Solar Panels have doubled in output and halved in price, sort of the Moore’s law of solar.
Wholesale V Retail
When looking at DIY solar systems online, the pricing is only about half the cost of the installed systems. Yet when you look at the parts individually the differences are astonishing. To add 6 panels to an existing system, SolarReviews.com says to expect a cost of about $7200. LA-Solar wanted $7245. The latest PV panels put out almost twice the energy and are under $200 each. The racking is only about $90 so what gives? How does that add up to $7200?
I started digging, after all I used to have an electrical license so maybe I need to go into the solar business. We never could make those kinds of margins selling smart homes or theaters so it was clear that solar was killing it. The more I researched the more I learned it is and isn’t. Interestingly though my neighbors solar company just added 6 panels to his system for half the price I was quoted. It was a one time deal where they sent out a card only to existing customers.
The Marketing Challenge.
Solar companies have several things working for them and a few working against them. Since installing my system, electric prices have more than doubled. Bonus solar companies. Since Covid, labor is in shortage, bad for solar companies. New TOU or Time of Use schedules have changed it so that instead of a refund, I get a bill each month. Bonus solar companies. The new TOU plan is the reason I wanted six more panels and maybe a battery or two. As a note, I also removed an electric hot tub so my overall usage is down way below my production level. Thank you NEM 2.
With the explosion of solar over the last decade solar installation has become quite competitive. That means the cost of competing is skyrocketing. There are “intermediaries” skimming some of the money too. These are websites that pay big money to appear first when you are looking for a solar system. After they collect your information they charge the solar companies to bid on a system for you. One website charges $50 to bid and $200 if you get the job. Another charges $350 per lead.
If the solar companies have to buy 10 “bids” or “leads” for every one job, that means they spend $700 to a whopping $3500 before anyone signs a contract. Even then there is probably a fat commission for the sales person to keep them happy. On top of that there is the in place marketing. How many times has someone said “have solar” in the big box warehouse store or local fair? That person isn’t free, and neither is the space or displays. I just walked the Texas State Fair. One solar company had eight people in the booth. That ain’t cheap kids. Going back to my neighbors deal, a $2 mailer instead of $700-$3500 in fees for a new job sounds like a bargain to me as a business owner.
Marketing to existing customers
Marketing in business has a lifecycle, just like any other part of the business. The cellular companies and solar companies haven’t figured this out yet. Cellular is getting there because they finally learned that “churn” is expensive. People changing cell plans every two years to get a free phone killed profits. That practice is pretty much over. Solar locks you in because your system should last 10 to 25 years. You are stuck with the original installer until the warranty expires and even then the next company may not want to touch it.
The best customer any business has is the one they already have. The lowest cost of marketing, and the easiest sales come from your existing customer list. I learned that lesson at my very first job. My boss Jerry didn’t seem to work at all. We sold cars, and he never worked the floor. He had a Rolodex on his desk in chronological order. He made three calls a day to past customers asking if they needed a new car or if a friend did. He sent a nice card every time a referral bought a car.
Using that system I have kept a solid list of every customer in every job I have ever had. People buy from people, but solar hasn’t figured that out yet either.
Churning Your Own List
Each time I started a new business, I started with the customer base I already had. For some reason contacts keep vanishing from my iPhone so I still keep an old fashioned spreadsheet of everyone I have ever sold anything too. A guy I sold an Audi to in 1989 is stunned when I send a card or call out of the blue. One of my first car sales, was one of my first computer systems sales and later one of my first home theater sales.
The solar company that added six panels down the block has figured out that it is much less expensive to sell six new panels to an existing, happy customer then it is to land a new customer. They also figured out, that customer will be even happier and offer more referrals if they get the best deals first. Maybe there is hope for the solar industry after all. I am considering an entirely new system from my neighbors solar company after my quote for 6 panels was nearly double what my neighbor paid for his 6 new panels. Maybe I’ll get lucky and my installer will move to the next phase in the marketing lifecycle. As long as I keep getting a bill from my electric company I am not a happy solar customer.