Explainer MeterEase blog
What is RUBS, and when is it worth it?
RUBS stands for ratio utility billing system. It is a way to divide one master utility bill among the units in a building using a formula instead of a meter on each unit. If your building has one water meter, one gas meter, or a shared trash and sewer bill, RUBS is how you turn that one bill into a fair share per tenant.
This post is the short version. For definitions of every method, see our full guide, What is RUBS?.
How RUBS works
You pick a factor that roughly tracks use, and split the bill in proportion to it:
- Square footage. Bigger units pay more.
- Occupants. More people pay more.
- Bedrooms. A fixed stand-in for household size.
- Fixed percentages written in the lease.
- A blend, such as half square footage and half occupants.
Example (made-up numbers): a $300 trash and sewer bill, two units. Unit A has 2 occupants, Unit B has 3. By occupants, A pays 2 ÷ 5 × $300 = $120 and B pays $180.
RUBS is an estimate. It does not measure what each unit used. That is the main trade-off against submetering, which installs a meter per unit and bills measured use.
Where RUBS is used
RUBS is common for utilities that are hard or expensive to meter per unit: water, sewer, trash, and sometimes gas in older buildings. Electric is usually metered per unit already, so it comes up less often. Some states mention RUBS by name. Arizona’s landlord-tenant act, for example, lets a landlord charge separately for some utilities through submeters or a ratio utility billing system if the method is in the rental agreement. Other states regulate it more tightly or say little. Our state guides cover eight states with sources. This is general information, not legal advice.
When RUBS is worth it
RUBS takes some setup and a little work every month. Whether that is worth it comes down to a few questions.
1. How big is the bill you are absorbing? If a shared water bill is a small, steady number, you might be better off building it into rent. If it is large or swings a lot with the seasons, billing it back moves that cost and that risk to the people using the water. Our money post walks through example math for a 4-unit building.
2. Can you put it in the lease? RUBS only works with a clear lease clause. If your current tenants are mid-lease with “water included,” you will likely start at renewal or with new tenants. See how to add a RUBS clause to your lease.
3. Is it allowed where you own? Check your state and city rules, and your water utility’s rules. Some places limit or prohibit formula billing for certain utilities or property types.
4. Will the monthly work get done? RUBS that is done late, inconsistently, or without showing the math creates more friction than it is worth. A routine, or a tool, matters here.
5. What about rent? Bill-backs and rent are linked in the tenant’s mind. Some landlords lower rent slightly when they start RUBS. Others keep rent flat and point out that conservation now saves the tenant money. Either way, think about the total monthly cost to the tenant, not just the new line item.
When RUBS is probably not worth it
- The bill is tiny. If the shared bill is small, the effort and tenant friction may outweigh the money.
- The rules where you own are restrictive. If formula billing is limited for your property type, look at submetering or include the utility in rent.
- Every unit is already individually metered. Then tenants can pay the utility directly, and there is nothing to split.
- You cannot explain it. If you cannot write the method in one sentence and show the math, tenants will push back.
RUBS vs the alternatives, in one table
| Option | Upfront cost | Monthly work | Tracks actual use |
|---|---|---|---|
| Include in rent | None | None | No |
| Flat utility fee | None | Low | No |
| RUBS | Low | Moderate | Partly |
| Submetering | Meters and install | Meter reads | Yes |
Getting started
- Gather a few months of bills to see the typical amount and swings.
- Pick a method and run it through the RUBS calculator.
- Check the rules for your state.
- Add the method to your lease, with a vacancy rule and a proration rule.
- Tell tenants in writing. Here is a letter template.
- Bill monthly, showing the math and attaching the bill.
MeterEase was built for step 6. It reads the bill PDF, applies your method and vacancy rule, and emails each tenant their share with the math shown, after you review it. See pricing.
Split the bill and email every tenant in minutes
MeterEase reads the master bill PDF, applies your method and vacancy rule, and emails each tenant their share with the math shown and the source bill attached, after you check the numbers. Plans start at $14/month.
Related
- What is RUBS? (full guide)
- RUBS vs submetering
- Free RUBS calculator
- Best RUBS software for landlords
- Answering "Why is my utility share so high?"
- How much can utility bill-backs recover on a 4-unit building?
- How to add a RUBS clause to your lease
- All blog posts