LED Market Insights – Are We At The Tipping Mark?

Do you remember as a child driving long distances with your parents on the road? It would be a question like “Are you there yet?” This is a crucial question for the lighting industry, especially when it comes to LED technology. However, the answer is very different depending on whether we are talking about residential and commercial segments. You need to see a company that sells high quality aluminum posts and commercial lighting applications, manufactured in the USA, of course at the MGM Transformer Company

Many lighting designers in the commercial world have stated that they use LED products in every project. While not in all cases, there are many instances where designers have confidence in the performance and quality of LED products.

As LED costs have fallen, the benefits to the commercial market are beginning to make financial sense. LEDs help deliver the energy efficiency levels required to be certified by LEED and other market incentives. This segment seems to be at or close to its tipping point.

We are still far from reaching our destination in the residential market. While there is an increase in product available on the retail shelf it doesn’t seem like the sales numbers are as exciting. Although the percentage of total bulb sales dollars that comes from LED replacement lamps is likely to be higher, just take a look at the retail prices. It doesn’t take many units sold to make a difference in the overall business dollars. The best indicator of how quickly adoption is taking place is the number sold LED units. When I speak to people in Lowe’s and Home Depot, this theory seems to be supported.

What is the problem? The main problem for homeowners is pricing. A home with a $.10 cost per kWh (kilowatt hour) and an average household usage of 2 hours per week (recently reported at 1 hour in a Department of Energy Report), would cost $4.38 to heat each year. Okay, the homeowner can purchase an LED bulb to save around $3.50 each year on energy, and possibly purchase another bulb in this same scenario. But is that enough savings to justify a $25 – $35 upfront purchase? It’s possible to get a payback of 6-9 years, depending on when you break even. It’s a very long time for the average person. Many people don’t know how to calculate the cost of LED lighting. Others will purchase it anyway, believing that they will save more money. Others will choose LED lighting because it is the most up-to-date technology available and they feel that it is good for the environment. It’s not about the price to make a significant impact on the mass consumer market.

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