Expense Management Solution: The Value of Energy Saving LED Lighting

Total Cost of Ownership (TCO), also known as “ownership cost,” is a metric I like to use when explaining the value of using energy- and water-efficient products. TCO includes the up-front cost of the product and the costs associated with using that product for the duration of its life. Often, we use TCO, along with payback and return on investment (ROI) to compare two products, to determine which product to purchase that will make the most financial sense.

LED lighting have several advantages over traditional lighting such as longer average hour life, they are dimmable, color temperatures similar to incandescent lights, and low power consumption. LED lighting is a great example of when to use TCO to compare it to the alternatives. Let’s take a look at how an MR-16 LED bulb (MR-16 bulbs are used in pin-based applications such as track or accent lighting and are most commonly found in lobbies) compares to a halogen MR-16 bulb:

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