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At Take Three, we are often extolling the values and benefits of LED lights and how they can help save you money. It’s all about saving energy, saving money, and yielding a maximum return on your investment, we say.

Ok, you’re thinking. That’s great and all,

So let’s dive into how to figure out your Return on Investment for your project.

Determining your ROI comes down to two concepts:

**Energy Savings:**Using less energy reduces your electrical bill. Simple.**Lifetime & Relamping:**This one is often overlooked. How long will an LED fixture last vs. a comparable fixture? There is a definite cost to replacing lamps in older fixtures vs. an LED that keeps on ticking. But the issue is not just the cost of the replacement lamps. It is the cost of labor to replace those lamps. How many man-hours will be spent on replacing lamps in your facility over a year?

Get your free ROI calculator!

Case Study #1 - Retail Retrofit

Case Study #2 - Educational New Construction

Case Study #3 - Warehouse Retrofit

Case Study #4 - Exterior Flood Light New Construction

So let’s compile some numbers before we start calculations. First, the electrical figures:

Number of luminaires |
25 |

Existing watts per fixture |
65 watts |

Cost of existing fixtures |
$0 (They're existing after all) |

Cost of replacement lamps for existing system |
$1.99 |

Existing system lifespan |
2,000 hours |

Proposed LED watts per fixture |
9.7 watts |

Proposed LED cost per fixtures |
$39.00 |

Proposed LED system lifespan |
35,000 hours |

Now let’s add in some energy and labor figures:

Hours per day system is in use |
8 hours |

Days in use per year |
365 |

Average energy rate |
$0.11/KwH |

Average labor rate for maintenance |
$20.00/hour |

Number of workers needed to replace all lamps |
1 |

Hours it will take (per worker) to replace all lamps |
2 hours |

Ok, that’s quite a few figures to tally up, but now let’s enter them into the calculator and see what we find:

- Based on energy savings alone, the LED system will save
**$444 per year**on the electric bill over the current incandescent system. - Based on energy savings alone, the LED system will recoup its cost in
**2.2 years**, that’s a**46% ROI.**(1 year being 100%) - Factoring in relamping and labor costs, the LED system will save your client
**$4,775**over a 10 year period. - Factoring in relamping and labor costs, the LED system will recoup its cost in
**just over 20 months**, yielding a**59% ROI.**

Ok, that’s pretty good. Let’s look at another example.

The reference standard fluorescent troffer specified uses four 32-watt T8 lamps each. The T8 lamps costs $2.50 each, and are rated for 20,000 hours. The troffer housing itself is $62.00.

The LED alternate is a 2x4 high-output lay-in with 5500 lumens of output. It costs $249.00 per fixture, uses 53 watts each, and is rated for 50,000 hours.

So let’s compile some numbers before we start calculations. First, the electrical figures:

Number of luminaires |
300 |

Baseline watts per fixture |
128 watts (32W x 4) |

Cost of baseline fixture housing |
$62.00 |

Cost of lamps for baseline system |
$10.00 ($2.50 x 4) |

Baseline system lifespan |
20,000 hours |

Proposed LED watts per fixture |
53 watts |

Proposed LED cost per fixtures |
$249.00 |

Proposed LED system lifespan |
50,000 hours |

Now let’s add in some energy and labor figures:

Hours per day system is in use |
12 hours |

Days in use per year |
250 (closed weekends and holidays) |

Average energy rate |
$0.14/KwH |

Average labor rate for maintenance |
$30.00/hour |

Number of workers needed to replace all lamps |
4 |

Hours it will take (per worker) to replace all lamps |
25 hours |

Ok, that’s quite a few figures to tally up, but now let’s enter them into the calculator and see what we find:

- Based on energy savings alone, the LED system will save
**$9,450 per year**on the electric bill over the baseline fluorescent system. - Based on energy savings alone, the LED system will recoup its increased cost in
**5.62 years**, that’s an**18% ROI.**(1 year being 100%) - Factoring in relamping and labor costs, the LED system will save your client
**$50,400**over a 10 year period. - Factoring in relamping and labor costs, the LED system will recoup its increased cost in
**5.13 years**, with a**19.5% ROI.**

Now, let’s factor in something else:

Mileage will certainly vary based upon what the local utilities and governments are offering, but you should always look into them, especially when working on a large project. It can be the deciding factor, taking an LED system from “almost worth it” to “definitely worth it”.

Though many MH bulbs are rated for a 20,000-hour lifespan, they will often lose half their light output by 50% of that lifespan. So we’re going to use a 10,000-hour life in this example to be more realistic with replacement rates. Additionally, a 400-watt metal halide bulb will actually use around 458 actual watts.

So let’s compile some numbers before we start calculations. First, the electrical figures:

Number of luminaires |
50 |

Existing watts per fixture |
458 watts (450W MH actually uses 458W) |

Cost of existing fixtures |
$0 (They're existing after all) |

Cost of replacement lamps for existing system |
$8.00 |

Existing system lifespan |
10,000 hours |

Proposed LED watts per fixture |
160 watts |

Proposed LED cost per fixtures |
$480.00 |

Proposed LED system lifespan |
50,000 hours |

Now let’s add in some energy and labor figures:

Hours per day system is in use |
12 hours |

Days in use per year |
365 |

Average energy rate |
$0.13/KwH |

Average labor rate for maintenance |
$25.00/hour |

Number of workers needed to replace all lamps |
2 |

Hours it will take (per worker) to replace all lamps |
8 hours |

Here’s what we find:

- Based on energy savings alone, the LED system will save
**$8,484 per year**on the electric bill over the current MH system. - Based on energy savings alone, the LED system will recoup its cost in
**under 3 years**, with a**35% ROI.**(1 year being 100%) - Factoring in relamping and labor costs, the LED system will save your client
**$69,500**over a 10 year period. - Factoring in relamping and labor costs, the LED system will recoup its cost in
**under 2.7 years**, yielding a**37% ROI.**

And that is not factoring in

Again, actual rebates and incentives will vary based upon what the local utilities and governments are offering, but it’s always worth looking into.

So let’s plug in the numbers and see what we find. First, the electrical figures:

Number of luminaires |
25 |

Baseline watts per fixture |
185 watts (150W MH actually uses 185W) |

Cost of baseline fixture housing |
$138.00 |

Cost of lamps for baseline system |
$10.00 |

Baseline system lifespan |
10,000 hours |

Proposed LED watts per fixture |
45 watts |

Proposed LED cost per fixtures |
$275.00 |

Proposed LED system lifespan |
50,000 hours |

Now let’s add in some energy and labor figures:

Hours per day system is in use |
12 hours |

Days in use per year |
365 |

Average energy rate |
$0.13/KwH |

Average labor rate for maintenance |
$25.00/hour |

Number of workers needed to replace all lamps |
1 |

Hours it will take (per worker) to replace all lamps |
3 hours |

Here’s what we find:

- Based on energy savings alone, the LED system will save
**$2,391**per year on the electric bill over the current MH system. - Based on energy savings alone, the LED system will recoup its cost in
**1 year 7 months**, that’s a**63% ROI.**(1 year being 100%) - Factoring in relamping and labor costs, the LED system will save your client
**$21,747**over a 10 year period. - Factoring in relamping and labor costs, the LED system will recoup its cost in
**under 18 months**, with a**67% ROI.**