I am constantly finding companies (contractors, not manufacturers) who advertise that the tankless water heater they install will give you 7-8 gpm of hot water when heating from 10C to 50C (122F). Sorry, but this should taken with a grain of salt. The amount of gas needed to give this amount of hot water is twice the input rating of most tankless heaters and is often more than the gas meter outside the house will allow.
It is a simple fact that a tankless water heater with a 200 mbtu input could give 3.5-4gpm of hot water. Most tankless heaters have a lower gas input than 200 mbtu.
People who come from countries where tankless heaters are common understand intuitively how they work. They do not expect the units to supply every tap in the house at the same time. For some reason, however, we in North America seem to feel that our water heater should be able to supply all our demands at once. It is a wasteful attitude some of us have, and I applaud those who rise above it.
The amount of flow you can get is determined in large part by the gas supply and the temperature rise you desire. If you would like water that is heated only to 40C you will get a higher flow. Alternatively, if you preheat the water with solar so that it is only being raised from 30 -50C, you can also will get a higher flow.
Tankless heaters also have the reputation for taking longer to get the hot water to your tap. This can be true for a lot of units. One of the problems with a normal tank (and it is partly why they are so wasteful) is that the heat from the tank rises through the output piping towards your taps even if you do not use the water. It therefore takes less time until you feel warmth coming to the tap than with a tankless heater. We sacrifice a small amount of time for gas efficiency.
The other truth about most tankless heaters is that a minimum water flow is needed to trigger the gas valve. Therefore, when you turn on the tap at a low flow, or for only a few seconds the unit tries to come on but does not complete the process until you have nearly finished using the water. If you need a small amount of water for hand washing, use soap and cold water. The soap will still work fine. When shaving, fill the sink rather than turning the water on and off for a few seconds at a time. The heater will last a lot longer and you will have a more satisfying shave.
Another issue is the desired temperature of the heater. Just like the tank type water, we should keep the set temperature as low as possible. This means that when a tap is turned on, there can be a higher flow through the unit and it will operate as desired sooner. Having a high temperature from the water heater forces you to mix more cold water with it at the tap and the resulting flow from the heater can be too low, causing it to turn on and off rapidly, which reduces longevity.
I have begun, in some cases, to advocate the use of high efficiency tank water heaters such as the Polaris or the Vertex over tankless heaters. Do not confuse a standard tank with a venter motor placed on top as a high efficiency tank. They are not, but are often sold as such. All these tanks do is take the products of combustion and force them out the wall through a 2″ PVC exhaust. A true condensing water heater has a large internal heat exchanger that brings the exhaust temps down to point where the efficiency can be in the mid 90% range. If you search for a tank thinking it will be high efficiency, check the posted efficiency numbers. They must be 90%+. Unfortunately, they do cost a bit more than the average tankless heater but should last a LOT longer as well.
It is easy to say that we can change the way we use water but that is often hard to do. For those who find it hard to use cold water for most things or just have a lot of small volume hot water uses, the tank may be the thing for you. I have not put in a standard tank in 10 years and probably will never do it again.
A few simple rules will help us get the most out of our tankless and tank heaters.
The green tank is the AO Smith Vertex and the cut away is the Polaris water heater.