Did you know that lighting manufacturers build light fixtures from a designer’s perspective yet allow them to be sold from a contractor’s perspective? Lighting manufacturers are frustrated by this situation, yet they have allowed and encouraged it to happen. So, how did this come about?
Years ago, lighting manufacturers had their own salespeople in major cities to sell their products but were unable to effectively work the territory. Now, sales agencies are based in metro areas to cover all geographical regions for lighting manufacturers with most metro areas having 5 or 6 major lighting reps competing for business.
For decades, the lighting industry has been at cross purposes with the design community. As designers, we believe that there needs to be a level of transparency to make pricing fair to the end user—to fairly compensate each entity in the project, to be able to maintain a project budget, and to preserve the design integrity. We value our lighting reps and understand the benefit they bring to the lighting industry, but there is a reason why your lighting budget is priced as a package instead of unit pricing, and it goes back to the manufacturer.
Lighting reps live on commissions from manufacturers, and those rates vary from around 5% on white goods (troffers, wraps, strips, etc.) to 15% on more specialty products. If this sounds low, it is. Reps simply cannot operate long-term on these low margins, which brings us to the overage that manufacturers have built into their contracts with lighting reps. These policies will pay the rep above the standard commission rate for any extra money that can be added to the order—as much as 50% to 100% on dollar amounts over the standard commission rates. Lighting packages with lump sums make it easier to conceal the overage that has been added to the total price. Unit pricing, on the other hand, levels the playing field and keeps the pricing fair to the owner.
As you can see, this method does not work well for the design community. We believe, along with many of our professional lighting design colleagues, that there needs to be more transparency in this process. Unit pricing would resolve this problem. Independent lighting designers carefully select light fixtures individually based on the specific application on a project. Sample fixtures are evaluated individually. Mockups are created to see the impact that a specific fixture is going to produce, and the fixture schedule is assembled during the design process--one fixture at a time. Therefore, it is important that light fixtures are unit priced. Package lump sum pricing turns the lighting design into just another electrical commodity item such as conduit or wire. Lighting design is not a commodity.
There are several steps that can be taken during the design phase to combat lump sum pricing:
Unit pricing is the resolution to this problem. Each fixture is judged on its own merit. Substitutions and VE alternates can be compared fixture-by-fixture and not become part of a broad-brushed package solution that compromises the budget and design integrity. Lump sum prices do not allow freedom of choice and are unfair to the owner. In addition, now you know the total lighting fixture costs before the project goes out to bid. Unit pricing is the fair and honest approach. Unit pricing is the best approach.
In our next article, we will discuss the VE process and how to make it work in your favor. If you would like to find a better way to light your projects, give us a call at 615.596.3001, or reach out to us at firstname.lastname@example.org.
Danny Streit, IALD, IES, LC is Design Principal of DHS Lighting Design in Nashville, TN, and has over 20 years’ experience in architectural lighting design and lighting control systems. He has successfully completed over 1300 designs in his career and has a history of providing innovative, functional, and sustainable lighting solutions for any design application. email@example.com
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