diff --git a/SimPEG/Regularization.py b/SimPEG/Regularization.py
index e7fc4895..f181a8a3 100644
--- a/SimPEG/Regularization.py
+++ b/SimPEG/Regularization.py
@@ -303,8 +303,8 @@ class Tikhonov(BaseRegularization):
         if self.smoothModel == True:
             mD1 = self.mapping.deriv(m)
             mD2 = self.mapping.deriv(self.mref)
-            r1 = self.W * ( self.mapping * (m) )
-            r2 = self.Ws * ( self.mapping * (self.mref) )
+            r1 = self.W * ( self.mapping * (m - self.mref) )
+            r2 = self.Ws * ( self.mapping * (m - self.mref) )
             out1 = mD1.T * ( self.W.T * r1 )
             out2 = mD2.T * ( self.Ws.T * r2 )
             out = out1-out2
diff --git a/SimPEG/Tests/test_regularization.py b/SimPEG/Tests/test_regularization.py
index 2197d27b..48846d2f 100644
--- a/SimPEG/Tests/test_regularization.py
+++ b/SimPEG/Tests/test_regularization.py
@@ -22,7 +22,7 @@ class RegularizationTests(unittest.TestCase):
             mapping = r.mapPair(self.mesh2)
             reg = r(self.mesh2, mapping=mapping)
             m = np.random.rand(mapping.nP)
-            reg.mref = m[:]*0
+            reg.mref = m[:]*np.mean(m)
             passed = checkDerivative(lambda m : [reg.eval(m), reg.evalDeriv(m)], m, plotIt=False)
             self.assertTrue(passed)