Calculating True Cost of Lighting

The cost of a lighting fixture or bulb is often the deciding factor in the decision to select one type of light over another. When reviewing cost do not simply consider the purchase price alone as that does not include potential operating cost.

A complete evaluation includes all costs over the lifetime of the product.  This includes purchase price, installation cost, maintenance cost, and operating costs. Many energy efficient products will pay back the initial costs over time by saving money during operation. This is why purchase price alone is not the best indicator.

Let’s look at LED lighting as an example.

Initial Cost – this is the purchase cost of the LED light bulb or fixture and any installation cost required. To simply replace one light bulb for another may not require installation services from a professional but installing a new fixture or retrofitting an existing fixture to work with LED bulbs will. An electrical contractor should be able to provide estimate on installation cost.

Incentives and Rebates – the government and utility companies may offer an incentive or rebate when selecting a lighting system that reduces energy consumption or is more environmentally friendly. The incentive or rebate has a net effect of reducing your cost and should be included in your evaluation.

Energy Cost – this is the electricity cost to provide power to operate the light. Power is measured as wattage, more precisely, per kilowatts (1000 watts). The electric company charges by the kilowatt-hour (Kwh), for example $.12 Kwh (12 cents for one kilowatt used for one hour of time). One (1) 100 watt incandescent light bulb can operate for 10 hours using 1 Kwh of energy.  This seems cheap but adds up quickly over time if used daily and with several light bulbs.

Maintenance Cost – this is the cost associated to keep the lighting system operating. Common maintenance items are repairing failed components, replacing light bulbs, or replacing bulbs to maintain a minimum light level[1].  The rated operating hours of the light bulb is a good indicator of how often the bulbs will need replaced.

Cost Calculation

Let’s compare replacing fluorescent bulbs with LED bulbs in troffer light fixture.

Fluorescent linear bulbs
(4 – T8 32 watt Soft White)1

LED linear bulb
(4 – T8 14.5 watt Soft White)1

Total Wattage

128 W

58 W

Purchase cost1

$ 12

$ 96

Installation cost

$ 20

$ 20


$ 0

$ -28

Total Initial Cost

$ 32

$ 88

System life

10 years

10 years

Energy Cost3

$ 460

$ 200

Lamp Life1

6.67 years

13.34 years

Maintenance Cost4

$ 32

$ 0

Total Operating Cost

$ 492

$ 201

Total Lifetime Cost

$ 524

$ 289

  1. Philips 4ft T8 32-watt soft white fluorescent bulb, Model 409433, $29.97 per 10-pack, 2950 lumens, 20,000 hour life.
    Philips 4ft T8 14.5-watt (32-watt equivalent) InstantFit direct replacement LED linear bulb, Model 433060, $237.22 per 10-pack, 1600 lumens, 40,000 hour life.
    Pricing and product data from Home Depot website.
  2. Alliant Energy offers rebate to businesses for replacing fluorescent lights with LED lights at 40 cents per watt saved.
  3. Assumes 3000 hours per year (equal to ~8 hours per day/7 days per week or ~11.5 hours per day/5 days per week) x electrical rate $.12 kwh x wattage (kw) x 10 years system life.
  4. Maintenance cost includes replacement bulb cost and labor. Fluorescent system requires all lamps to be replacement one (1) time to reach 10 year system life.

Payback Period

What is your ROI, or when does the savings pay for the upfront costs?

First determine the yearly operating savings ($492 – $201 = $291) and then divide by the number of years (10).  In this example the yearly savings is $29. The payback period (ROI) is determined by dividing the Initial cost by the Yearly Savings ($88/$29 = 4).

The ROI for above LED linear bulbs is 4 years.


If you have lighting questions or would like to schedule a technician to perform lighting maintenance, please contact McGill’s Repair and Construction at 641-437-1086.

Thank You,

David McGill
James McGill

Article written by Tim McGill, editor@Tree Branch Publishing.


[1] Many light bulbs will produce less light over time as the light bulb reaches its end of life. LED light bulbs may continue to operate for many 1000’s of hours beyond the useful life.

electrical meter

How to calculate electric energy cost of common household items

Electricity from the utility company is delivered to your house and connects to a meter that measures the amount of electricity used. The electricity is sent through the meter and routed to the service panel which split the electricity into the circuits throughout the house to power the appliances, lights and wall outlets.

Each month the utility company collects this usage information from the meter to determine how much electricity to charge you for. Electrical power is measured in watts and is charged by the kilowatt-hour. Kilowatt-hour is simply how many 1000′s of watts are consumed per hour.

Let’s review all the terms you need to know to understand electrical cost.

Kilowatt is watts in units of 1000 (1 kilowatt = 1000 watts).

Watts (wattage) are calculated by multiplying the voltage by the current.  (Voltage x Current = Watts)

Kilowatt-hour (kWh) is how many 1000 watts are consumed in a one hour period.

Utility Rate is the cost per unit of electricity, measured per kWh (kilowatt-hour).


Calculating Electrical Energy Cost

To calculate energy cost the “kilowatts” are multiplied by “time in hours” x “utility rate”. The average utility rate for electricity in southern Iowa seems to range between 11 -14 cents per kWh. I’ll use 12 cents for the calculations.

Just a quick note on time, since the rate is based on hours, converting minutes to hours may be required for calculation purposes (Total usage time in minutes/60 = hours). For example: 45 minutes would equal .75 hours.


Let’s look at two examples for calculating energy cost:

Example 1 – 60 watt light bulb

The power consumed by the light bulb is 60 watts, or .06 kilowatts. Using the utility rate of 12 cents per kwh, each hour of use will cost slightly under 1 cent ($.0072) If the light bulb is on for 10 hours per day then the cost per day is 7 cents for that single bulb (.06kw x $.12 x 10 hours = $.07).  Considering how many light bulbs operate in a household it’s easy to see how the lighting cost per month can add up to a few dollars.

For example: I have 6 recessed 65-watt light bulbs in the kitchen that were on today for 16 hours – I like to hang out in the kitchen. The total wattage for all the light bulbs is 390 watts, or .39 kW. At 12 cents per kilowatt-hour, my cost for lighting the kitchen today is $.75. If that were a typical day, then my projected monthly cost would be $22.50.  Time to rethink leaving the lights on!


Example 2 – Space heater

The typical wattage of a space heater is 1500 watts. In kilowatts that equals 1.5 kW. Using the 12 cent kWh energy rate, the cost per hour for the heater is 18 cents. That doesn’t seem like much until you consider how that adds up over time.

Hours per day

Cost per day

Cost per Month

5 hours



10 hours



15 hours



20 hours




Use the below calculator to estimate electrical cost for your devices.


Calculating Amperage

Sometimes you need to know the ampere draw of a device, especially for determining the correct circuit size. If you know the wattage then you can determine ampere draw by dividing the wattage by the voltage.  For example, the 1500 watt heater plugged into a 120 volt circuit will draw 12.5 amps (1500/120 = 12.5).


If you would like assistance with determining the energy cost or ampere draw of various devices in your house, please contact us. We are happy to help.


Thank You,

David McGill
James McGill

Article written by Tim McGill, editor @ Tree Branch Publishing.