A transformer is a device that changes the incoming electricity voltage level to a different voltage level. Channel letter signs use a transformer to power their LED or neon illumination. A transformer is needed because the standard incoming current typically does not meet the requirements of the letter illumination.
Transformers come in two standard configurations - "step up" and "step down". Step up transformers increase the voltage output, and step down transformers decrease it. Neon illuminated channel letters typically need a step up transformer, and LED letters usually use a step down transformer.
Some of the transformers commonly used by Direct Sign Wholesale are shown below.

This step down transformer is one of the standard LED units used at Direct Sign Wholesale. It has a DC output of 12 volts, and complies with the UL 48 standard.

This step up transformer is a common neon channel letter choice. It varies in output from 4,000 to 15,000 volts, and is available in 30 and 60 milliamp units.
The 60 milliamp version burns hotter and will draw more power than the 30 milliamp unit. The 60 is often used for the cool neon colors like blue, green and purple. In cold temperatures, mercury in neon tubes does not vaporize as easily as in warmer temperatures making it difficult for the argon gas to burn brightly. A 60 milliamp power supply can help this situation.

This step up transformer is often used for self contained neon illuminated channel letters, and it also has an output of 4,000 to 15,000 volts. Self contained channel letter signs have a separate transformer for each letter. This sign type is more expensive due to the larger number of transformers required. However, it requires fewer holes to be drilled into the mounting substrate. Self contained channel letter signs are typically used when landlords or building owners wish to minimize installation impacts over the sign cost.