Lighting as a service (LaaS), also known as light as a service, is a service delivery model that is gaining increasing popularity in the business world. This can be mainly attributed to the upfront costs associated with an LED retrofit. However, businesses are aware of the many benefits of LED lighting such as energy saving, improved lighting quality, and reduced maintenance costs. So, more and more businesses are considering LED lighting systems.
However, the huge upfront cost associated with the installation of LED lighting has acted as a hindrance for some businesses, which has led to the emergence of LaaS business model. It allows businesses to avail lighting services on a subscription basis. So, they can avoid the capital investments required for lighting upgrades in order to get the benefits of LED lighting.
Like leasing, lighting as a service helps to avoid the huge upfront outlay associated with LED lighting systems. However, leasing and LaaS are not same. LaaS differs from leasing, as in LaaS, the service provider or the supplier of the lighting systems takes the responsibility of monitoring and maintaining lights. Along with guaranteeing the quality of lighting and uptime, the supplier takes up the responsibility of replacement and recycling as well.
All these make LaaS very popular to avail the benefits offered by the latest technological advancements in LED lighting, without incurring huge investments for the same. This service makes lighting upgradation affordable for even small and medium businesses. Further, the amount of money reserved for installing LED lighting systems can be allocated to some other critical areas.
LED lighting systems can save huge amounts on energy bills as well, which can be used to either pay for lighting service or for investing in areas important for business growth. So, the main benefits of LaaS are – no upfront cost, energy saving, maintenance issues are handled by the service provider, and it provides cash flow advantage to the subscribers.
However, LaaS does suffer from a few limitations. For example, once the contract has been signed, the subscribers will be tied to the agreement for the entire period of the contract. Secondly, it is true that SaaS helps businesses avoid the upfront investment by breaking it down over a period of time. But, if the interest and fees associated with breaking down the total costs into monthly payments are taken into account, the cost may be higher than the upfront cost.
Nevertheless, SaaS does help businesses to go for lighting upgradation even if they cannot afford a huge upfront investment. This coupled with the growing popularity of LED lights due to their energy efficiency, cost saving, and low maintenance, is going to boost the LaaS market in the near future.
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