If you own or operate a commercial building, it is very likely you have either looked into retrofitting to LEDs or had a company call on you to talk to you about doing it. In order to have an LED retrofit conducted in your building, the first step is getting an audit performed. After all, you cannot know what to install, what the costs will be, or what you will save in energy without first knowing what actually exists in your facility.
There are many so-called LED lighting consultants out there who pretend to be experts in energy efficient lighting. This is truly a “Buyer Beware” scenario. They call on you and tell you that they can help you save money by retrofitting your lighting to LEDs–which is true, by the way (see point #2 below). All they need is permission to enter the facility with a clipboard and a pencil and commence to counting light bulbs. “No charge!” they say proudly.
You wouldn’t be a successful business person if you believed that you can get something for nothing. There is no free lunch, right?
These “free” lighting audits are not really free. There are several hidden costs associated with any free lighting audit. Let’s look at a few.
#1) Lack of Experience
Let’s think rationally for a minute? Who gives things away for free? People who are trying to get a foothold in the market. People who are testing a new product. People who don’t yet see value in the product or service they provide.
Remember the last time you were walking through a mall or an outdoor strip center and a restaurant offered you a free bite of a sandwich, taste of ice cream, or nibble of a pretzel? They do this to see if people like their new products. If enough people like the free sample, then the product is a success and they no longer give it away for free. Now it will cost you $5.99 with the combo meal.
When a so-called LED lighting consultant offers to audit your building for free, you have to ask yourself what experience they really have. If they knew the value of the expertise they bring to the table, why would they be giving away the hardest, most technical part of the LED retrofit process for free?
If the audit isn’t correct, the project will not be a success. If you start badly, you will end badly. Garbage in, garbage out, the old saying goes.
The hidden cost of lack of experience can approach the tens of thousands of dollars, depending upon the project size. How? By taking up more of your precious time through ongoing maintenance and lighting level issues because they didn’t know exactly how to conduct a professional, investment-grade audit.
For the sake of discussion, let’s say the lack of experience ends up costing you an extra$5000 in lost potential savings and lost productivity time for you and your employees.
#2) Wrong Focus
It is 100% true that LEDs will save you money on energy and maintenance costs. Everyone knows that. However, not all LEDs are created equal. Some LEDs are better, more efficient, and longer-lasting than others.
Companies who offer to do a lighting audit for free usually are focused on the LED products more than they are the bottom line results. Many times these companies are manufacturer reps or work directly for a distributor. Even when they don’t have those direct ties to certain manufacturers, they often do not have access to more than a few product types. This puts the focus on what they CAN do rather than what SHOULD be done.
What does this mean for you? It means you may end up with a cheaper product, but a less efficient product that will end up costing you five to ten times more in energy and maintenance costs over time.
For the sake of discussion, let’s assume the wrong focus costs you $7500 in lost potential energy savings.
#3) Lost Opportunity Cost
Opportunity cost is the money or other benefits lost when pursuing a particular course of action. In other words, if you have one or two companies offering a free audit, you will likely take them up on it. If another one shows up during the bid process who also offers a free audit, you will probably take them up on it too. The more the merrier, right?
But time is money and electricity never sleeps. While you are weighing options based on free audits, you are losing money that could have otherwise been saved had you proceeded with a professional paid lighting audit in the first place.
Let’s look at an example: Assuming you are spending $10,000 per month on energy and 40% of that is lighting and the potential LED project will save you at least 70% on energy costs alone, your monthly overspend on lighting is $2800. For every day you delay a decision on the contractor to retrofit your facility, you are losing almost $100 in opportunity costs. Each audit should take 2-3 days on site and another 4-10 days on the backend (incentive work, sourcing, labor agreements, etc.).
For the sake of discussion, if you let three companies come in and perform free audits, that will cost you potentially $3,900 in lost time. To put it another way, you’ve wasted more than one and a half months in potential savings by taking more time to develop the project.
#4) Poor Quality
This is really the most important point. If a company is giving away a lighting audit for free, how good can it be? As we all know, you get what you pay for.
While it may be somewhat normal for this service to be provided for free, what value is the company bringing you who will do such a high-level service for free? Given a choice you wouldn’t choose a “free” attorney for your defense in a lawsuit. Why? Because there’s too much at stake.
While lighting audits are not on the same level as defending a lawsuit, they are very technical and important to get right. Lighting is one of the most important factors that contribute to overall safety, aesthetics, and comfort in your facility. Don’t leave this to just anyone.
A poor quality audit will produce inaccurate counts, inaccurate identification of current lighting specifications, inaccurate location information, etc. All of these inaccuracies lead to extra cost or lost potential savings for you. For example, if the count is wrong, then you will end up spending more than you thought to get your entire lighting system retrofitted. If the existing system is misidentified, then the new products they select may not work correctly. If they do not specify the proper fixtures to provide the required foot-candles, you may end up with major safety or aesthetic issues.
For the sake of conversation, let’s assume the poor quality audit ends up costing you an additional $5000 on the project.
Let’s Do the Math
- Lack of experience can cost you $5000
- Wrong focus can cost you $7500.
- Lost opportunity cost can cost you $3900
- Poor quality can cost you another $5000
Altogether, a “free” lighting audit can cost you $21,400 in hidden costs. And for what? Just so you can avoid paying another lighting contractor who might charge $7,000 to 10,000 for a professional lighting audit? This isn’t a good business decision.
So why do companies continue to choose the free audit over the paid audit? Because they would rather ignore the reality that free audits are typically conducted by contractors with little experience, who focus on the wrong issues, and who ultimately provide a poor quality audit, wasting precious time that equates to money.
Don’t trip over a dollar to pick up a dime. Beware of any vendor who offers to conduct a technical lighting audit for free.
NOTE: Energy Lighting Services used to conduct lighting audits for free. Once we discovered the immense value in the project scope and lighting audit report for our customers, we made a strategic decision to begin charging for lighting audits. However, our lighting audit fees were set to just cover the cost of our time on site and in the office for the feasibility study. We do not intend to make a profit on the audits. There is something to be said about paying for an audit, but there is also danger in paying too much for an audit. Contact Energy Lighting Services to ask how we calculate the costs related to conducting a professional lighting audit.