Solar leads guide: How to grow your business in 2024

Are you a solar installer looking to grow your business in 2024? With the federal tax credit reauthorized as part of the Inflation Reduction Act, this is a great year to grow your sales organization and grab additional market share.

Many solar company owners have been burned in the past by low-quality lead vendors or having too small a sales force to profitably work the leads they’d purchased. However, when done right, buying solar leads or appointments is extremely profitable.

In this article, we’ll give you an overview of how much solar leads cost, the different types of solar leads, and what to avoid when it comes to buying leads. With these tips, you can allocate your sales and marketing budget more effectively in 2024.

In this article, we’ll give you an overview of:

• How much solar leads cost, and typical ROI
• How to tell if solar leads and appointments are worth it for your business
• The different types of solar leads
• How the quality of SolarReviews leads compares to other vendors
• What you need to know about solar appointments
• And frequently asked questions about solar leads

With these tips, you can allocate your sales and marketing budget more effectively in 2024.

How much do solar leads and appointments cost in 2024?

Most installers who are trying to grow their sales teams need to buy high-quality solar leads at a reasonable cost. So, what’s considered reasonable?

On average, solar leads cost between $25 and $300, with prices changing due to factors like where you’re located and how many other solar companies the leads are shared with. We’ve seen per-lead prices increase across the board in the hottest U.S. solar markets, primarily due to growing competition.

The biggest factor that plays into the price of a lead is how it’s sourced. For example, exclusive opt-in web leads (leads matched only to you) that have been through a screening process in a solar market dense with installers — like San Diego — will sell for as much as $300 per lead. A lead generated by a call center in India in that same market might sell for $25.

Leads that are generated through large platforms, such as Google and Facebook ads, have prices that are set by each platform. Generally speaking, the more attractive solar is in a particular city or county, the higher the price of traffic in that area, which raises the cost of leads or appointments.

Why do solar leads cost so much?

The profit margin in the U.S. residential solar industry is phenomenal compared to similar home improvement industries or by international comparison.

For example, installed residential solar systems are sold in Australia at around $1.20 per watt, compared to around $3 per watt in the U.S. This means that you get paid $16,000 more than a company that installs the same 8 kW system in Australia.

Given this profit margin, it is unsurprising that so many are investing heavily to attract solar leads. However, this means that solar companies are competitively bidding up the cost of traffic and leads. From October 2021 to October 2022, our cost per lead across all paid traffic searches increased by 38.5%, while the cost per click increased by 65%. Since 2017, our cost per click has increased by more than 300%.

Additionally, if you are working with ethical lead gen partners, you get what you pay for. If you look closely into companies that are selling dirt-cheap leads, you’ll likely find them following one (or multiple) of the following shady business practices:

1. The leads are generated using aggressive ad copy or outbound tactics like cold calling. This can generate leads at a low cost, but it usually results in a higher downstream cost per close, as the homeowners aren’t genuinely interested in going solar.
2. The company does minimal screening of its leads. If a lead company sells you 50 leads and only 1 closes, they made most of their money selling you those other 49 leads that tied up your reps' valuable time! Quantity certainly does not always outweigh quality.
3. The lead generation company may cut corners when it comes to TCPA compliance (hiding or even eliminating the disclaimer that gives you confirmed written consent to call the lead). This can land you in trouble with the Federal Communications Commission, leading to hefty fines.
4. Some lead aggregator companies sell each lead to dozens of solar installers at once to inflate their profits.

To get away from cheap leads, solar installers with the best digital lead processing tend to focus more on their cost per appointment or cost per close, rather than their cost per lead.

Considering cost per close

Most installers in competitive solar markets, like the Northeast and California, are trying to get their cost per close (lead spend/number of closes) under $1,500. Installers in emerging solar markets, like Florida, Colorado, and Texas, are usually aiming for $800 to $1,300.

Savvy sales organizations that track their solar lead processing measure not just their cost per close, but also the amount of sales rep time it takes to get to each close. There’s a big difference between needing to process 50 leads to get a deal versus closing after 15 leads, both in terms of what it costs financially and in terms of your available bandwidth as an organization.

If you have a small team with under 20 sales reps, every minute counts. You want your reps to be spending as much time as possible in conversations with actual prospects, whether that be via phone, text, email, or in person. That means incorporating software to help with contacting leads and measuring activities, as well as working with solar lead companies that have a good screening process in place, so you don’t have to sift through 49 dud leads to get to that one closed deal.

Are solar leads and appointments worth the high price?

