By Pete Cleveland, VP of solar, EagleView
In competitive residential solar markets, a solar sales and installation company competes with an average of 20 solar businesses for customers, referrals and market share. For many companies, the pressure to stay competitive has emphasized a new need to reduce system costs.
While overall system costs in the United States have declined by 25% since 2014 largely due to technology advancements, customer acquisition and overhead costs have increased by 31% during the same time. According to SEIA, soft costs in the United States represent 60 to 70% of the total cost of residential-scale solar PV systems.
This disparity between rapidly falling system hard costs and the generally increasing percentage of soft costs point to the importance and opportunity of soft cost reductions.
Reducing soft costs to scale business
Soft costs represent the costs outside of hardware equipment associated with selling, designing and installing a solar PV system – including customer acquisition, design, permitting, installation, inspection, interconnection, business overhead and profit.
Overhead (general and administrative) and profit make up a project’s largest expense, representing 21% of the total system cost. Sales and marketing come in a close second with 18% of the total system cost.
Rather than sacrificing profit margins to narrow costs, companies have an opportunity to evaluate their sales and operations workflow to first pinpoint inefficiencies and then identify high-impact solutions to streamline operations. Customer acquisition and related sales and design activities, in particular, are a great place to start.
Prioritize accurate site assessment data
Site assessment data is foundational to the solar sales and installations process. Roof size, usable square footage and sun exposure are all data points used throughout a project’s sales, planning, installation and close-out phases.
Inaccurate site measurements result in less profitable jobs in the best case, and canceled contracts and lost referrals in the worst. On the flip side, high-quality site measurements result in a quick sales cycle from lead through installation, which speeds payment and cash flow.
Fortunately, new advancements in remote measurement allow solar companies to bypass inefficient and error-prone site visits to measure and record roof dimensions, azimuth, pitch and localized shading at a given site. Additionally, some remote measurement technology, such as those that derived from aerial imagery, captures thousands of measurement points. In comparison, the same rooftop measured manually with a hand-held device captures perhaps only a few dozen values.
Streamline the design process
Traditional solar sales processes begin with sales representatives using preliminary system designs from a do-it-yourself software to develop an initial proposal that estimates how many solar modules will fit on various roof facets. In this preliminary design process, many contractors purposefully underutilize roof space to avoid issues at final design or installation. (Under-sizing a …….