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How long before an LED light bulb pays for itself?

Cheap LED light bulbs cost more upfront -- between $8 to $10 apiece -- but begin to pay off within 18 months.

By Jul 31, 2014 5:55PM
This post comes from Elizabeth Sheer at partner site on MSN MoneyAt the beginning of the year, standard 40- and 60-watt incandescent bulbs began their slow fade into obsolescence for both manufacture and sale. In their stead, consumers are turning to LED bulbs, a relatively recent entry into the realm of indoor lighting. LED bulb prices dipped into $10 territory this year, and we found some that are even cheaper.

That's still a lot of dough for a light source. But LED bulbs last up to 25 times longer than traditional bulbs. And they are light years ahead of the CFL bulbs that constituted the first wave of replacement lighting. LEDs light up instantly, stay cool, work in low temperatures, and don't contain mercury, which requires responsible disposal.

LED light bulbs © Scott Olson/Getty Images
We researched five brands to see how long it would take for the cost of an LED bulb to break even with that of an old-school incandescent. Based on manufacturers' data for yearly operating costs, plus the upfront cost of the bulb, the cheap LEDs on our list break even with an incandescent within 18 months.

Let's start by assuming that a kilowatt hour costs 11 cents and the bulb (incandescent or LED) will stay on three hours a day for a full year. The estimated yearly energy cost of a traditional light bulb is $7.23 compared with average $1.25 for an LED bulb. (Your actual cost might be greater or lower, depending on local electric rates). Traditional bulbs go for about $1 apiece and have an average lifespan of about 1.5 years and then suddenly give out; an average LED bulb costs $10 and nearly all boast an expected working life of 25,000 hours, or 22.8 years, after which they begin to dim. During the first year, the average cost (price of the bulb plus energy costs) of an incandescent bulb is $8.23 and the five-year cost (figuring three bulbs) comes to $39.15. The first- and five-year costs for an LED bulb are $11.25 and $16.25, respectively (remember, no replacements necessary). The five-year total for using an LED bulb is less than half that of an incandescent bulb.
We ran a similar set of calculations for five brands of LED bulbs that are equivalent to 60-watt incandescents. Each emits a warm, soft white light that is a close imitation of the old-time standby's slightly yellowish cast.

Cree is a line of LED bulbs available exclusively at Home Depot. It wins over consumers with its quality and familiarity (the size and shape are similar to an incandescent). A six-pack of soft white 9.5-watt dimmable bulbs goes for $56.82, or $9.47 per bulb. The annual operating cost of a Cree LED bulb is $1.14, and it begins to undercut the incandescent bulb at 17 months. Cree bulbs boast an Energy Star, which may make them eligible for a rebate from the utility company, and they come with a 10-year warranty.

The TCP 10-watt LED bulb also looks a lot like a regular light bulb. At $23.99 for a three-pack ($8 per bulb), this is the cheapest LED bulb we checked out. It is not dimmable but is Energy Star rated, and comes with a three-year warranty. The expected annual running cost is $1.20. After 14 months, the TCP bulb would become a cheaper light source than an incandescent.

The Philips Slim Style 60-watt equivalent assumes a very unusual shape -- flat -- which might make it suitable for wall fixtures. At 10.5 watts, this LED bulb uses slightly more energy than the others and costs $8.79 per bulb. It's dimmable and omni-directional (i.e., the light diffuses in all directions, which is what you want if the bulb is destined for a table lamp), and comes with a three-year warranty. The expected average energy cost is $1.26 per year and after 16 months, it keeps getting cheaper and cheaper than a traditional bulb.

The 60-watt LED equivalent from Sylvania also uses 10 watts of energy and costs $9.99 apiece. While it looks similar to a standard light bulb, it is only semi-directional, with most of the light emitted in one direction; it's a good choice for can lights. The expected yearly operating cost is $1.20, pushing it into the cheaper-than-incandescent zone after 18 months.

Another LED Energy Star choice, the 9.5-watt Sunsun, fetches $9.88 per bulb. This one is dimmable, omni-directional, and backed by a three-year warranty. It should not be used in fully enclosed fixtures, but can tolerate damp environments and works well outdoors. The expected average annual running cost is $1.15. This one, too, hits the breakeven point with an incandescent in 18 months.

(Note: A dimmable bulb may require a new LED-compatible dimmer.)

* All figures rounded to nearest penny; calculations for breakeven point added monthly operating cost to Year 1 estimated cost
** Yearly operating cost supplied by manufacturer

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Jul 31, 2014 6:16PM

My experience with LED bulbs has been positive.  They do light up instantly and seem to last much longer than the incandescent bulbs.

My experience with CFL is much worse.  I have CFLs that seem to burn out just as fast as the incandescent ones, and of course the cost quite a bit more and don't light up immediately.  CFL lifespan quotes are not based on how they are used, turning them on and off all the time.  They only last their stated life time if kept on continuously, which of course then wastes the electricity they are touted to save.

Aug 1, 2014 6:58AM

Not a bad return on investment...  How many other money saving improvements pay themselves off that quickly? That makes LED bulbs a better investment than just about anything offered through your broker!


Although replacing bulbs that are seldom used prior to them burning out still makes little sense...

Jul 31, 2014 6:20PM
Also, I don't know how they can compute the time an LED bulb takes to "pay for itself", without knowing the cost of electricity per KWh.   I live in Orange County, my provider is SDG&E, and I have the highest electricity rates in the country.   So, LEDs pay for themselves much faster here than average.
Aug 1, 2014 9:40AM
Grabbed a FEIT BR30 LED Spotlight for my kitchen when I had one burn out.  You can't tell the difference from the other traditional incandescent bulbs.  Dims just fine too.  Yes it cost a bit more at first but considering the light is one the most used in the house, it will pay for itself in a 2-3 years.  And will still work for another few years.  LED lights are great... if you get the right ones.  Some the light is too harsh.  Do your homework and don't be afraid to take things back.
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