How much do solar leads cost in each state?
The average cost per sale in California for organic sourced leads
with an average of conversion rate
Interesting reading
- What makes up total customer acquisition costs and what part of this is lead generation cost?
- How much is the average amount of commission paid to a salesperson for each job they sell across America?
- How much is the average cost of solar leads in the US?
- What is going on right now in the solar lead generation space?
The cost of solar leads varies greatly around the country. In short the cost of a solar lead in a particular state varies with:
- The quality of the lead source and whether it is an organic lead source where interaction is initiated by the consumer or an outbound lead generation method where the interaction with the consumer is generated by telemarketing/email;
- The number of solar companies that a lead is sold too;
- The average conversion rate in each state. This in turn is a function of how attractive solar is as an investment in each state. Electricity prices and local incentives are the factors that determine how attractive solar is as an investment for consumers in each state; and
- Demand for leads from solar companies in a state which is also usually linked to the attractiveness of going solar in a region.
States with highest energy prices and strongest incentives are typically the busiest solar markets in America and typically have the most competitive markets with solar companies fighting it out for market share.
The following table gives a rough guide as to what solar leads cost in each state:
The green column shows multi-installer organic leads from a defined organic source, with good quality call to action that you can see online. The undersold leads are not sold to other lead generation companies.
The orange column shows multi-installer leads where the origin of the lead is not visible, and leads are purchased from many sub-affiliates. These leads are usually sold to 4 installers and undersold leads are sold to other lead generation companies for sale to even more installers.
Last updated June 2017
| State | Multi-installer organic leads from a defined organic source |
Average conversion % |
Average lead cost per sale |
Multi-installer leads - origin not visible |
Likely conversion % |
Average lead cost per sale |
|---|---|---|---|---|---|---|
| AK | 18 | 4.00% | $450 | 9 | 2.00% | $450 |
| AZ | 49 | 8.00% | $613 | 25 | 3.00% | $833 |
| AR | 18 | 4.00% | $450 | 8 | 2.00% | $400 |
| CA | 135 | 7.00% | $1,929 | 95 | 3.00% | $3,167 |
| CO | 39 | 7.00% | $557 | 29 | 4.00% | $725 |
| CT | 90 | 7.00% | $1,286 | 80 | 3.00% | $2,667 |
| DC | 90 | 10.00% | $900 | 70 | 4.00% | $1,750 |
| DE | 25 | 7.00% | $357 | 25 | 3.00% | $833 |
| FL | 39 | 8.00% | $488 | 22 | 4.00% | $550 |
| GA | 29 | 6.00% | $483 | 12 | 3.00% | $400 |
| HI | 45 | 8.00% | $563 | 39 | 4.00% | $975 |
| ID | 18 | 5.00% | $360 | 35 | 3.00% | $1,167 |
| IL | 18 | 5.00% | $360 | 12 | 3.00% | $400 |
| IN | 18 | 5.00% | $360 | 12 | 3.00% | $400 |
| IA | 18 | 5.00% | $360 | 12 | 3.00% | $400 |
| KS | 18 | 5.00% | $360 | 12 | 3.00% | $400 |
| KY | 18 | 5.00% | $360 | 12 | 2.00% | $600 |
| LA | 18 | 5.00% | $360 | 12 | 2.00% | $600 |
| ME | 18 | 5.00% | $360 | 12 | 3.00% | $400 |
| MD | 80 | 6.00% | $1,333 | 65 | 3.00% | $2,167 |
| MA | 98 | 7.00% | $1,400 | 75 | 3.00% | $2,500 |
| MI | 18 | 5.00% | $360 | 11 | 3.00% | $367 |
| MN | 39 | 6.00% | $650 | 27 | 3.00% | $900 |
| MS | 18 | 4.00% | $450 | 11 | 3.00% | $367 |
| MO | 18 | 4.00% | $450 | 12 | 3.00% | $400 |
| MT | 18 | 4.00% | $450 | 10 | 3.00% | $333 |
| NE | 18 | 4.00% | $450 | 10 | 3.00% | $333 |
