Lighting-as-a-service (LaaS) is a monthly subscription program that makes it affordable to replace and upgrade your lighting. Many businesses don’t have the upfront capital needed to pay for a lighting upgrade project. But now there is an option to stay current with your competitors.
When organizations use a lighting as a service company for their retrofit lighting project, they find that the LED lighting energy savings often pay for the monthly charge. The LaaS provider also handles maintenance, taking this task away from employees and management. It is an affordable solution that differs from other procurement options.
There are other methods companies can use to finance their retrofit lighting project. However, you quickly notice that many of these options are geared towards larger corporations with plenty of cash flow.
You can pay cash upfront and own the LED lighting system outright. The accounting will claim it as a capital expense since long-term benefits are expected from the purchase. While there will be a warranty, you are responsible for all maintenance. When it’s time to upgrade the lighting, you’re responsible for that cost.
Lease or Loan
It’s possible to reduce initial project costs with a loan. However, there are several downsides. Accounting stills lists it as a capital expense, and the only maintenance and support are what comes with the product’s warranty. Ownership is also not completely yours until the loan is repaid. You also need to account for the interest that is added to the repayments.
Companies with enough cash flow can use savings to pay for their lighting project over time. It is considered an operating expense, and maintenance is often included with the warranty. The business has partial ownership of the lighting, however, the company will need to create a complex financial model that both parties agree to.
Using a lighting as a service company to retrofit the lights is affordable, regardless of the organization’s cash flow. Payments are made monthly over a set time frame and are claimed as operating expenses. The business assumes 3rd party ownership during the length of the service plan. Along with maintenance and support, a new service plan can be created when upgrades are needed.
The questions are mounting. Is a Lighting as a Service program right for you and your organization? We suggest reading Lighting as a Service FAQ, for answers to all those mounting questions!
How Does Lighting as a Service Work?
Your lighting-as-a-service provider makes it possible for you to install energy-efficient lighting without having to pay a large amount at the start or the end of the project. It eliminates the need for capital, instead, businesses enter into a monthly agreement.
Businesses have access to state-of-the-art equipment that might not have been affordable through other methods. You’re also covered if your lighting system becomes obsolete. You can choose to have upgrades installed as needed in your monthly subscription service. Companies can stay competitive without spending a lot of cash.
Turning your lighting project into an operating expense makes financial sense for many organizations. You can set aside a small portion of the savings the company realizes through its use of energy-efficient lighting. This energy savings amount often covers the cost of the monthly subscription, still leaving funds behind to reinvest back into the business.
There are major benefits to a LaaS LED project. In our blog, What are the Benefits of LED Lighting as a Service? we review the substantial savings and benefits of participating in an LED LaaS project.
How to Choose the Right Lighting-as-a-Service Provider
Experience is crucial when you’re choosing a lighting as a service company, and Action Services Group boasts 25 plus years as a national lighting service provider. We only use the best and latest lighting technology on all of our turn-key LED lighting projects.
As a single point of contact, we save our customers time and money by streamlining your programs. For more information on Lighting as a Service, or to speak with one of our lighting specialists, contact us today by calling 610-558-9773, email [email protected] or schedule a call.