Lighting as a Service: What to Know, How to Succeed

A version of this blog post originally appeared on SnapCount’s website.

Lighting as a service seems perfect on paper – steady income and a steady relationship with the client, who in turn, benefits from hands-off maintenance of their lighting and a much easier cash flow. So why isn’t everybody offering it?

As it turns out, offering lighting as a service (LaaS) is a more complex and in-depth process than you might think. Here are some best practices to keep in mind when considering offering lighting as a service.

Build a Quality Foundation for Lighting Retrofit

Lighting as a service is not a low-maintenance side offer you can tack on to bring in a little bit of recurring revenue. Go half-hearted on it, and it will likely wind up confusing and ineffective.

Instead, whether you’re a manufacturer, lighting company, retrofit company, or an ESCO, you need to fully commit to setting it up well, getting the right details in place, marketing it, and managing it. This may require a significant disruption to your existing business model, but establishing a robust foundation is critical.

A well-operated LaaS solution can build a relationship with clients that allows for unforeseen levels of depth and growth. Instead of only being a vendor/installer, you can monitor the system, make recommendations, and help them optimize their usage. It can elevate you from a vendor into being a trusted partner.

Keep Your Lighting as a Service Offer Simple

While ensuring a strong foundation it critical, the simpler you can keep the offering itself, the better.

To start, a simpler offering is easier to promote. Communication around the offering should stick to a few key points so that if customers ask questions of different people, they’re receiving consistent answers.

Next, if your LaaS offering has a lot of ambiguity or variables, that leaves the door wide open for customers to haggle, or in some cases, willfully misunderstand what you’re offering. A simple, clear, and well-defined offering also makes administration much easier.

In a nutshell, the contract can essentially state, “I’m going to loan you my product and install it in your facility, and I’ll be the one you call if anything is needed, and I’ll charge you a monthly fee for all of this.” LaaS service is most efficient when turned into one product, not a custom offering.

Enlist Lighting Retrofit Experts

Getting the right people to help you develop your offering is a great way to avoid future snags and turn your LaaS package into a smooth, streamlined, professionally designed service that practically runs itself.

While the offering itself may be simple, there’s a lot of ground to cover in the LaaS contract. To protect yourself and your customers, here are some of the areas where you may want to consult an expert: 

• Warranty coverage – It’s important to have adequate warranty coverage in your offering. For example, you may write a seven-year LaaS contract, but if your products only have a four-year warranty, then you’re on the hook for any product failures that take place during those last three years, which could be a massive hit on your balance sheet.
• Property ownership/lease – What happens if the property changes hands? If the owner sells or the renter leaves, will the contract still be enforceable with the new owner or tenant?
• Setting up financing – Offering your own financing is a massive undertaking. A better option is to partner with a financing company who can take care of all the nuts and bolts of setting up the financial end of the contract.

There’s never been a better time to develop a Lighting as a Service offering. LaaS is a solution that pays for itself, delivers a better, safer working environment, and eliminates risk for the customer. And it’s a solution that diversifies your revenue while turning you into a trusted partner, not just a vendor.

The key is to obtain thorough, expert information, use it to develop a clear and simple offering, and then throw everything you have into making it succeed.

DLL can help you simplify the process and offer financing options to make LaaS attainable. Reach out to us to learn more.