In addition to the number and type of fixtures you want simultaneously served by the tankless water heater, you will also have to consider the temperature of your groundwater.  And that is determined by where in the country you live.
The colder the groundwater gets the less hot water can be produced by a unit for a given GPM "Gallons Per Minute" flow rate.  This means a tankless water heater in Florida would have to be rated 33% to 50% larger in Michigan to serve the same number and types of fixtures, because the tankless unit heater has to warm the incoming cold water more in Michigan than Florida since the groundwater coming into the unit can be 30° F colder in Michigan (42°) than Florida (72°).

The Federal Energy Policy Act of 1992 required all faucet / shower fixtures made the  USA  to have a flow rate of no more than 2.2 GPM at 60 PSI. Often you can get below 2.2 GPM with low flow aerators but before 1992, older fixtures used much more water than 2.2 GPM. To determine your required GPM, add up how many fixtures of what type you will have served by the tankless water heater:

Lavatory Faucet

·  Low Flow: 0.5 -1.5 GPM

·  Meets Code / 1992 Standard: 2.2 GPM

·  Pre-1992 Faucet: 3.0 - 5.0 GPM   

Kitchen Faucet

·  Low Flow: 0.5 - 1.0 GPM  -  Not appropriate for dish cleaning

·  Meets Code / 1992 Standard: 2.2 GPM

·  Pre-1992 Faucet: 3.0 - 7.0 GPM   

Shower Head

·  Low Flow: 1.0 - 2.0 GPM

·  Meets Code / 1992 Standard: 2.2 GPM

·  Pre-1992 Faucet: 4.0 - 8.0 GPM

As you can see, older pre-1992 faucets and shower heads can require very large water flow. A tankless water heater is sized by rating its temperature rise at a given GPM. So a unit could be rated at a 33°F Temperature Rise at 2.0 GPM and this same unit could also provide a 65°F Temperature Rise at 1.0 GPM.

The slower the flow of water through the unit, the more the water can be heated.
Here's how to quickly determine flow rate for a specific faucet or shower head: ·  Multiply the measured quantity of water by 6 to calculate the flow rate in gallons per minute (0.25 gal x 6 = 1.5 GPM)
- Turn the fixture on to it's normal position
- Place a container under the fixture and collect the water for 10 seconds
- Measure the quantity of water in the container and convert the measurement to gallons (e.g. 0.25 gallons)
- Multiply the measured quantity of water by 6 to calculate the flow in gallons per minute (0.25 gal x 6 = 1.5 GPM)

The difference between the temperature of the hot water exiting the heater and the cold water entering the unit is called the temperature rise. If you want a shower up to 112°F and you live in California with groundwater at 57°F, then you need a 55°F temperature rise (112-57=55).
The required temperature rise (desired hot water temperature - incoming ground water temperature = temperature rise) and you have added up the required flow rates for all the faucets and shower heads to be heated by the unit that may be on at the same time. So let's say you require 4.2 GPM to accommodate 1 shower head at 2.2 GPM and 1 lavatory faucet at 2.0 GPM or the kitchen faucet at 2.2 GPM. Based on our previous section "Calculating Temperature Rise" you need a 55°F temperature rise if you live in California. So you need a Medium Volume unit capable of handling 4.2 GPM (2.2+2.0=4.2) at a 55°F rise