Do you want to know how solar reps make money and how much they make monthly and yearly? If YES, here is the average amount solar reps make. Solar representatives are sales people that market solar panels of their organizations or various organisations if they are freelance.
In the solar industry, salespeople are almost always paid on commission. The sales people that are paid commission are usually not placed on any fixed salary range. Most companies prefer to go this route rather than retain a lot of sales people on their employment list.
There are a variety of payment schemes that determine the amount of return that is paid to a solar sales person on each deal. There are also hidden costs associated with running different types of commission payouts to salespeople, and if you are a sales person or you aspire to be one, you need to take note of these hidden costs.
There are several common ways to pay commissioned solar salespeople. Payouts can be set up as a percentage of the overall contract price, based on a percentage of margin, constructed as a combination of contract price commission plus a split of margin above a base price, or reflected as a simple cut of the base contract price.
Table of Content
6 Payment Options For Solar Contractors
1. Overall contract price
One of the ways solar salespeople are usually paid is by using the overall contract price model. Paying commission on the basis of the overall contract amount is also one of the most straightforward payment options that a majority of solar businesses use. But you should not that there are issues with setting up your commission structure this way.
This model involves simple calculation and it is easy for a salesperson to know how much to expect out of each deal. On the other hand, this flat commission structure incentivizes salespeople to sell more solar than may be optimal for each client.
If a customer has a challenging roof, needs multiple inverters, or other work needs to be completed onsite, these fees are added onto the final contract amount. Paying your salespeople commission based on the overall contract price can, in turn, have the effect of rewarding them for seeking out complicated work, which may not be best for company margins.
2. Percentage of margin
Yet another payment model is the percentage of margin. When you pay commissions on gross margin instead of sales, you can expect your salespeople to stop cutting prices and focus on selling more profitable components.
If your product and distribution costs change frequently enough, calculating margins regularly can become a headache – especially across large regions or territories. Also, if you want to keep your profit margins confidential, you may want to avoid sharing this information with salespeople.
To help you figure out if the margin-based commission is right for your company, you should be considering whether or not profitability is strategic right now. If you’re a new installer and looking to make a big splash into the market, paying a commission on profitability may not make much sense.
It’s challenging to reward salespeople for above-average sales if you don’t know what “average” is. Therefore, some solar companies calculate their base commission rate on the average solar system size and cost to install the system. Then, they’ll couple this base rate with incentive multipliers to encourage better-than-average sales.
Say your average system size is 6kW, and your average installation cost per watt is $3.00. Your average revenue per installed system would be $18,000. You know you have $0.30 per watt you can comfortably allocate to sales commissions as part of your installation cost. In this instance, that amounts to $1,800.
To be conservative, you may then set a base commission of $1,000, which can be expanded up to $1,500 to incentivize above-average sale amounts.
4. Margin splits
Margin splits is another way you can pay your solar representatives. Some installers use margin splits instead of flat percentages above base. In a similar example to the multipliers above, salespeople are rewarded for higher-margin sales. Deals booked at more than say, 5% of base qualify for a base compensation plus a margin split between the company and salesperson above the base amount.
5. Paying on sales by product grouping
Your company strategy may help shape what your salespeople are paid. For example, say you have just sourced high-margin battery backup and inverter suppliers. You may consider bundling groups of these high-margin products together into separate sales commission percentages.
6. Paying commissions based on system size
In this commission arrangement, your salespeople get paid at set system size amounts. The base price commission is static, and published in tiers linked to system sizes. However, care needs to be taken to properly ensure each system is sized appropriately to the amount of usage of your customers. Solar reps may be tempted to sell more solar than is actually needed, so you may have to regularly ensure your customers’ best interests are honored.
While there is limited consideration for profitability in this model, the benefit to this structure is its focus on sales volume instead of profit per deal. If your business is in a mature place where you can readily ramp up sales, this structure is worthy of your sincere consideration.
How Much Money Do Solar Reps Make Monthly/Yearly?
As of Sep 21, 2020, the average annual pay for a Solar Sales Representative in the United States was $81,635 a year. Entry-level Solar Sales Reps with little to no experience can expect to make anywhere between $39,960 to $55,630 per year or $19 to $27 per hour.
Just like any other job, the salary of a Solar Sales Representative and Assessor will increase as they become more experienced. The majority of Solar Sales Representative salaries currently range between $40,500 (25th percentile) to $105,500 (75th percentile) across the United States.
The average pay range for a Solar Sales Representative varies modestly (up to $65,000), which suggests there may be fewer opportunities for advancement based on skill level, but increased pay based on location and years of experience is still possible.
Even though a particular company may pay sales commissions for solar power system sales on the basis of cents per watt or dollars per kilowatt (kW) of nameplate system size, the amount of commission is generally based upon the following structure:
- 5% base commission
- 2% time-based volume bonus (i.e., so many sales within a month, or a quarter)
- 2% self-generated (e.g., canvassed) lead
Percentage commissions are calculated based on net revenue, which is the contract price less any dealer finance fees charged by a lender.
A competent and experienced, but average, solar power salesperson can make around $65,000 per year, closing around 3 deals per month over 11 net productive months, after subtracting time off for personal matters, bad weather, illness, and the last three weeks of the year, when prospects are focused on the holidays (unless a tax credit is expiring). A salesperson of this caliber will close around 1 out of every 6 to 8 full presentations (13% closing rate).
A top 10% solar power salesperson can make around $120,000 per year, closing around 4.5 deals per month (50 deals per year) over 11 net productive months. A salesperson of this caliber will close around 1 out of every 5 full presentations (20% closing rate).
Some top solar power salespeople can earn around $220,000 per year on roughly 8 deals per month (90 deals per year) over 11 net productive months. Note that all the figures above are for fair market priced systems in a competitive environment.
Any company paying salespeople more than $300 per installed kW is probably overcharging the customer and will not be successful in highly competitive local markets. Any company paying salespeople more than $400 per installed kW is likely some sort of unsustainable pyramid marketing program.
Sales commission levels are generally set to attract the caliber of salesperson needed to get the job done, given typical closing ratios and the practical number of presentations that can be completed during a typical work week.
The average solar power system sale is about four to five times more expensive than the average solar pool heating system sale. So a solar contractor does not need to pay as high a percentage, per typical transaction, for a salesperson with a given employment market value to earn a certain employment market-based level of annual income.
Generally speaking, you will earn more by working for an established, leading solar contractor in a local metro market than you will by working for one of the big three (Tesla/SolarCity, Vivint, SunRun). The reason is not that you will be paid more per sale. In fact, the big three will probably pay you less, on the theory that their brand recognition and company size makes your job easier.
On the contrary, you will likely earn more working for a local/regional solar contractor with a good reputation because you will sell more systems, in large part because your prices are likely to be lower. The big three tend to charge higher prices to cover higher overhead and marketing costs.
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