Five-Year Ownership Math: TCO & Warranty Checklist for Custom LED 

A clear, CFO-proof model for calculating the five-year Total Cost of Ownership (TCO) of a custom LED screen—plus a practical warranty checklist you can take to vendors. Built for real budgets, real uptime, and real accountability. 

The Tuesday board meeting moment

The demo wowed. Then your CFO slides a spreadsheet across the table: “What happens in Year 4 when modules drift? How fast do we get replacements? What’s our worst-case monthly cash burn if a PSU batch fails?”
You feel that pinch because you don’t just need a price—you need a promise you can model. Let’s build the promise into the numbers.

The Five-Year TCO Model (and how to use it)

1) The TCO equation (plain English first)

5-Year TCO = CapEx 

           + 5 × (Energy + Content Ops + Preventive Maintenance + Monitoring/Connectivity + Insurance/Permits) 

           + Expected Repairs/Spare Replenishment 

           − Residual Value (if transferrable)

Make it conservative; you’ll win credibility. 

2) CapEx line items you should insist on breaking out

• LED cabinets/modules (incl. masks, receiving cards)

• Power supplies + control/processor/scaler

• Subframe/rigging + structural engineering + electrical/data

• Commissioning (uniformity, D65 calibration, brightness profiles)

• Training (operators + incident runbook)
  
  

• On-site spares kit (2–3% modules, PSUs, receiving/transfer cards, data/power cables)

If it isn’t itemized, assume it isn’t included.

3) Energy math you can defend

Step A — Nameplate vs. real use:
Most outdoor walls average 18–35% of nameplate; indoor often 8–20% (auto-dimming + content mix).

Step B — Formula:

Annual kWh = (Average Power Draw in kW) × (Hours/Day) × (365)

Annual Energy Cost = Annual kWh × Local Tariff

Example (outdoor 4 × 8 m @ P8):

• Nameplate: 900 W/m² → 28.8 kW max
  
  

• Realistic avg: 30% → 8.64 kW
  
  

• Hours: 16/day → 50,342 kWh/yr
  
  

• Tariff: $0.18/kWh → $9,062/yr
  
  

Lower night brightness and darker content palettes will materially reduce this line.

4) Content operations (don’t lowball)

• Creative refresh cadence (weekly/monthly)
  
  

• Dayparting & data feeds (weather, countdowns)
  
  

• File QA against your processor/scaler
  Rule of thumb: $300–$1,200/month depending on frequency and localization. In-house teams still have a cost—account for hours.
  
  

5) Preventive maintenance plan (and realistic cost)

• Quarterly: surface cleaning, visual inspection, log download
  
  

• Semiannual: uniformity check, white-point touch-up
  
  

• Annual: electrical/mech audit, gasket checks (outdoor), fan/thermals
  Budget 1–2% of CapEx per year for preventive work (lifts included).
  
  

6) Monitoring, connectivity, compliance

• Remote device monitoring (temperatures, offline modules, voltage)
  
  

• Data SIM or fiber, static IPs/VPN if required
  
  

• City permits & inspections (outdoor) + luminance audits
  Budget $50–$200/month for connectivity/monitoring; permits vary by city.
  
  

7) Repairs & spares replenishment (model the ugly)

• Common failures: PSUs, receiving cards, individual modules, connectors
  
  

• Assume 0.5–1.5% module attrition per year depending on environment
  
  

• Price a top-up spares order in Year 3 if usage is heavy or if LED binning may change
  
  

8) Residual value

If the wall can be relocated (retail fit-outs, events), assign a conservative 10–20% residual in Year 5; otherwise, set to zero and be pleasantly surprised.

The simple spreadsheet you can present

Below is a compact model you can paste into your sheet. Swap numbers; the structure holds.

| Line                  | Assumption                  |       Year 1 | Year 2 |    Year 3 | Year 4 |      Year 5 | 5-Year Total |

| --------------- | ---------------- | ----------- | -----| -------- | -----| ---------- | ----------- |

| CapEx             | Hardware + install + spares |  $145,000  |      — |         — |      — |           — |  $145,000   |

| Energy                | 8.64 kW × 16 h × $0.18      |        9,062  |   9,334 |     9,614 |  9,902 |      10,199 |       48,111 |

| Content Ops           | $700/mo                     |        8,400      |    8,652 |     8,912  |  9,179 |       9,454 |       44,597 |

| Preventive Maint.     | 1.2% CapEx                  |        1,740 |   1,792 |     1,846  |  1,901 |       1,958 |        9,237 |

| Monitoring/Conn.      | $120/mo                     |        1,440 |    1,483 |     1,528   |  1,574 |       1,621 |        7,646 |

| Permits/Compliance    | City-specific               |        1,200 |    600 |       600 |    600 |         600 |        3,600 |

| Repairs/Spares Top-up | Attrition + PSU batch |            0 |      0 | 5,000 |  1,500 |       1,500 |        8,000 |

|   Subtotal                           |                                    |      166,842 | 21,861 |    27,500 | 24,656 |      25,332 |  266,191 |

| Residual Value        | 15% CapEx if relocatable    |                  |             |            |                |   −21,750       |        —    |

|   5-Year TCO              |                                       |                         |                 |              |             |                              |   $244,441   |

Now your CFO can divide TCO by projected five-year incremental gross margin to see payback and IRR. If your LED drives $75k/yr gross margin, the payback is ~1.95 years and five-year ROI is comfortably positive. 

The Warranty Checklist (get this in writing)

Scope & Term

• 3–5 years parts & labor (not parts only)

• Coverage for PSUs, receiving cards, modules, control system, and field labor rates
  
  

Performance Guarantees

• Brightness retention ≥70% at term end

• Color uniformity ΔE threshold across modules (state target)

• Dead-pixel policy (max per sqm and adjacency rules)
  
  

Service SLAs

• Response time (e.g., next business day remote, 72-hour on-site)

• Advance replacement shipping windows for modules/PSUs/cards

• Escalation path (manufacturer ↔ integrator ↔ you)
  
  

Spares & Compatibility

• On-site spares kit delivered day one (2–3% modules + PSUs + cards)

• Form/fit/function compatibility clause if model is superseded (no mixed-bin surprises)
  
  

Exclusions & Protections

• Clear stance on surge/lightning; require upstream protection spec

• Vandalism & water ingress exclusions—confirm IP rating responsibilities

• Cleaning chemicals and procedures approved (so maintenance doesn’t void coverage)
  
  

Lifecycle & Security

• Firmware update cadence and support horizon beyond warranty

• End-of-life parts availability commitment (e.g., 5 years after last ship)
  
  

Documentation

• Factory burn-in reports, binning records, UL/CE/IP/EMC certificates

• As-built drawings, load paths, calibration profiles, and runbook for incidents
  
  

Print this. Hand it to vendors. If they balk, you just avoided future pain.

Sensitivity Levers (fast wins to lower TCO)

• Auto-dimming profiles: Every 100 nits you save at night is real money and happier neighbors.

• Content design: High-contrast, darker backgrounds reduce average power draw without hurting readability.

• Preventive beats corrective: A $300 inspection avoids a $3,000 outage.

• Right-sizing pixel pitch: Don’t overbuy resolution the street can’t see. Spend the delta on warranty and spares.

Tools & next reads

Turn this into a decision memo with our templates:

• Brightness, Dimming & Compliance for Outdoor LED

• Pixel Pitch vs. Viewing Distance: The Back-Row Rule
  
  

Send us three things—photos, true viewing distances, and your operating hours. We’ll return a right-sized CUSTOM LED SCREEN spec, a five-year cost curve, and a warranty redline you can negotiate tomorrow.