Designing a small hydropower plant (SHPP) necessitates fulfillment of energy and ecological constraints, so a well-defined design flow is of the utmost significance. The main parameters of each SHPP are determined by appropriate techno-economic studies, whereas an improved approach to defining more precise SHPP installed parameter is presented in this paper. The SHPP installed parameter is the ratio of the design flow and averaged perennial flow obtained from the flow duration curve at the planned water intake location. Previous experiences in the design of SHPPs have shown that the SHPP installed parameter has a value in a wide range without the existence of an unambiguous equation for its determination. Therefore, with this aim, the thirty-eight (38) small watercources in the territory of Montenegro, denominated for the construction of SHPPs, have been investigated. SHPPs are divided into two groups depending on the installed capacity and the method of calculating the purchase price of electricity. For both groups, the range of SHPP installed parameter is determined according to the technical and economic criteria: the highest electricity production, the highest income, net present value (NPV), internal rate of return (IRR), and payback period (PB).