When comparing the upfront cost of LED tube lights to conventional fluorescent lights, the fluorescent lights are the winner. However, when you consider volume discounts and the lifespan of LEDs, the results will lean the opposite direction.
Conventional fluorescent lights are cheap in the first year. However, when you account for product longevity, LED tube lights are the winner. LED tube lights last an average of 50,000 hours, while conventional fluorescent lights last an average of 17,000 hours.
Using prices from our previous example, in the first year it will cost $2,750 for the energy and initial purchase of 40 LED tubes. However, conventional fluorescent lights would cost $1,056. Every year thereafter, the energy costs of LED tube lights will be $235, while $465 for the fluorescent lights. In the eighth year, the fluorescent bulbs will need to be replaced at a cost of $240.
At last, you will find a little different in the numbers. That’s because we have included an annual energy inflation rate of 4%. We also used a 1.5% inflation rate to calculate the cost of LED tube lights in the eighth year. Therefore, we only used a 5% discount rate to determine the net present value.