| NV | 29 | 6.00% | $483 | 18 | 3.00% | $600 |
| NH | 39 | 7.00% | $557 | 29 | 3.00% | $967 |
| NJ | 98 | 7.00% | $1,400 | 75 | 3.00% | $2,500 |
| NM | 39 | 7.00% | $557 | 25 | 3.00% | $833 |
| NY | 95 | 7.00% | $1,357 | 79 | 3.00% | $2,633 |
| NC | 29 | 8.00% | $363 | 18 | 3.00% | $600 |
| ND | 18 | 8.00% | $225 | 10 | 3.00% | $333 |
| OH | 18 | 6.00% | $300 | 12 | 3.00% | $400 |
| OK | 18 | 5.00% | $360 | 10 | 3.00% | $333 |
| OR | 29 | 7.00% | $414 | 22 | 3.00% | $733 |
| PA | 18 | 5.00% | $360 | 15 | 3.00% | $500 |
| PR | 29 | 6.00% | $483 | 18 | 3.00% | $600 |
| RI | 59 | 9.00% | $656 | 39 | 3.00% | $1,300 |
| SC | 49 | 8.00% | $613 | 29 | 4.00% | $725 |
| SD | 18 | 4.00% | $450 | 12 | 3.00% | $400 |
| TN | 29 | 6.00% | $483 | 18 | 3.00% | $600 |
| TX | 39 | 7.00% | $557 | 19 | 3.00% | $633 |
| UT | 49 | 7.00% | $700 | 39 | 3.00% | $1,300 |
| VT | 29 | 6.00% | $483 | 22 | 3.00% | $733 |
| VA | 18 | 5.00% | $360 | 20 | 3.00% | $667 |
| WA | 29 | 6.00% | $483 | 24 | 3.00% | $800 |
| WV | 18 | 4.00% | $450 | 9 | 3.00% | $300 |
| WI | 18 | 4.00% | $450 | 12 | 3.00% | $400 |
| WY | 18 | 4.00% | $450 | 10 | 3.00% | $333 |
You will note on some of the prices there does not seem to be a linear relationship between the pricing of multi-installer leads and the prices of exclusive leads. This is because in some less competitive areas the multiple demanded by lead generation firms to sell leads exclusively is more or less depending on the number of bidders they have wanting to buy their leads.
Please note that this is a compilation of prices that we see in the market and this does not reflect pricing of SolarReviews leads at any specific time. The pricing of SolarReviews leads will always be as advised in the control panel from time to time.
What makes up total customer acquisition costs and what part of this is lead generation cost?
Customer acquisition costs have two major components being:
- Wage and/or commissions paid to salespeople who sell the system; and
- Lead, appointment or warm transfer costs paid to either third party lead, appointment or warm transfer providers or spent with your own internal marketing efforts. Whether you buy leads externally or generate them all yourself these costs can be converted back to a cost per job won and a cost per watt of solar installed.
The easiest way to work out the average cost of lead generation in the residential solar market is to deduct your payments to sales people from your overall customer acquisition costs.
How much is the average amount of commission paid to a salesperson for each job they sell across America?
Each of you reading this article will know how much you pay for salespeople. Where your sales staff are paid on a commission only basis this is easy. The average commission payable to salespeople in the residential solar industry is $180 per kilowatt (or $0.18 per watt).
However, this number can vary from as little as $100 per kilowatt for salespeople who are fed large quantities of leads from their employer, or also have a base salary, to as much as $250 per kilowatt for salespeople who are required to generate their own leads and earn no base salary.
How much is the average cost of solar leads in the US?
To work out the average cost of solar leads per job in the US we need to deduct the average cost of money paid to sales people ($0.18 per watt) from the average total cost of customer acquisition $0.43).
This gives us an average cost paid for lead generation per kW of residential solar sold in America being now being $0.25 per watt. Given the average residential job of 5.6 kW it equates to an average lead spend per residential solar job of $1400.
