The heater's output is dependent in part on the inlet water temp:

http://lib.store.yahoo.net/lib/lowen...temp-chart.jpg

so you live in a cold climate and and your water supply is at 45-50F
or less (mine goes as low as 38F) one possibility is a passive
"tempering tank" located in a heated area and plumbed ahead of the
heater - I've read about this, but not seen it done,

I elected to prevent this problem by installing a Takagi T-M1 at my
home (T-M1), I also have Takagi T-KD20s at my office and at 3 of our
rentals. They work well if properly installed, but we encountered a
LOT of issues when installing them.

I have a web page up where I discuss some of the problems we have
encountered, and how to avoid them. It also has a link to an OA Smith
white paper on calculating the payback of tankless heaters:

http://paragoninspects.com/home-insp...blems-faq.html

Michael Thomas
Paragon Property Services Home Inspections
http://www.paragoninspects.com