That's it, I'm off...

[SRE]

Doing a smoke packet calculation it's costing us about £1500 a year and oodles of hassle to keep solar on - it's not our core business but margins are now getting so tight that come November when our MCS is due for renewal we'll have to seriously consider if it's worth the extra cash. I guess we'll know what the impact of the import duty is by then too.

 

[solarsavings]

Our mcs is due for renewal on monday so I'm making the payment later today. I have a feeling it will be the last time we renew as there is more money to be earned elsewhere without the high cost and grief.

 

[Worcester]

@SolarCity - What size was that job?

In the law of business, turnover is vanity profit is king. If you're not making a profit, then unless there are very extenuating circumstances, then don't do it.

 

[SolarCity]

It was a 2.5kWp job, so a significant amount.

 

[Gavin A]

To be fair, we had a little chat yesterday and we think the time may well coming up for us too.

We lost out to a job in the week on a rosemary tiled roof with a very awkward scaffold. We were beaten by miles - £4,900 AFTER VAT.
On an install on Wednesday, the customer told us she used us because she liked us but that we were £400 more expensive than our competition. You'd think that would have perked me up, but I'm more concerned that we can be undercut to much by firms if we are a small family firm.

We aren't making a profit and we haven't done for a long time. We're a little busier than we were last year but nowhere near enough to keep us going. In fact, it is other business ventures which are keeping us going at the moment - I earn as much supplying labour fitting suspended ceilings and partition walls as I do from installing solar.

I can't say for sure, but I reckon we'd have been around £4.9k or maybe a little lower for that job.

Not particularly that we want to be that low, but we're fairly relentless about trimming costs, via improving working methods, bringing in lower paid trainees / younger staff to do the donkey work, so not having a £16 an hour spark grinding tiles when a £7 an hour trainee can do it just as well / better, leaving the spark to spark, and not having the spark / installer doing all the paperwork when someone on a lower rate could do most of it, leaving the installer to chase down more work / work on more installs per week etc.

Also doing this allows you to work to tighter margins per job because you can carry out more jobs per week, and have more time to chase down those extra jobs.

I don't mean to teach granny to suck eggs, but we're looking like ending up having been booked solid for virtually the whole of june, partly as a result of me taking 2 extra install staff on, on a job by job basis last month at much lower rates than I would charge my time at / my electrician etc which then freed me up a lot more to chase down the sales we'd been missing out on.

It is doable IMO, and sometimes we may only make £500 a job on top of wages, but at least we're now working, back into profit and perhaps most importantly generating more referral work, as the more jobs we have on the more referrals we then get

ps up to the middle of May we were in a pretty similar boat, really struggling after the long winter on top of last year, and we just hadn't been converting enough of our sales leads due to me being on site too much when we were busy, resulting in 1-2 weeks of busy, then dead for 2 weeks as I'd not been around to chase up the leads.

So I would really recommend really going through your figures with a fine tooth comb, as well as your insstall methods to see how you can trim that £400 off those jobs and still make money on them, as these sorts of cheaper prices aren't going to go away, and it's no use putting loads of effort into quotes you're not going to win IMO.

hope you take this advice as intended, it really is tough out there, but there definitely is a lot of work out there to be had if you can price it right and have the time to chase it up as well or better than the smarmy sales guys do.

 

[SolarCity]

To be fair, I probably wasnt very clear with posts. The £4,900 job was a 4kwp and the one where we were £400 more expensive was the 2.5kwp.

 

[TJLinks]

£4900 for a 4kw system, we can hardly get the materials alone for that.

 

[The Solar King]

Big problem is that most PV equipment is not brands that are household names. This makes it difficult for a prospective customer to differentiate betweem a quality offering and the latest consignment imported by Arthur Daily. It can be hard enough as an installer to keep up. Attempting to explain to a customer the technical niceties is almost self defeating. I tend to ask why they drive a BMW and not a Lada.

This is never going to be easy. Here is something given to me in sales over 30 years ago. It is a quote from the 19th Century Philosopher John Ruskin:

“There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person’s lawful prey. It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”

More recently, there is a famous quote from Warren Buffet:
"Price is what you pay, value is what you get".

We loose jobs on price. Like others we are bumping along. We win when we add value, not when we subtract price.

