Most retail store owners know LED lighting saves money. What they don’t know is exactly how much, or how quickly they’ll see returns. I’ve walked dozens of retailers through this calculation, and there’s always a surprise or two buried in the numbers.

Here’s how to calculate your actual ROI, including the factors most people miss.

Start With Your Current Lighting Reality

Before you can calculate savings, you need a baseline. Walk your store and count every light fitting. For each type, note:

• Number of fittings
• Lamp type (halogen, metal halide, fluorescent)
• Wattage per lamp
• Daily operating hours

A typical 200sqm retail store might have 50 halogen downlights at 50W each, plus 20 fluorescent tubes at 36W. That’s 3,220W running 12 hours a day, six days a week. At $0.30/kWh (typical commercial rate), you’re spending roughly $600 per month just on lighting energy.

Calculate Direct Energy Savings

LED replacements typically use 60-80% less energy. Those 50W halogens become 9W LEDs. Your 36W fluorescents become 18W LED tubes.

New consumption: (50 × 9W) + (20 × 18W) = 810W

That’s a 75% reduction. Your new monthly energy cost: $150. Monthly saving: $450.

Over a year, that’s $5,400 back in your pocket.

Factor in Maintenance Reduction

This is where most ROI calculations fall short. They ignore maintenance.

Halogen lamps last maybe 2,000 hours. At 72 hours per week, you’re replacing them every 28 weeks. Fluorescents might give you 10,000 hours if you’re lucky.

LEDs? 50,000 hours is standard. That’s 13 years at your operating hours.

If you’re paying an electrician $120/hour to change lamps (and disrupting trading while they do it), you’re looking at roughly $800-1,200 annually in maintenance costs that simply disappear.

Annual maintenance saving: $1,000 (conservative estimate)

Don’t Leave Rebate Money on the Table

Victorian retailers can claim VEECs (Victorian Energy Efficiency Certificates) worth $15-30 per fitting, depending on what you’re replacing. NSW has ESCs (Energy Savings Certificates) with similar value.

For our 70-fitting example, that’s potentially $1,050-2,100 in upfront rebates. Most commercial electricians will handle the paperwork and discount your installation accordingly.

Upfront rebate: ~$1,500 (middle estimate)

The Numbers Most People Miss

Here’s where it gets interesting. Research from the Lighting Research Center shows that better lighting quality directly affects customer behaviour.

LED lighting offers:

• 95+ CRI (colour rendering) vs 60-80 for fluorescents, making products look more appealing
• Zero flicker, reducing eye fatigue in customers and staff
• Better uniformity, eliminating dark corners that customers avoid

A 2023 study by Deakin University found that retail stores with high-quality LED lighting saw an average 12% increase in dwell time and 8% increase in conversion rates. I can’t promise you’ll see those exact numbers, but the effect is real.

If you’re turning over $50,000 monthly, an 8% lift is $4,000. Even if LED lighting contributes just 20% of that improvement (other factors like layout and merchandising matter too), that’s $800 monthly in additional revenue.

Add It All Up

Investment:

• 70 LED fittings and installation: $8,000-12,000
• Less rebates: -$1,500
• Net investment: $9,000 (middle estimate)

Annual returns:

• Energy savings: $5,400
• Maintenance savings: $1,000
• Conservative revenue lift (1% of turnover): $6,000
• Total annual benefit: $12,400

Payback period: 8.7 months

Even if you completely ignore the revenue lift and only count energy and maintenance, you’re looking at 16-month payback. That’s a 75% return in year one.

The Reality Check

These calculations assume you’re replacing inefficient lighting. If your current setup is already T5 fluorescents or older LEDs, the numbers won’t be as compelling.

Also, quality matters. Cheap LED fittings fail early, flicker, and have poor colour rendering. You need products that meet Australian Standards (AS/NZS 60598) with proper warranties. Factor $120-180 per fitting installed for commercial-grade gear.

Start With an Audit

Most commercial electricians will audit your space for free if there’s a reasonable chance of winning the upgrade work. Get two or three quotes. Ask them to show their calculations and include rebate processing.

The math works. But only if you’re working with real numbers, not guesswork.