RUBS vs Submetering: Which Is Right for Your Rental Property?
Compare RUBS and submetering for tenant utility billing. Learn the costs, pros, cons, and which method works best for your property type.
Two Ways to Bill Tenants for Utilities
If you're a landlord looking to pass utility costs to tenants, you have two main options: RUBS (Ratio Utility Billing System) and submetering. Both accomplish the same goal — tenants pay for their utility usage instead of you — but they work very differently and have different cost structures.
Here's a straightforward comparison to help you decide.
How RUBS Works
RUBS divides the building's total utility bill among tenants using a formula based on unit square footage, occupancy count, or a combination. The building stays on a single master meter, and tenants receive a proportional share of the total bill.
The landlord's workflow: Receive the master utility bill each month, apply the allocation formula, generate individual tenant invoices, and collect payment.
How Submetering Works
Submetering installs an individual utility meter in each unit. Each tenant's actual consumption is measured directly, and they're billed based on their real usage — just like how a homeowner receives a utility bill.
The landlord's workflow: Read meters (or have them read automatically with smart meters), calculate each unit's bill based on the utility rate, generate invoices, and collect payment. Some landlords use third-party billing companies to handle this entirely.
Cost Comparison
The upfront cost difference is significant.
RUBS implementation cost is essentially zero. You need a way to calculate the allocation (a spreadsheet or a tool like BillBack) and a method to invoice tenants. There's no physical installation, no permits, no plumber or electrician needed.
Submetering installation typically runs $300–2,000 per unit depending on the utility type and building configuration. Water submeters tend to be the most expensive because they require plumbing modifications. Electric submeters are cheaper but still require licensed electrician work. For a 20-unit building, you're looking at $6,000–40,000 in upfront costs.
Ongoing costs: RUBS requires 15–30 minutes of administrative work per property per month (less with automation). Submetering may require periodic meter maintenance, calibration, and replacement. If you use a third-party billing service, expect to pay $3–8 per unit per month.
Accuracy and Fairness
This is where the tradeoff gets real.
Submetering is more accurate. Each tenant pays for exactly what they use. There's no question about fairness — the meter doesn't lie. Tenants who conserve energy pay less, and heavy users pay more.
RUBS is approximately fair. A 1,000 sq ft unit will always pay more than a 600 sq ft unit, even if the smaller unit uses more electricity. It's proportional, not precise. That said, over time and across many tenants, RUBS tends to distribute costs reasonably — especially when using a weighted blend of square footage and occupancy.
Impact on Tenant Behavior
Both methods encourage conservation compared to including utilities in rent, but submetering has a stronger effect.
Studies consistently show that submetered tenants reduce water consumption by 15–30% compared to flat-rate billing. RUBS produces a smaller but still meaningful reduction of 5–15%, because tenants know they're paying for utilities even if their individual impact on the total bill is diluted.
When RUBS Makes More Sense
Older buildings where retrofitting meters would require significant plumbing or electrical work, potentially disrupting tenants.
Smaller properties (under 20 units) where the cost of submetering doesn't justify the marginal improvement in billing accuracy.
Properties you might sell soon. If you're not holding the property long-term, the ROI on submeter installation may not pencil out.
Mixed-use buildings where utility distribution is complex and metering each space individually would be prohibitively expensive.
Landlords managing a few properties. RUBS can be set up in an afternoon with no capital outlay.
When Submetering Makes More Sense
New construction where meters can be designed into the building from the start at minimal marginal cost.
Large properties (50+ units) where the per-unit economics of metering improve and the accumulated inaccuracy of RUBS becomes material.
High-consumption markets where utility rates are expensive and the difference between approximate and precise billing adds up to real money.
Properties in jurisdictions that require or incentivize submetering. Some municipalities mandate individual metering for water in new construction.
The Hybrid Approach
Many property managers use both. They might submeter water (where individual usage varies the most) while using RUBS for gas, electric, and trash (where consumption correlates better with unit size). This gives you precise billing where it matters most without the full cost of metering every utility.
Making the Decision
For most small-to-medium landlords with existing buildings, RUBS is the practical choice. It costs nothing to implement, starts working immediately, and recovers the majority of utility costs. You can always upgrade to submetering later if the economics change.
If you want to try RUBS, BillBack's free calculator lets you see exactly how your bills would be divided — no signup required. You can test different allocation methods and see the results instantly.