The Water heater thermostat right out of the package will have about a 10 degree temperature swing if the back of the stat is not close to the heat source. keep in mind that the stat was designed to have the metal back right up against the tank of the hot water heater. I placed mine so the back is a bit less than an inch from the bulb with the bulb laying on it side. Stat is next to not above the bulb. I have my temp holding within a degree for the last 36 hours or so. I also tried the drilling holes in the front of the stat idea. it did help with reducing the temp swing but not nearly as well as having the back toward the heat. My stat now also has the front drilled out of it, in fact I used my dremel tool and carved out as much of the front as I could.