Field Tips

Economics of Lighting

Demonstrating the economic value of a project can determine whether your customer is ready to proceed. In NXT Level’s Course 3: Lighting Economic Analysis, participants learn the difference between three common types of economic analysis and how to best apply each method. The three main methods highlighted are:

  • Simple Payback—referred to as “first level” economic analysis. This analysis is useful during the design process to quickly compare several options, each of which might be expected to pay for itself in a relatively short period of time.
  • Simple Rate of Return (ROR)—sometimes referred to as “simple return on investment” (ROI). The reciprocal of simple payback, this analysis tells the rate (typically expressed as a percentage) at which your investment in a new or replaced lighting system will return its initial cost each year.
  • Life Cycle Cost Benefit Analysis (LCCBA)—recommended by the Illuminating Engineering Society (IES), this is the most accurate form of economic analysis. Including all quantifiable costs of a project, such as the costs of financing or investing, this type of analysis is used to compare the costs of two or more competing lighting systems or designs over the lives of the systems.

Consider which type of economic analysis will best fit your customer’s decision-making process and never hesitate to provide a full life-cycle cost analysis.

If you need a refresher on any of the training topics, remember that you can always access the NXT Level courses online after you have earned the designation.

Access NXT Level Courses