RUBS: Ratio Utility Billing Explained
What is RUBS?
Ratio Utility Billing Systems
RUBS stands for Ratio Utility Billing System, and is a cost-effective and fair alternative to submeters. RUBS is a popular utility management solution, and essentially divides the bill among your residents based on certain criteria. Different utility types can often influence the type of RUBS formula a property uses.
How to RUB Your Residents
You’re out at a restaurant having dinner with several of your friends. The drinks are flowing, the conversation is engaging, and the food couldn’t be better.
It’s a great time until the bill comes. The mood quickly changes as everyone tries to figure out how much money to pony up. Someone suggests splitting the check evenly, but that’s clearly not going over well with the person who only ordered a salad. Your vegetarian friend doesn’t want to pitch in for the table’s calamari, and a few of your friends didn’t drink any of the wine that was ordered for the group. Most likely, someone will leave for the night feeling like they paid for much more than they consumed.
Divvying the utility bill for a multifamily property can be a lot like dining with a large group of friends. How do you determine the best way to charge residents based on their utility consumption? If you’re lucky, your property is equipped with submeters, which will make it easy for you to know how much to charge each unit. However, submeters aren’t feasible at every property, which leads many property managers to use RUBS when allocating resident utilities.
What is the RUBS Formula and how do I calculate it?
How do you calculate utility charges using RUBS formula?
If you are thinking about your apartment utility management and want to implement RUBS, here are the different formulas and calculations to consider.
- Occupants per unit
- Square footage of unit
- A combination of square footage and occupants per unit
Occupants per Unit
This calculation evenly splits the utility bill between each occupant in a unit, and is commonly used for water bills. The logic behind this method is, if more people live in a unit, they will consume more of a given utility. For example, a single occupant in a one bedroom unit most likely uses less water than two people in a one bedroom unit.
Property management companies love using this allocation method. It’s a clean split that makes sense to residents, and it solves the problem that the more people that live in a unit consume more.
A difficulty can be figuring out how to adjust the allocation should the occupants per unit increase. For example, if a couple has a new baby, how should their rate be adjusted? Their new addition won’t be using as much as a grown adult. The other challenge is making sure that occupancy totals and data are always updated and accurate within your property management software.
Square Footage of Unit
Some property management companies calculate utility bills based on the square footage of a unit. This method is often used for gas bills. The logic behind this method is that larger the unit, the higher its utility consumption will be.
Larger living spaces often correlate with higher heating/cooling prices. The gas needed to regulate the temperature in a 1,000 square foot unit will be much higher than in a 500 square foot unit.
Before committing to this formula, you should take into consideration each unit’s design. An apartment might be larger, but that does not mean it has more water appliances or occupants as smaller units, thus disproportionately allocating back.
You can also use a calculation that accounts for the unit’s total occupants and the square footage. Most of the time these two are split 50/50 split when generating the utility charge. The logic being: larger units and more occupants will result in higher utility consumption. While it has the benefits of each of the above methods, it also carries the pitfalls.
Adjusting for x-factors is crucial for making a fair allocation. What are examples of x-factors? Perhaps some units are equipped with a washing machine. Maybe you have units with more bathrooms, which will use more water, or units with fireplaces, which use more gas.
To solve for these variables, we simply add in a multiplier to ensure one resident is not paying more than their fair share. We might notice a washing machine uses 30% more water so we assigned it a factor of 1.3x per month.
What are the benefits of RUBS?
The main benefit of using RUBS to calculate resident utility charges is that it allows operators to recoup the maximum allowable utility costs from residents without investing in submeters. It can be easily integrated into existing utility billing systems, minimizing up front costs. This helps offset the overall operational costs of managing the property and maintaining its amenities. Additional benefits of RUBS include:
- Fairness: RUBS takes a variety of factors into account including occupants, square footage, or other relevant consideration to allocate costs proportionately among residents.
- Versatility: RUBS can be applied to almost all utilities, including water, electricity, gas, trash collection, and more.
- Conservation: By using RUBS, residents gain visibility into their individual utility consumption and associated costs. This transparency fosters a sense of accountability and helps residents understand the impact of their consumption habits.
- Efficiency: RUBS automates the utility billing process by eliminating the need for individual meter readings or separate billing arrangements for each unit. This reduces administrative overhead and streamlines the billing process for property management.
- Flexibility: RUBS allows property managers to adjust the allocation factors based on specific circumstances or changing needs. This flexibility ensures that the billing system remains adaptable to different apartment configurations and evolving utility usage patterns.
Why should I use RUBS at my properties?
Regardless of which RUBS method is chosen, the benefits are the same – you’ll recoup more of utility costs, have stronger expense forecasting, and see reduced utility consumption. RUBS enables property managers and owners to accurately allocate and recapture utility costs, eliminating the need for costly meter installations, providing a fair and transparent approach to utility billing.
Contact Zego to find out if a RUBS billing method can be used at each of your properties. Our utility billing experts work with you to determine the best setup for your unique property and if you should apply different calculations for each utility.
So, how will you choose to RUB your residents?