1. Buy LEDs slowly over time. With the average household’s roughly 40 sockets, that’s $800–$1,600 in light bulbs! But prices will drop now that the inefficient incandescent is restricted and competition increases among LED manufacturers. How fast they’ll drop is a subject of debate — some experts project a 50% price reduction over the next five years, but others think we’ll see a 75% decrease by the end of 2012.

2. Buy LEDs when the price drops below three times that of a comparable CFL since they last three times as long. For example, CFL reflector lamps — the flat-topped bulbs you put in floodlights or recessed fixtures — typically cost around $10, so look for prices below $30 for similar LEDs. “In Vermont, where I live, I found LED retrofits for recessed fixtures for $20,” says Russ Leslie, associate director of the independent Lighting Research Center in Troy, N.Y. “It was a no-brainer.”

We did the math on the payback for replacing incandescents with LEDs. Keep in mind that these numbers are based on national averages, so your results will vary:

Assuming lighting accounts for roughly 6% (or even higher, depending on which federal source you consult) of the average $2,200 annual energy bill, according to the U.S. Department of Energy, and LEDs are 75% more efficient than incandescents, you’d save about $100 per year by switching totally to LEDs.

  • $2,200 x .06 = $132 in lighting costs on average per year
  • $132 X .75 = $99 in savings/year

Say you have the average number of sockets, 40. If you save $100 total each year, each LED averages roughly $2.50 in annual energy savings. But there’s another hidden savings: When you buy that LED, you’re saving the cost of the 25 incandescents you would’ve had to purchase for the same socket over the LED’s lifetime. So LEDs do save you money, breaking even after two or three years.

3. Combine sale prices you might find with rebates from your state or your utility for savings, says Leslie. The Database of State Incentives for Renewables & Efficiency can help.

4. Replace high-wattage and frequently used incandescent bulbs with LEDs in:

Recessed (can) lighting. Start here. These tend to be in places where usage is high, such as kitchens, which account for the most kilowatt hours per year in American homes, according to the Lighting Research Center. “LED retrofits for recessed lighting are ready for prime time,” Leslie says, “and CFLs in that application aren’t as good.”

Open fixtures. Concentrate on drop-bowl light fixtures, table lamps, and other fixtures where air can circulate freely around the bulb. LEDs, like CFLs, don’t perform as well in enclosed fixtures where heat builds up.

Outdoor lighting. The high wattage of outdoor floodlights makes them a good replacement target. LED floodlights are an improving technology and will likely become cheaper this year, Leslie says, so you may want to put off this purchase until later in 2012.

5. Hold off on replacing bulbs in enclosed fixtures, as they tend to burn out faster. More residential fixtures designed specifically for LEDs will start hitting the market this year, Leslie says, which should address some of the problems LED bulbs have with high-temperature environments. Because the quality of LEDs varies widely, be sure to choose one with the Energy Star label.

A final thought: Suzanne Shelton, CEO of Shelton Group and an expert on consumer attitudes toward energy efficiency, recommends that you start thinking of your light bulbs as an investment. “Save the boxes from your LEDs and take them with you when you move,” she says.

What’s your light bulb strategy? Do you use a combo of LEDs and CFLs, or hoard incandescents while certain wattages are still available?