Height is measured at the highest point of the withers, right at the base of the neck with the dog standing square on a firm surface.
It helps to stand the dog near a wall, with the yardstick against the wall, and then another ruler to put at the withers to see exactly how tall the dog is.
If the dog is coated, allow for coat.
The red line on this image goes through the withers on the dog on the right. It is slightly below the withers on the dog on the left.
http://www.abiquadogs.com/schnauzers..._sm_height.jpg