What does the calculator do?
It calculates whether you are better to buy a cheap, energy inefficient appliance, or an expensive, efficient oneback to top
Because once you are an an accountant, you are always an accountant, and I was at the hardware store one day wondering about whether expensive lightbulbs really paid for themselves, or if it was all BS.back to top
The calculator performs two financial comparisons to determine which of the options is financially the best:
This is simply the number of months it would take the savings to pay for the extra initial investment. If the payback period is under your threshold, chose that option. If it is not, do not. Payback period has two significant disadvantages - it does not take any account of the interest costs, and it ignores any gains after the payback period.
Net present value (NPV)
This is scary finance stuff, and therefore hard to explain in a simple manner. Basically it reduces all future profits to take account of the reduced value of money in the future. You would rather have $100 today than $100 in 5 years. NPV measures how much you need in 5 years to make it equal to $100 today. If an investment has a positive NPV, it is good (the value is the increase in value in present day dollars), if it is negative it is bad. NPV is highly dependent on the interest rate. back to top
How long do lightbulbs last?
According to the internet:
- Incandescent: 750-1000 hours
- CFL: 8000-10000 hours
- LEDs: 25000 - 50000 hours
Your other option is to look at the packet. Many brands have a claimed life, which should be reasonably accurate, at least in the conditions in which they were tested - which may vary significantly from how you are using them.
Many people have reported that cheap off brands last less time than more expensive known brands. No, it is true!
If you go through lighbulbs a lot faster than this, there are a number of things to check. First of all, is to stop and think if you are actually replacing bulbs more than you would expect. Count the bulbs in your house, multiply by the hours per day/month they are on, divide by the life of the units, and you will get an expected number of replacements per month. Lives are averages, some will be longer, some less. If you did a 'big bang' replacement of cfls, then it is likely they will start to fail at the same time. If this is not the answer, check to see if you are using a cheapo brand, and if not you may have a problem with either the lamp or your wiring.back to top
But what about needing more heating?
To call lightbulbs lightbulbs is not very accurate, they would be better called 'glowing heaters'. About 90% of the energy from an incandescent bulb becomes heat, and 10% light. To put that another way, with 22 100W lightbulbs and a pair of sunglasses, you would heat the room just as well as a 2000W electric heater.
Energy efficient lightbulbs simply transform a greater proportion of the energy they get into light, and less into heat. So, if you switch all of your incandescent bulbs with cfls or leds, it will be cooler, and in winter you will need to pay more to heat it. Depending on where you live, this probably doesn't offset the savings from the more efficient lightbulbs.
Do you run your heating more than your air conditioning? Remember that bulbs add heat all year round, so you are paying twice for the inefficiency in summer - once with the inefficient bulb, and again when you run your air conditioning for longer to cool your hotter house down. The gains from energy efficient bulbs (and appliances in general) are much larger.
While the savings would be less in a cold environment, unless you are running your heat all year, and your heating is at the same cost as electricity, then you will probably still make savings from energy efficient bulbs.back to top
What interest rate should I use?
The short story is you should use the interest rate which this purchase is costing you, or your next best use of the money.
If you have outstanding credit card debts or similar - use this rate, your best alternative use for this money is to pay down this expensive debt.
If you are buying an appliance on terms, use this rate, but make sure that the cost of the money is the same as the advertised rate. Companies will often advertise "low interest rate" and hide a bunch of fees which make the actual cost of the money high.
No debts to pay off? Nice. Your best alternative use for the money is to invest it somewhere. A lazy approach is to use 10% as a good long term approximation.back to top
What does replacement vs alternative mean
The two analyses compare the return from replacing a product that is currently working, with chosing one of two alternative options where there is no current product. If you are replacing a light bulb which currently works, then the efficient option has to have a greater return to pay for the value of the light bulb which is currently working. You may save more money by replacing lightbulbs before they blow rather than waiting for them to blow and then replacing them.back to top
I am renting, what can I do?Check the payback period. If it is less than you expect to spend in the property, then you are likely to still be saving by buying and using the bulbs. The payback period is simply the number of months the savings would take to pay back the initial investment. Buying a cheaper, unit with a lower life would be a better option for a renter - you don't care if it burns out after 3 or 5 years. back to top
Does it only work for lightbulbs?
No, it should work for anything which you can pay a premium to get a longer lasting or more efficient device. While lightbulbs are the most commonly advertised, you may be able to save money by buying a new fridge!back to top
How do I tell how much power my device uses?
It should have a power rating on it somewhere. Check the power adapter if it has one, otherwise somewhere around where the cord meets the device. While this is a good start, it only gives you part of the story. It will only show you the rated power, the maximum the device will use under normal conditions. Some devices, especialy computers will use less power if they are not doing much. Also if the device doesn't run all of the time (think a fridge or air conditioner), then you need to have an understanding of how long the device is running in a day, not just switched on. If you want to get a better idea of what your device is actually using, check out the cool and useful Kill-a-watt at Amazon or elsewhere.back to top
What do you do with my information
Nothing. We don't store anything, and certainly don't sell any of your information. We pay for the site with the ads we have on the site. As with any site which shows Google ads, Google is able to track visitors. If you don't like this, you should install an adblocker.back to top
How good is this information?
As with anything in life, it is as good as what you paid for it. The results calculated have approximations to make life (yours and mine) easier. They might even be plain wrong. If relying on this website is going to cause you financial difficulties if it is wrong, we recommend that you seek professional advice. We accept no liability arising from the use of this website.back to top