the North - either tank or tankless - will need a higher BTU input in the winter than the summer to heat and deliver water to a given temperature. Also, do not forget to factor in the actual size of the water heater. This usually are:

Lowboys or Short
These units are shorter and wider than a normal water heater, allowing them to hold the same amount of water as their larger counterparts while still fitting in areas with limited headroom, such as crawl spaces and under cabinets. Lowboys vary between 30 to 49 inches and hold up to 50 gallons of water.

Tall water heaters range from 50 to 76 inches and can hold up to 100 gallons of water. They're ideal for basements or garages where height isn't an issue.

STEP 1: First, list the number of hot water devices you expect to use at any one time. Then, add up their flow rates (gallons per minute). This is the desired flow rate you'll want for the demand water heater. For example, let's say you expect to simultaneously run a hot water faucet with a flow rate of 0.75 gallons (2.84 liters) per minute and a shower head with a flow rate of 2.5 gallons (9.46 liters) per minute. The flow rate through the demand water heater would need to be at least 3.25 gallons (12.3 liters) per minute. To reduce flow rates, install low-flow water fixtures.

 Average Flow Rates
 Bathtub  Shower  Kitchen Sink  Laundry Sink  Dishwasher  Jacuzzi Tub
 2.0 - 4.0 gpm  1.5 - 3.0 gpm  1.0 - 1.5 gpm  2.5 - 3.0 gpm  1.0 - 3.0 gpm  4.0 - 8.0 gpm

STEP 2: Consider the incoming water temperature (MOST IMPORTANT FOR TANKLESS WATER HEATER)
This is very important in case of tankless water heaters. When inlet water temperatures dip down into the 30s and 40s, larger BTU inputs will be needed. In certain high-volume applications, you may want to specify more than one tankless water heater unit, either installed separately or connected together to operate as a single tankless system.
Geography: Where is your home? Consider the winter inlet water temperatures in the area to make sure there's sufficient hot water flow on the coldest days. The rule of thumb is:
i. 40°F for the northern tier of states.
ii. 50°F in most parts of the South.
iii. 60°F year-round in Southern California, the Southwest and Gulf states.
To determine temperature rise, subtract the incoming water temperature from the desired output temperature. Unless you know otherwise, assume that the incoming water temperature is 50ºF (10ºC). For most uses, you'll want your water heated to 120ºF (49ºC). In this example, you'd need a demand water heater that produces a temperature rise of 70ºF (39ºC) for most uses. For dishwashers without internal heaters and other such applications, you might want your water heated at 140ºF (60ºC). In that case, you'll need a temperature rise of 90ºF (50ºC).