How Underwriters Laboratories (UL) Make Money

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Underwriters Laboratories or UL is a global safety science certification company that is headquartered in Northbrook, Illinois. Underwriters Laboratories is the largest independent testing laboratory in the United States.

Underwriters Laboratories makes their money from contributions and grants, servicing and other fees, and investment income. When you view their tax returns, you can see that the primary way they make money is through their servicing and fees structure.

How Underwriters Labatories Makes Money

There are many ways that Underwriter Laboratories make money. On their US tax return can you discover how they make their money. The latest tax return was for 2018 that I was able to find on the Nonprofit Explorer website.

  • Contributions and Grants – They make about 2,147,864 USD from contributions and grants in 2018. I assume this would include some goverment and other grants. This is an increase from the previous year.
  • Program Service Revenue – Their program service renevue is 18,515,526. This woud be for things like testing fees, inspection fees, anniual fees. No doubt this is their largest income earners. This amount saw a slight decrease form the following year.
  • Investment Income – The investment income is 7,000,000 USD. This has remained the same year-to-year.

When you add all this up, Underwriter’s Laboratories’ revenue in 2018 was 29,251,539 USD. There is no doubt this is a billion-dollar company.

Where it can get confusing is that UL has a Non-profit company and a recently organized For-Profit company.

UL As a Non-Profit Company

Underwriters Laboratories is considered a global not-for-profit safety science company that is based out of the United States. It is the largest and oldest testing laboratory that was founded in 1894.

Underwriter Laboratories is funded by grants, document licensing, and fees. Manufacturers of products submit to Underwriter’s Laboratories their products for UL certification. They are charged fees such as testing fees, yearly certification charges, and inspection fees.

Even though UL is a non-profit organization, it is mainly funded by its fee structure. What makes it a not-for-profit is that the profit is filtered back into the business, and profit is not stated as one of the company’s goals.

Here is how UL describes itself on its website:

“As the global safety science leader, UL provides the expertise, insights and services necessary to solve critical business challenges. We help our customers achieve their safety, security and sustainability goals, meet quality and performance expectations, manage risk and achieve regulatory compliance…To fulfill our mission, UL delivers business solutions and our nonprofit affiliate conducts independent research and shares scientific knowledge broadly. “

UL

That is where it gets confusing. Even though Underwriters Laboratories is a not-for-profit company, they have set up a subsidiary for testing and certification for profit.

UL’s For-Profit Subsidiary

UL has a For-Profit company that is operating under the umbrella of a not-for-profit company. They can call themselves a Not-For-Proft company while having a subsidiary that is a For-Profit Company.

On January 1st, 2012, Underwriters Laboratories set up UL LLC as a For-Profit company in the United States. UL LLC has taken over Underwriter’s Laboratories product testing and certification business – undoubtedly the most profitable part of the Underwriters Laboratories business.

If all of this sounds confusing, that is because it is. UL is a Not-For-Profit company that is under the umbrella of a For-Profit company. In 2020, they estimated that their revenue was about 25 billion US dollars.

In Talking Pointz, Colin Berkshire points out the irony of all this in his article called The Dirty Secrets behind the UL logo. He said:

“Sitting atop $850 Million in investments, with an annual income of about $25 Million, this organization is flush with cash. The trustees work an average of 1.5 hours a week and earn $150,000 a year. (Yes, that is one and a half hours a week, per government filings.) The CEO makes seven figures, and various vice presidents earn in the upper six figures. The executive suite of dozens of execs is stocked with million dollar people.”

Colin Berkshire

I have seen the UL tax returns for 2018, and many people listed on the returns report less than 6 hours of work per week and are still earning six-figure incomes. Some are reporting zero hours.

Colin Berkshire discusses the problem in the rules and laws that UL controls electrical products in the United States. To sell any electrical product in the United States, you need UL or an ETL certification.

To find out more about UL vs. ETL, you can read our blog by clicking this link.

I know this from my own experience with having a UL-certified factory here in Vietnam; UL is very expensive. I know many factories in China that are now switching to ETL certification as it is cheaper than a UL certification.

The truth is without a UL or ETL certification it is almost impossible to sell any lamps into the United States even if those lamps all have UL-approved parts. The lamp needs to have a UL certification, sticker, and testing with a UL-certified lamp.

I also know firsthand how expensive the UL certification can be. Not just to get the UL certification itself, but also to maintain the certification each year. Not only do you pay a hefty yearly fee, but you must also pay for yearly inspections even if you don’t have any goods that need to be inspected.

Every part and piece of that lamp that you produce must have the UL inspection and certification. You must keep records, buy stickers, and only purchase UL-approved parts with the proper documentation.

That is also costly for anyone in the UL global supply chain. A supplier in China can sell me the same cord cheaper if it does not have the UL certification attached. But we must always buy the higher-cost parts and products to pass our UL inspection.

Producing a UL-certified product cost money throughout the entire global supply chain. It cost more to produce a UL-certified lamp than it can be to produce a CE-certified lamp.

UL and US Safety Measures

UL feels their safety measures are helping make the United States and the world safer through their testing science and technology. They see themselves as being in the risk management and scientific research business.

Underwriters Laboratories was founded after the World’s Fair in Chicago in 1894. Underwriter’s laboratories published its first product category of Tin Clad Firedoors in 1903. No doubt, many of these doors helped save the lives of many people.

The reality is that UL certification is expensive and all this is in the name of keeping the public safe. But the truth is other countries don’t have the same UL standards, and their citizens continue to remain safe.

You do not hear of many electrical fires or electrocutions in other parts of the world due to products that have not passed a test or are unsafe.

Colin Berkshire, in his article talks about the UL certification standard wrote:

“So if you want to make an electrical product you are required by state laws to pass UL tests. To know what those are you need to purchase copies of the UL standards. (And, they aren’t cheap, often costing $300 each.) Then, you need to pay UL to test your product (Kiss $30,000 goodby) and then pay ongoing royalties to UL for factory inspections. It’s a slow and arduous process. And, the states have no control over what tests UL requires, or what standards UL chooses to impose.

Ostensibly, this is to keep the American public safe.

But the funny thing is that other countries don’t have this hugely profitable scheme and their citizens are not being electrocuted to death.”

Colin Berkshire

That is why you can see that the most profitable part of Underwriters Laboratories is their servicing fee structures. That shows on their tax returns as being their number one way that they make their profit. It is because any electrical product that is sold in the United States usually bears a UL Mark. Each time the UL mark is put on a product, UL makes money.

If you are interested in seeing how Mondoro can help you with your UL Certified lamp needs – we would love to talk to you to see how we can help you.

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Anita Hummel

Hi, I am Anita Hummel. I am the President of Mondoro. I am passionate about helping you CREATE, DEVELOP, and MANUFACTURE home decor and home furnishing products. I am also an avid blogger with a love of travel and riding my motorcycle around the streets of Hanoi, Vietnam.

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