However, this number varies greatly by state and anecdotally I can say it varies from as little as $500 per job in places like Texas and Florida up to around $2,000 in states like California and Massachusetts.
What is going on right now in the solar lead generation space?
In the stronger residential and small commercial solar markets across America right now we have reached a point of saturation with the key marketing message of solar (that you can get a zero down system with a monthly payment less than your utility bill savings i.e profit without investment) starting to get stale.
Many call centres and door knocking companies that were extremely active from 2013 through to 2016 in markets like California, Massachusetts. Arizona, New Jersey and New York are no longer calling these areas because the percentages of people responding to their messages have fallen.
So at the same time that those generating solar leads are facing higher costs to generate these leads we have solar companies facing falling selling prices and demanding cheaper leads.
How each side responds to this situation will determine the future of both lead generation companies and also solar companies themselves.
At the moment the situation is ridiculous.
What we see happening between solar companies and lead generation is a prevalence of what I would describe as a stupid conversation, thus my title for this page of blind men yelling and deaf people.
Solar companies are saying to lead generation companies that leads need to be cheaper.
Lead generation companies scratch their heads. They used to be able to dial 100 homeowners and get 5 interested in solar quotes now I only get 1 person interested per 100 calls and so their cost to generate each lead has increased 5 times.
As such many honest door knocking and telemarketing companies have stopped running solar offers or run them only in conjunction with other home improvement offerings. This is fine, I respect those companies that are acting economically rationally and honestly.
However, some solar lead providers are resorting to large scale lead fraud to meet the pricing expectations of their clients.
At SolarReviews we have always been a low volume and high quality niche provider (95% organic leads from our own three websites) with a very small share of the overall lead generation market. However, recently we have tested out some of the telemarketing and email marketing houses used by some of the largest volume lead generators. We have done it is small quantities and examined the results closely.
What we found is that lead fraud is rife. In one instance a click to call company sent us six leads in a row where the person pretending to be a consumer was actually (we assume) being paid by.
So why is solar lead fraud so prevalent?
- The first reason that solar lead fraud is so common is that it can be hard to detect. Even with a good quality, honest lead provider that has done everything in their power to send you genuine consumers who have expressed a genuine interest in solar in the last 24 hours you may not be able to get half of these people back on the phone. This means that fraudulent lead providers know that a lot of bad leads can be hidden and it can be hard to tell the difference between genuine and fraudulent lead sources.
- The second reason lead fraud is so prevalent is that most lead buyers in the solar industry don't investigate how their leads are generated and dont have the skills or knowledge to verify things they are told by their lead company.
- Some volume solar lead generators have dumbed down their message so much now that even genuine leads don't convert at much better than simply picking up the phonebook and dialling numbers randomly. I recently saw an ad from a volume solar lead supplier saying they had a new premium lead service that would convert at 2-3%. It made me think that their standard leads must be horrible because I would have thought dialling numbers out of the phone book would convert at about this percentage !! (haha).
How is solar lead fraud being perpetrated?
There are two main ways that solar lead fraud is being done.
Firstly, in respect to telephone leads media companies and call centres that supply these leads use their own telemarketing staff to call the lead aggregator and pretend they are a consumer that is interested in solar. As such the lead aggregator pays them for the lead and then sells the leads to you. The lead aggregator that you have a relationship with may not be aware of this fraud because these people answer the phone and pretend to be genuine consumers when the lead aggregators QA person calls (because they know the process) but then are not interested when you the installer calls. If you as an installer picks it up they will usually blame it on a sub affiliate.
The ridiculous outcome of this is usually that the lead providers that are supplying the most fraudulent leads are the lead providers that agree to drop their lead prices and the lead providers that are acting honestly and finding it more and more expensive to generate real leads simply can't.
Such installers usually end up buying more of the bad lead source because it is cheap.
It is absolutely crucial to track your lead spend and return for each lead source separately so that you can move your spend towards the more profitable lead source.
