There is a particular kind of solar sales model that has become increasingly common, especially among door-to-door sales organizations. If someone arrives at your house unannounced, or the appointment was arranged a few days earlier by a kid on an e-scooter who showed up at your door, there is a good chance the person sitting at your kitchen table is not simply quoting you a fixed company price.
They may be using what the industry calls redline pricing.
The concept is simple. The solar company establishes a minimum price for the project, the redline, and the salesperson is free to sell above it. Some or all of the difference becomes commission.
If the company's redline is $30,000 and the salesperson convinces you to sign at $36,000, there may be $6,000 sitting above the actual price of the job. If they can get you to sign at $40,000, there is $10,000. Same equipment, same roof, same installation. The difference is how much the salesperson managed to extract from the customer.
That creates a fairly obvious conflict of interest. The person determining what you will pay is also determining what they will earn.
So how is the price decided? It can become less about the cost of delivering the system and more about what the salesperson thinks you will tolerate. Nice house, new vehicles, paved driveway, new roof, no competing quotes? Maybe the number stays high. Push back hard enough and suddenly a discount appears. Say you need to think about it and the price may fall again before they make it back to the driveway.
If a price can move by thousands of dollars during a conversation, it is worth asking what that price represented in the first place.
This is also where the structure of some modern solar companies starts to become interesting, because the salesperson sitting in front of you may not actually work for the company whose logo is on the proposal.
Renting the sales department
There are solar companies that outsource essentially their entire sales operation. They bring in independent sales organizations, appointment setters and closers because those people specialize in getting contracts signed.
There is nothing inherently unusual about outsourcing a business function, but solar has taken this considerably further. In some cases, the sales team is rented and the installation team is rented too.
The outside sales organization gets the contract signed. The job is then handed to a subcontracted installation company. Equipment can travel directly from the distributor to the customer's driveway. The company whose name appears on the contract may never warehouse the product, transport it, install it or commission it.
At a certain point, you have to ask what exactly the solar company is.
There is a website, a logo, a corporation and a sales agreement, but nearly every part of actually selling and delivering the solar system belongs to somebody else.
A ghost solar company is probably the best description.
It does not need much infrastructure because it does not actually do very much of the physical work. It does not necessarily need a warehouse because the distributor can deliver directly to site. It does not need installation vehicles because the subcontractor has those. It does not need a large installation staff because someone else's employees are doing the installation.
The company becomes primarily an organizer of contracts between the homeowner, the sales organization and the people who actually know how to install solar.
Borrowing someone else's track record
One of the uglier versions of this model is when a company starts borrowing credibility from the contractors it hires.
You will occasionally see a young solar company make enormous claims about installation experience because an electrician or installer working with them has previously installed tens of thousands of panels.
That experience belongs to the individual. It does not retroactively become the experience of every company that hires them afterwards.
If an electrician installed 90,000 panels while working for another solar company, Company B cannot hire that electrician and suddenly imply that those 90,000 panels form part of Company B's history. Company B did not sell those systems, design them, manage those projects, perform the quality control or stand behind those customers afterwards.
Hiring an experienced person is a good thing. Pretending their former employer's body of work is now your company's track record is not.
A company's installation history should consist of systems that company actually delivered.
The problem appears when something goes wrong
The weaknesses in the ghost-company model are easy to overlook on installation day. The panels arrive, somebody puts them on the roof and eventually the system starts producing electricity.
The more important question is what happens three, five or ten years later.
Solar is a long-term product. Someone has to monitor these systems, understand how they were designed, diagnose failures, deal with manufacturers, replace equipment and send qualified people back to the property when something needs attention.
A company with its own technical staff, electricians, installers, vehicles, equipment, monitoring systems and service operation can actually respond to those problems.
A ghost company has to make another phone call.
They have to call the subcontractor who installed the system and hope they still have a relationship with them. They have to hope that contractor has time. They have to hope somebody knows what was installed and how it was configured. Most importantly, they have to be willing to spend money fixing a system after the sales commission has already been paid and the profitable part of the transaction happened years ago.
That becomes particularly uncomfortable when a large portion of the original contract price disappeared into customer acquisition and sales commissions before a panel ever reached the roof.
Everybody in the chain gets paid
Redline pricing and outsourced installation also help explain something that frequently confuses consumers: how a company with very little visible infrastructure can still sell extraordinarily expensive solar systems. If you thought this lean looking model saves the customer money, you would be dead wrong.
There may be very little company to pay for, but there are a lot of people standing between the homeowner and the finished system.
The lead generator gets paid. The appointment setter gets paid. The closer gets paid. The sales organization gets paid. The solar company takes its margin. The installation contractor gets paid. The electrician gets paid. The distributor gets paid. If financing is involved, there may be another substantial cost sitting there as well.
Eventually all of those layers arrive in one place: the customer's contract.
Meanwhile, the things that actually make a solar company expensive to operate, employees, vehicles, warehousing, safety programs, technical training, inventory, electricians, service technicians and long-term monitoring, may barely exist.
There is nothing inherently wrong with subcontracting. Good companies use specialized contractors all the time. The issue is whether there is still a competent solar company standing behind the work when all of the subcontractors are removed from the picture.
Ask who you are actually buying from
If someone is sitting in your house selling you solar, one question cuts through the redline model very quickly:
Is your commission affected by the price you sell this system to me for?
Then ask who will actually install it.
Are the installers employees of the company on the contract? Who employs the electrician? Who designs the system? Who commissions it? Who monitors it afterwards? Who owns the vehicles that arrive at your house? Who comes back when something fails? How many systems has this company itself actually installed?
Not its salesperson. Not the installer they started subcontracting last month. Not an electrician's previous employer.
The company whose name is on the agreement.
There is a very large difference between a solar company and a company that sells solar.
One has personnel, equipment, vehicles, technical knowledge, infrastructure and a long-term obligation to the systems it puts into the world. The other can, in the most extreme cases, be little more than a website and a logo sitting between a rented sales team and a rented installation crew.
If you are spending tens of thousands of dollars on a product expected to remain on your home for the next 25 or 30 years, it is worth knowing which one you are dealing with.