Calculating a payback period is simple. You just have to compare a “new” scenario against your current scenario, and the only important outcome is how long it takes for the investment to pay for itself (to break even). There are, of course, a lot of variables and no case is simple. LED lights are a pretty easy one, though, so let’s use this as an example.

Just to keep the math simple, let’s say that you have one hundred 60 watt incandescent bulbs in your store or restaurant.  The first thing to do is calculate the number of kilowatt hours of electricity you’re using.

100 bulbs x 60 watts/bulb x 1 kilowatt / 1000 watts = 6 kilowatts (when in use)

Take that and add time:

6 kilowatts x 10 hours per day x 350 days per year you’re open = 21,000 kilowatt hours per year.

Multiply that by your utility rate for a kilowatt hour. Lets use 12.5 cents per kilowatt hour for simplicity.

21,000 kWh x 12.5 cents / kWh = $2625 per year you spend on lighting