Why low LED prices are bad for everyone

At the Hong Kong Lighting Fair you’re never more than six feet away from a calculator. We believe that the industry needs to weaned away from the abacus.

Visit the Hong Kong Lighting Fair and you’re never more than six feet away from a calculator. Price, it appears, is still the dominant selling point in attracting and keeping people on a stand, and we love it, it’s become almost a sport amongst the overseas buyers. At the end of a busy day hunting, the talk in the bars of Wan Chai is of who has found the cheapest LED panel, floodlight or LED. 

At the show I often listen to the opening banter between buyer and seller to see how long in to the conversation it will be before price is mentioned and the calculator appears and at such a large show, you don’t have time to linger on the design details.

This is not a show for lighting designers, it’s a show where supply meets demand, where buyers have catalogues and web sites to fill and traders have orders ready to place.

When LEDs first entered mainstream lighting applications, prices had to fall to enable adoption and to get prices to fall you need to drive volume. So we entered the vicious price erosion cycle that remains a challenge for western and Chinese producers alike. We often talk about a race to the bottom in terms of price and quality, well folks, we have reached the bottom, or at least there cannot be much further to fall unless  manufacturers are going to start paying consumers to take their products.

On one stand I was drawn to what looked like a commodity product, but with a hint of design flair that made it stand out from the hundreds of other ten watt LED floodlights on show. The manufacturer had all of the paperwork in order with TUV certification. The design was cheekily from their iPad range, which featured nice rounded corners and a contrasting black and white colour scheme. The manufacturer boasted about some of the retailers whom they supply to. So down to business, the price,  USD 2.50, a staggering USD 0.5 higher than the regular commodity version. You see quality design pays off.

Of course you would never dream of using a USD2.50 floodlight to light your projects, but unfortunately this establishes a perceived ‘market price’ for a technology. Should a well designed product be ten times the entry cost, or 100 times more? What is the difference between one lump of aluminium and another. A light is a light right ? Surely this is Smallwood’s law in action.

Which brings us to the complex area of lighting design. Of course you realise that there is no such thing as free design. Design, or to be more accurate, design support, is incorporated in to the price of lighting products. Regardless if you use a manufacturers ‘free’ lighting design or employ the services of an independent lighting design practice, a large proportion of the margin manufacturers add to the price of the product covers the cost of supporting a lighting project from concept to completion. This includes the site visits, the samples and the tendering process.

If you can relight a large office with LED panels for a thousand dollars, then nobody will be calling to offer advice on the things that should matter.

A friend of mine works in the energy retrofit business, working with end users, first to understand the cost of lighting, then to establish the lighting levels they should have while looking at the controls scheme to improve

payback. This then has to be wrapped up into a financial model that helps the client to justify the investment and often short payback. However, once the client, who at the outset knew nothing about lighting,  knows which pieces of kit are required, they can gauge ‘value for money’ on eBay. A light’s a light right? And then frustratingly for my friend, they loose the project.

If you can relight a large office with LED panels for a thousand dollars, then nobody will be calling to offer advice on the things that should matter such as glare, flicker, lighting control and actually improving the lit environment for the people who will be working under the lights for years to come.

Low prices are bad for manufacturers, as it means they can’t invest in new designs and support the supply chain. Low prices are bad for independent designers, as they wont be able to get the support they need to deliver their projects. Low prices are bad for the user as they end up working in spaces lit be commodity products with no design input.

Enough is enough, if we are to survive and thrive as an industry we need to stop talking prices down, and start talking quality lighting up, and I don’t mean just the quality of the products but the quality of the design. We need to create an environment where people demand good lighting, lighting that enhances a work place, retail environment or town square. It will only be when we can sell the value of light to users that we will be able to wean the industry away from the calculator.

Perhaps one day a Hong Kong show will have signs displaying ‘no calculators’, rather than the ‘no photographs’ signs we see today.

Okay, perhaps I can dream.

  • You find out more about the state of the lighting industry at this year’s LuxLive. The event will take place in London on Wednesday 23 November and Thursday 24 November 2016. Registration is free and you can find  out more here.