Calculating the ROI of LED Lighting

Calculating the ROI of LED lighting is important for any business or individual thinking of switching to LED lighting.

Calculating the ROI of LED

Whether you are a business or individual, saving money is always a good thing. Yet even with the best of intentions, if you don’t watch your costs, it can be easy to find yourself suddenly going broke because of all the money you are trying to save.

Payback on investment is an important component to any financial choice you make, whether it’s adding a new product line or converting your lighting to LED lights. As a business understanding your estimated return on investment or ROI is vital. The ROI is a ratio that tells you how profitable an investment will be. How quickly you can expect to see a return on investment can help a business owner decide if upgrading a building or warehouses’ lighting to LED light will be a good choice.

Calculating the ROI of LED lighting

Before you can calculate your ROI, you need to gather information about the space you are planning to convert to LED lights and your energy usage. You will need to know some basic information about your current lighting usage and replacement costs.

You will need to know the following about your existing bulb information and usage:

  • Wattage
  • Unit cost
  • Bulb life
  • Number of bulbs used
  • Hours of daily use per bulb
  • Number of days a bulb is used per year
  • Energy cost
  • Bulb replacement labor rate
  • Time to replace bulbs
  • Number of workers needed to replace bulbs

You will also need to know the following information about the LED replacement bulbs:

  • Bulb wattage
  • Unit cost
  • Bulb life

With this information, a simple ROI lighting calculator can find the estimated energy savings per year and the energy savings over the life of an LED bulb. You can also find the total savings you can expect over the life of an LED bulb and how soon you will receive a payback in your investment.

With this information, you will have an idea of long it will be before you can begin to see a return on your investment, and you can decide if converting the lighting in your office or warehouse from fluorescent or incandescent lighting to LED lighting will be a good, money saving choice for your company.

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