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Why Are Solar Panels So Expensive?

Aug 30, 2021 | Industry Secrets, Solar, Solar 101, Trending Now

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If you are a homeowner, at some point, you probably have considered installing solar panels to combat the ever-increasing electricity rates. The benefits of going solar are clear. Solar energy is more sustainable as opposed to fuel. It’s also less expensive to power your house in the long run. 

When you begin your research on residential solar, you’ll come across many ads and companies telling you solar energy is affordable, or even free. However, if you have received quotes from most solar companies and wonder why are solar panels so expensive?, you are not alone.

On average, 90% of homeowners who get solar pay 35% to 50% above the actual cost of their systems.

While existing blog posts and articles will tell you that the cost of solar panels depends on many components, such as where you live, how big of a system your house needs, or what type of panels you want, there is one factor that isn’t talked about often enough. And it is how the solar industry operates today.

With the markup, a solar panel system that costs about $18,000 could end up costing you $30,000 altogether.

Although, solar is the future of clean energy, the way the industry currently running makes it difficult for consumers to buy solar and for installers to do their jobs.

Here is the thing: solar equipment costs about the same everywhere you go. 

Large installers, however, have overhead costs to keep their businesses up and running. The costs include, but are not limited to, labor, office rent, utilities, installation equipment, vehicle, marketing, leads generation, and so on. 

Running a profitable solar installation company has many challenges and requires huge capital.  If the company does not have a consistent pipeline of new high-value customers or has operational breakdowns, it can go under pretty quickly. This is why so many solar installation companies go out of business in their first 1 to 3 years.

solar panels are so expensive

In order to drive more sales, many of these installers will purchase leads from lead generation companies, which sell customer’s contact information for a ridiculous amount of money.

As a result, the installers mark up their prices to cover all the expenses and make a profit, hence, what you see on your solar quotes.

 

Another way for installers to lower their expenses is to launch dealer programs. Here is how these programs work.

Through contracts and agreements, solar installers set a baseline price and allow dealers to sell their products. Then, the dealers will hire salespeople and give them a little higher baseline price to sell solar to homeowners like you. To calculate the final price that you see on your quote, the salespeople will add their sales commissions, financial fees, and other additional installation costs. 

solar panels are so expensive

These programs might work great for solar installers because, now, they can just focus on the installation side. Yet, it doesn’t benefit you as a consumer. Your solar panels are now even more expensive.

The final pricing of your solar panel system can be marked up 2x – 3x for the installers, the dealers, and the salespeople to make a profit.

This is not a scam, but rather how the solar industry works.

On top of everything, the solar industry isn’t well regulated. How much sales commissions built into your quotes are usually to the discretion of the salespeople. This results in greedy companies and their sales representatives charging too much for solar products and services so they can make huge profit margins for themselves.

There are not many options for homeowners to purchase solar. Unless you work for a solar company, you are most likely to have to go through a sales representative or a lead generation partner if you want to get solar for your house.

This is why we created Gondola.

 

Our founder, Dong Tran, who has years of experience in sales, saw these existing problems as he works in the solar industry for the past 5 years. Dong has seen many installation companies went out of business and come across many homeowners who bought or leased their solar systems where 75% of the purchase price was from the sales commissions.

All of us at Gondola envision a better solar industry that works for both the consumers and the installation companies.

We want you to have the ability to set the terms of your solar purchase, decide how much assistance you will need throughout the process, and how much commissions should be paid.

solar panels are so expensive

Think you’re ready to go solar but want to avoid being overcharged for your system? We’re here to help. See if you qualify for Gondola pricing today!

Photo Credit: stock.adobe.com

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