The short answer: 15-25% gross margin on cash installs; 8-18% on financed. Net margin after CAC and overhead typically lands at 5-15% for established installers. The single biggest variable separating profitable from struggling solar businesses is customer acquisition cost — direct acquisition (mailed solar quotes, warm-follow D2D) at $250-$500 CAC vs broker leads at $1,500-$3,000 CAC is the difference between a healthy business and a margin-compressed one.
Gross margin by deal type
| Deal type | Gross margin range | Notes |
|---|---|---|
| Cash install | 15-25% | No financing dealer fee. Highest margin tier. |
| Loan (Sunlight, GoodLeap, Mosaic, Sungage) | 8-18% | 20-30% dealer fee compresses margin |
| Lease / PPA | 5-12% | Lowest installer take; large share to lease provider |
| Premium tier (Tier 1 panels + microinverters) | +3-7% over base | Cash buyers pay the premium fully |
Net margin after CAC
Net margin is what matters at the end of the year. The CAC variable dominates:
| Acquisition channel | Effective CAC | Net margin impact |
|---|---|---|
| Mailed solar quotes (Solar Launch) | $250-$500 | 10-15% net |
| Warm-follow D2D (after mail) | $600-$1,200 | 7-12% net |
| Cold D2D (loaded rep cost) | $1,200-$2,500 | 3-8% net |
| Broker leads (HomeAdvisor, Modernize) | $1,500-$3,000 | 2-6% net |
| Cold Facebook ads | $1,500-$3,500 | 0-5% net |
This is why acquisition channel selection isn't a marketing question — it's a margin question. A 10 kW system at $35K gross with $7K margin can either net the installer $3K (after $4K CAC) or $6,500 (after $500 CAC). Same install. Different acquisition.
What drives the upper end
- In-house electricians. Sub-contracted electrical work runs 8-12% of project cost; in-house lifts margin 4-7 points.
- Direct distributor relationships. Buying panels + inverters direct (not through broker chains) saves 8-15% on materials.
- Low broker-lead dependency. Below 25% of revenue from broker leads is healthy; above 50% compresses margin sharply.
- Cash mix. Above 30% cash deals in the book lifts blended gross margin meaningfully.
- Neighbor follow-up automation. Same-block neighbor mailings after install convert at 8-15% vs 2-4% cold; these compound LTV at near-zero marginal CAC.
The ITC doesn't lift installer margin (directly)
One common confusion: the 30% federal ITC reduces the homeowner's net cost but doesn't directly lift the installer's margin. What it does is enable larger systems and higher per-watt prices because the homeowner's net feels affordable — which lets installers maintain healthy margin at competitive headline prices.
Target margin by year
- Year 1 (broker leads, year-1 inefficiency): 3-8% net. You're building base.
- Year 2-3 (mix of acquisition, refining install ops): 6-12% net.
- Year 4+ (direct acquisition, in-house electricians, neighbor follow-up at scale): 12-18% net.
The fastest lift to your net margin is changing acquisition channels.
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