Owners can gain greater cost certainty and protect design intent by rethinking when and how lighting distributors join the project team.
As CEO of the largest independent lighting design firm in North America, I’m frequently asked why purchasing lighting has become so difficult. Owners are increasingly frustrated by opaque pricing, complex supply chains, hidden markups, and regional politics that make accurate budgeting nearly impossible. It’s not unusual to attend a project kickoff meeting and find the owner already dreading the lighting procurement process. We see that regularly.
Our firm has spent nearly six decades designing lighting around the world, and in my 30+ years of practice, I can say with confidence that the process has become increasingly difficult in the United States. Ironically, it is far less challenging in many other parts of the world. In Europe and the Middle East, design teams often work directly with manufacturers and distributors to design, coordinate, purchase, and deliver successful projects while maintaining pricing transparency. Distributors typically serve as a direct link to manufacturers, verifying pricing throughout the process.
Why lighting procurement is more complex in the U.S.
So, what is different about the United States?
The American market, massive in scale, relies on a complex network of lighting sales representatives contracted by manufacturers to promote and sell products within specific regions. Lighting sales representatives are uncommon in Europe and relatively rare in the Middle East. Reps develop relationships with designers, engineers, and contractors, promote multiple manufacturers, and help get products specified on fixture schedules. They also provide pricing information used for budgeting and bidding.
The challenge begins when a product’s price is communicated from manufacturer to the owner. Between the manufacturer and the owner sit the lighting sales representative, distributor, electrical contractor, and general contractor. Each plays an important role and is entitled to a reasonable markup for sales, coordination, risk management, handling, and installation.
The difficulty is not that markups exist. The difficulty is that they are often unpredictable.
When budgeting, design teams commonly receive a line-item “distributor net” price per product from a lighting sales representative and apply what is known as an industry-standard “long 30” markup by dividing that number by 0.70. The result is roughly a 42% increase intended to cover distributor, electrical contractor, and general contractor markups. The distributor net price that the lighting sales representative gives the design team already includes a markup from the manufacturer to the distributor to cover their sales commission. In theory, this typical best practice produces the price an owner should ultimately pay.
In reality, those markups vary widely. Design teams may assume approximately 10% per party, but actual markups can be significantly different. That is often why carefully managed, seemingly on-budget projects suddenly become over budget without a clear explanation. The lack of transparency leaves owners and design teams struggling to understand where costs have shifted.
How evolving digital workflows complicate lighting procurement
The situation has become even more difficult over the last several years with the widespread adoption of Revit and Autodesk Construction Cloud (ACC).
Gone are the days of frozen backgrounds, coordinated milestones, and drawing sets that remained relatively stable after completion of construction documents. Today, architectural models frequently move ahead of electrical models, changes are captured through a steady stream of bulletins, and project teams are expected to update documentation continuously throughout construction. In many cases, the design model evolves into something close to an as-built record.
This reality collides with the traditional design-bid-build process.
Historically, fully coordinated drawings and specifications formed the basis for competitive bidding. Today, projects are often bid using electrical documents that are already outdated. Despite efforts to communicate updated information, lighting packages continue to be priced from electrical drawings that no longer reflect current project conditions.
The result is predictable. Coordination gaps are not treated as a natural consequence of modern documentation workflows. Instead, they become change orders. The disconnect between evolving digital models and traditional bidding practices is creating unnecessary cost escalation, confusion, and frustration. For lighting procurement, it is increasingly difficult for anyone to keep pace.
A more transparent approach to lighting procurement
So what works better?
It starts by rethinking the budget and procurement process from the beginning of the project.
We increasingly recommend to owners that they bring a qualified regional or national lighting distributor onto the team early. These distributors work collaboratively and at risk, providing transparent line-item pricing, real-time budget tracking, ongoing coordination with design teams, and agnostic purchasing strategies that are not tied to local pre-packaged deals. Lighting sales reps are critical to the U.S. process given the massive scale of our country, providing greater exposure and education about manufacturers’ products, demonstrating samples, answering product questions, ultimately working with the distributor to place orders, and providing pre- and post-installation site support. By working collaboratively with the design team and distributor, they are brought to the table early, engaged respectfully and efficiently, and compensated fairly without a bidding war.
When distributors understand the project goals, performance requirements, and budget priorities from the outset, they can negotiate effectively with manufacturers while collaborating directly with the design team and lighting sales reps. Procurement discussions happen in the open, not behind closed doors. Budget impacts are visible in real time. Product decisions remain aligned with the design intent and the owner’s objectives.
The outcome is better for everyone involved. Owners gain cost certainty. Design teams maintain greater control over quality and project outcomes. Distributors are compensated appropriately when projects proceed to purchase.
What owners can do to improve the procurement process
Why is this approach not already standard practice?
Some distributors are undoubtedly working this way, but many continue to operate within a system driven by local politics, packaging arrangements, and back-room negotiations. The industry has moved from specifying products with an “or approved equal” clause to three-name specifications, only to find additional substitutions introduced later in the process under the banner of getting the project “back on budget.”
Too often, those negotiations result in mediocre value-engineering exercises, compromised design quality, lead-time pressures, last-minute substitutions, and a tremendous amount of wasted time, effort, and frustration. Most importantly, they do not serve the owner’s best interests.
If we want a smoother, more transparent path forward, owners must take the lead. Identify reputable, agnostic regional or national distributors willing to operate collaboratively and transparently as early as possible in the project. Consider developing an RFP that clearly defines distributor expectations early in the project before any specific project pricing is researched. Seek multiple recommendations. Interview candidates with key members of the design team. Then hold them accountable.
We have delivered dozens of large, complex projects using this approach. From my perspective, there is a better way to procure lighting. But meaningful change starts with the owner demanding a better process.
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Carrie Hawley is senior principal and CEO at HLB Lighting Design. Connect with her on LinkedIn. |