Solar leads and appointments are absolutely worth the price — if you’re purchasing leads from a reliable, trustworthy, and fair company.

Consider the success enjoyed by SolarReviews customers. In 2021, we saw two companies that started as small solar buyers with us sell for a combined value of nearly $1 billion. In the last couple of years, several others have received valuations of over $100 million during acquisitions or VC funding rounds.

Their secret to success was simple: With SolarReviews driving their customer acquisition, these companies could regularly acquire customers at the lowest cost possible.

SolarReviews is both the largest and highest-quality supplier of leads and appointments to the residential solar industry. On average, our customers generate $6-$8 of gross margin for every $1 they spend with us on either leads or appointments. This means you could see a 600% to 800% return on your investment.

If you’re not buying solar leads by now, you’re likely missing out on an incredible opportunity to take your business to the next level. Current levels of profitability in the solar industry will not be around forever, and solar company owners would be wise to aggressively make the most of these excellent trading conditions.

Our solar leads profitability calculator allows you to enter your cost per lead or appointment, your conversion percentage from lead/appointment to sale, and the metrics of how profitable jobs are for you. This includes the average job size, selling price, and cost of labor and materials.

Let’s take a look at a snapshot of a live dashboard of one of our smaller clients in California:

Let's follow the math. They bought 92 leads and won eight jobs. That is a conversion percentage of 8.6%. This is a little above average, as normal conversion rates from lead to sale are around 6%, but vary greatly depending on how you price your systems.

This installer has an average job size of 10 kW and an average gross margin of $1.20 per watt. They sell at $3.00 per watt, and their labor, equipment, and permitting costs total $1.80 per watt. So, they have generated eight jobs with a total value of $240,000 and a gross margin of $96,000.

Even though approximately 19 of the 20 leads this company purchased did not buy solar from them, they still made a 10x return on their ad spend.

Types of solar leads

There are many types of solar leads available, which we give an overview of below. These are critical to understand when entering the lead-buying space, as many of them should not be considered viable options for your business.

• Appointment-setting calls: In the short term, buying appointments can be one of the lowest-cost ways to get customers. It’s pretty cheap to have an overseas call center contact 100,000 consumers per day through a predictive dialer on a list of numbers they bought or traded. But in the long term, the numbers don’t look so great when you consider the potential damage to your company's reputation on sites like Google or Yelp, along with the legal risk you run for TCPA violations.
• Canvassing leads: Some solar lead generation companies have set up door-to-door sales operations to generate new leads using aggressive sales tactics. In some areas, door-to-door sales require a permit, so this may also present a legal risk depending on your local laws. Associating yourself with companies that generate leads or appointments this way can be tricky in terms of risk versus reward, and while solar will likely continue to be sold door-to-door, it can turn consumers off from wanting to do business with your company.
• Solar lead sheets (aged data): Many solar sales organizations buy aged data, otherwise known as a “solar lead sheet,” to run through a call center. Solar installers who buy this type of data usually have low return expectations, and the data is priced accordingly (often below $1 per record). Solar installers often report that they need to process through hundreds and hundreds of records to get to one appointment.
• Opt-in web leads: “Opt in” means just that — the consumer has opted in online to you calling them for a solar quote. This is by far the least risky way for you to win new business if you are working with a TCPA-compliant solar lead generation company.
• Organic solar leads: This type of opt-in lead comes from websites that appear in the unpaid section of Google search results. When homeowners are learning about solar, they’ll search their questions on Google, and the websites that pop up, such as SolarReviews, may have lead generation elements on them. Consumers who self-educate before becoming a solar lead will set up appointments and close at a higher rate.
• Google PPC leads: If you can’t get your site to rank for a keyword in Google, you can pay for a spot in Google’s “Sponsored” section. Google Ads is an open playing field — your budget and the clicks you pay for directly compete against national lead-gen companies, affiliate marketers, home improvement marketplaces, and other regional installers. When competition increases, bids go up, leading to a virtually perpetual cycle of bid increases. So if you’re thinking about starting Google Ads, be prepared to spend.
• Social media solar leads: Sites like Facebook and Instagram have advanced targeting options that make it possible to target users in certain locations and demographics. Users scrolling social media have a low shopping intent compared to people searching Google for specific terms, however, and ROI is typically harder to track.

Are SolarReviews leads better quality than leads from other vendors?

