There are a lot of ways to save energy. One of the best ways is to reduce the size of your hot water heater. In our current home, which we built, we installed a 40-gallon hot water heat and put it in a heated over-sized closet. If you put a hot water heater in an unheated room, like a basement or garage, it will have to work harder to keep the water hot. A hot water heater is normally one of biggest users of electricity. I am not familiar with the energy usage of the "hot on demand" heaters but it is my guess they use a lot of electric in a short time.
It is also important to set the water temperature to a level low enough to be practical. If you are heating water too high and then cooling it down by blending in cold water, you probably have it set too high.