Independence LED introduces an innovative Lighting Service Contract
With its new Lighting Service Contract, Independence LED helps cut the energy waste, reduce the operating costs per sq. ft., and deliver the maintenance-free Benefit of Light at no upfront cost to the end user.
Over the summer of 2012, Independence LED developed a ground breaking new Lighting Service Contract (LSC). There are three primary reasons why End Users may want to consider a Lighting Service Contract in addition to reviewing the savings opportunities through a direct sale or a financing model.
#1: End Users that have not budgeted for LEDs or those that do not have cash on hand sometimes resist the financing options in part because the loans are “On Balance Sheet” liabilities.
#2: End Users are sometimes uneasy about perceived “expensive” new technology and often take a “wait and see” approach to avoid buyer’s remorse. Given that current fluorescent and metal halide lighting is so inefficient relative to LEDs, the cost of waiting is very high!
#3: Independence LED wants to provide its Authorized Resellers with the highest potential for success through an alternative engagement path for End Users.
STRUCTURE: End Users may choose to pay a pre-determined cost per square foot for the light rather than buying the LED lights. The cost per sq. ft. is lower than what the owner/operator currently pays for lighting, and the initial installation and ongoing maintenance labor costs are included in the full service contract.
THE STATUS: The Lighting Service Contract program is under development over Q4 2012 with “seeded” pilot programs through Distribution Partnerships. Independence LED introduced the LSC over the week of September 17th at a live LED Boot Camp training and factory tour program on 9.18.12 and at one of the Company’s training Webinars on 9.20.12.
Inspiration for Change:
Independence LED’s CEO, Charlie Szoradi, came up with the idea of Lighting as a Service when his home cable and internet system went out one weekend. He said, “I was down in the basement tracing the wires and realized that I had never actually understood the complexity of the router or modem of the technology that was in our home ‘bundle’. All I wanted was to watch some news and check my email. The benefits of the technology were what I wanted not the technology itself. This moment is all that it took for me to understand that the world has bought lights since the days of Edison, and we could change the game and sell the light as a service.” Mr. Szoradi went on to share with his staff at their Monday Sales Meeting, “We manufacture a new generation of Light Engines that are no longer in the same category as light bulbs. So, we can offer our Resellers and End Users a new generation of payment options – specifically a service path through a Lighting Service Contract (LSC) in addition to the former options of a straight purchase, equipment lease, or financing.”
Calculating the Savings:
Independence LED has developed a sophisticated Return on Investment (ROI) Calculator over the past three years that helps Resellers and End Users see the benefits through Savings Reports. The reports include a breakdown of the existing cost per sq. ft. to illuminate any given facility or areas of a facility based on the lighting audit data collected. So, the new Lighting Service Contract leverages that data to provide an option for the facility owners and operators to make a service payment based on the savings at a cost per sq. ft. that is lower than their current rate. Mr. Szoradi goes on to explain, “Over the arc of my career as an Architect, I initiated the Home Utility Trend (HUT) Score which aggregated the data on utilities for electric, gas, water, etc. to determine the cost per sq. ft. to run a home. I used the analogy of a vehicle where you a buyer would see the ‘the sticker’ price and the miles per gallon MPG was integral to the value proposition. We buy cars knowing some relative cost of operations, but we often buy real estate without knowing the operating cost of the energy per sq. ft.” The lighting challenge is compounded by the fact that illumination is not typically sub-metered from the rest of the electric bill. Since commercial lighting is typically 25% to 35% of the total electric bill, this is a major component. Very few owners and operators think of the lighting cost in terms of sq. ft., and the Independence LED Lighting Service Contract gives them at very least new perspective on optimizing their facility whether they choose the service, purchase, leasing, or financing path.
The Internet Service: When a property owner signs a contract for technology like “Internet Service”, they do not typically need to buy the router, modem, wires, or any hardware as they did in the early days of the internet technology. The Lighting Service Contract (LSC) is similar in that an end user buys the light and not the technology of the lights.
The Drill: A construction contractor typically buys the most reliable cordless drill to have at hand, while a big box store often sells the cordless drill with the highest profit margin. The contractor depends on the drill to work day after day, while the retailer just wants to turn a volume of products and profit. Independence LED is like the contractor that makes the investment in the best possible tool to accomplish the goal. If you were to ask one of the imported Chinese LED manufacturers or a reseller of their products to provide a 5 Year service contract that included payments over time and coverage of the labor cost to replace the lights that fail, they would most likely run from the challenge. They simply want the dollars up front and know the vulnerability of their products given internal drivers and lack of deep fin aluminum heat sinks and overall thermal management.
Emergency Rescue: Professionals that provide emergency services do not take the cheap route on technology and equipment like Ambulances and Fire Trucks. As consumers, we want the benefits of emergency service. How professionals select the best technology to deliver that service, in advance of the precious minutes when it is needed most, is their call. The LED market is evolving, so asking facility owners and managers to pick the best technology would be like asking a heart attack patient to pick the right defibrillator.
Stop the Pain:
American buildings are overweight with energy consumption. We use 25% of the world’s power with 5% of the population and buildings account for over 40% of our national energy footprint. We can avert the building heart attack by cutting out the fat in the arteries. The fat is the 32 Watts of electricity for every 4’ T8 fluorescent tube that we can now cut down to 15 Watts or less with LEDs. Plus, Industrial facilities like warehouses and distribution centers often still use Metal Halide fixtures that require 400 watts vs. LED equivalent output for 100 to 150 Watts.