Total Cost of Ownership
TCO (Total Cost of Ownership) sums up the costs of purchasing and using a product throughout the usage period.
Often the choice falls on the cheapest solution in terms of price at the time of purchase, but this is not always the cheapest decision in the long term.
Instead of only considering the lowest purchase price, TCO tools make it possible to select the product which has the lowest cost throughout the product’s service life.
TCO calculations are an important tool that can help to make the best decision when choosing lighting solutions. Besides the economic environment, a TCO report also provides information on energy and environmental calculations, such as energy savings, W/m2, carbon emissions, etc.
TCO calculation – the warehouse
A company is considering the renovation of its warehouse lighting. The existing lighting solution is over 25 years old.
The question is, can it pay to renovate the old lighting solution and, if so, should it be a T5 or LED solution?
The TCO calculations clearly show that it pays to replace the existing lighting system.
hat is interesting is that, although the required investment for an LED solution is more than twice as much as a T5 solution, the LED solution clearly costs less, seen over a 10-year period.
The LED solution will generate savings of 41% over a 10-year period compared to the existing solution, while a T5 solution will only generate savings of 23% over a 10-year period.