Yes, SolarReviews leads are among the best in the industry. This is partly because SolarReviews runs an incredibly high-quality verification process in which only 48% of the raw leads pass and are sold. Here are the key reasons why SolarReviews leads far surpass the quality of leads from other vendors:

• We provide a wide variety of educational content, which means consumers on our websites are well-versed in the economics of solar before they decide to request a quote.
• Our solar cost calculator allows consumers to select how many quotes they would like to receive. They won’t have to worry about their phone ringing off the hook knowing that, on average, our leads are only sold to 2.3 companies per lead and our appointments to only 1.5 companies.
• We require consumers to verify that their phone number is correct by having them enter a specific pin sent to their phone to see their online estimate. If they do not confirm their phone number, they are not sold as a lead unless they are further qualified.
• We provide a high-quality online estimate to consumers. Those who have tried to copy our ads and call to action promise the same but deliver no online estimate to customers.

All leads’ addresses are checked for:

• Shade coverage
• Roof viability for solar
• Confirmation that the address is not a mobile home
• Confirmation that the address does not already have solar installed

An onshore, American-based QA team completes this qualification. They disqualify over 50% of the raw leads we generate from paid traffic, meaning we only sell approximately 50% of our raw leads.

Why can SolarReviews generate a cost per acquisition from Google Ads and Facebook at a lower cost?

Many of the leads and appointments sold by SolarReviews are generated via Google Ads and Facebook.

Some solar company owners have tried both SolarReviews leads and generating their own leads using the Google and Facebook platforms. Many concluded that they could purchase leads themselves for the same price. However, they noticed their cost of acquisition was higher with self-generated leads.

While you can set up traffic-buying accounts on these platforms relatively easily, it’s unlikely that you’ll achieve the same cost per lead or cost per sale as we do. This is because:

• As mentioned, our strict QA process eliminates roughly half of the leads we generate via third-party platforms. This means the leads we pass on to solar company owners have a higher chance of converting, leading to a significantly lower cost of acquisition.
• We have a large amount of organic traffic. SolarReviews' solar-specific websites (SolarReviews, Solar-Estimate, and SolarPanelTalk) generate approximately 12 million organic visitors and 200,000 organic leads annually. This allows us to run our paid traffic business at a significantly lower margin.
• It is not always possible to hire resources to manage paid traffic. It’s a full-time job, and the skill level of the employee directly correlates to how successful you’ll be on these platforms. It’s rare to find one employee who is an expert across all platforms. We are fortunate to have many platform-specific experts who are among the world's best at managing a specialized advertising budget.
• Google and Facebook are becoming complex applications, making it harder for one team to manage spending across multiple platforms. It is difficult for even a platform-specific expert to maximize returns from just one platform.

Solar appointments

Many family-owned solar companies want to avoid investing time and cost into a sales infrastructure that can support lead-buying and converting leads into customers.

Smaller, owner-operated solar companies are at a disadvantage when it comes to chasing up leads quickly. However, they are at an advantage once they are in the home with the customer. Owner-operated companies are typically local, and the salesperson generally has a much broader range of knowledge than a salesperson for a larger, more corporate company.

This is why we often recommend that owner-operated companies buy appointments rather than leads. The appointments cost more but they yield a lower cost of acquisition and give the company a way to grow even before they have a complex CRM and dialer set up.

How does the cost of solar appointments compare to the cost of solar leads?

Solar appointments are between three and four times more expensive than solar leads. This is because it takes three leads to generate an appointment. In the process of trying to press the consumer to make an appointment, you may disqualify other leads. The consumer may grow wary, believing you were only after their information, and then refuse to enter into a serious shopping process.

These disqualified leads do not earn any revenue. However, the clicks from Google or Facebook that generated these leads still need to be paid for and are reflected in the cost.

How much do solar appointments cost?

Solar appointments usually cost between $200-$500, depending on the location and the number of set appointments. Once you’ve set up your account, the cost of appointments in your area can be found in your company dashboard.

We only set one or two appointments per consumer. This is because the no-show and cancellation rate is too high when more than two appointments are set.

This is the most affordable way to generate appointments. Dozens of clicks need to be purchased to generate just one in-home appointment. With a cost per click in Google Ads sitting around $8, this can equate to $200-$300 worth of traffic. Then, it’s time to follow up on those leads and find the appointment-ready customer.

Are there different types of solar appointments?

Yes! SolarReviews offers both in-home appointments and pre-set virtual appointments. Virtual appointments are generally a lower cost compared to in-home appointments. Ultimately, it is the consumer's choice which they prefer. We are then guided by the consumer’s selection, the type of appointment that best fits their needs, and how many appointments they want to schedule.

Frequently asked questions