 

[TJLinks]

Big problem is that most PV equipment is not brands that are household names. This makes it difficult for a prospective customer to differentiate betweem a quality offering and the latest consignment imported by Arthur Daily. It can be hard enough as an installer to keep up. Attempting to explain to a customer the technical niceties is almost self defeating. I tend to ask why they drive a BMW and not a Lada.

This is never going to be easy. Here is something given to me in sales over 30 years ago. It is a quote from the 19th Century Philosopher John Ruskin:

“There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person’s lawful prey. It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”

More recently, there is a famous quote from Warren Buffet:
"Price is what you pay, value is what you get".

We loose jobs on price. Like others we are bumping along. We win when we add value, not when we subtract price.

Very true, we could get a cheapo 4kwp system for £3000 and install it for less than £5k but all our installs are with 30miles of base and usually regular customers or friends of existing customers, so we tend to only install the more well known makes (SMA, Fronius, Hyundai, Sanyo, Sharp, K2 etc) there is a local supplier selling ****ey panels & inverters but marketing them as the best things since sliced bread, some installers fall for it but hayho not for us!!!!!

 

[SRE]

We've got 4 solar jobs this month, I estimate that we've made the same amount of profit as another installer in the area would make if they were selling 10 systems. Setting aside the fact that we're working on 4 jobs for the same money - there's doesn't seem to be any other work happening in our area at the minute - by anyone - at any price.

Our jobs have come through customer referrals. I've had some business coaching recently and that's helped me to understand our place in the market. We often begin our conversation with customers with - we're not the cheapest because we don't think the stack em high and sell em cheap is a responsible attitude to take with the electrics in your home. For the first time this month, we went to a job first (so the other installers all followed our lead with installation) had 4 other installers follow us and still won the job & without pressuring the customer into a sale.

I don't know what will happen next month - we've got DIY SOS tying us up for a few days, some of our other work to do - but I'm very clear that I'm not going to sell 4kwp at 5k. I've tried about 1k worth of leads (converted 3 ) and they all want the cheapest price, installation, products which is great for someone prepared to do the work for nothing and accept any future liabilities but it's not where my market is. I guess we're lucky we can chose.

 

[TJLinks]

Totally agree SRE, I just wish the customers would wake up to the fact that a 5k install is going to be made up of inferior products and short cuts. we have been trading for over 20 years and intend to be around for another 20, but don't want to be going back to failing installs due to shoddy panels and inverters, rather stick to our quality rather than quantity mantra

 

[ktech]

Our 4kW installs are coming out at around 5400 using Samil and anything from Renesola, Canadian, Suntellite. Personally I think this is a good mix in terms of performance and keeping the return for the customer (it is after all an investment product). We strongly impresses the important of panels with an insurance 3rd party guarantee on panels such as with all the above. We very rarely install SMA although this was all we fitted 18 months back. The 10 year warranty on the Samil is a good selling point and they have good reviews, I think possibly the Samil produce more than similar SMA and certainly PowerOne. With any job we always work on 1k profit after parts, scaffold and cost of labour. After all if you are doing your figures correctly you have to take 20% off your profit for tax. Would I install a job based on £500 profit after direct costs, not a chance it's a negative perspective on overall profits and a sure way to be going to a bad place in the future. It's a very competitive market but you have to accept loosing a few jobs to those working on negative profit who will no doubt disappear in the medium term. I think if you can install with a reasonable margin at least you can give that bit more time to customers and should get the rewards later on down the line. If you made £500 on a job would you really be wanting to call by later on down the line to give any unpaid support.

 

[ktech]

Gavin A, sorry mate but I think you must be nuts fitting a job for £500 after wages. That's already £400 after corporation tax. What happens if you get rained off a job and have to pay wages and then go back you will be earning nothing.

 

[Gavin A]

Gavin A, sorry mate but I think you must be nuts fitting a job for £500 after wages. That's already £400 after corporation tax. What happens if you get rained off a job and have to pay wages and then go back you will be earning nothing.

yeah, but we have to pay those wages anyway.

and when I say wages, I mean we take all wages including design, survey, admin, post installation paperwork etc etc into account, not just the install wages, along with around £100 contingency, £40 towards van wear and tear etc . We're probably on £1500-2k actually into the company on top of equipment costs on most jobs.

If you're doing £5400 for 4kwp then you must be on the same actual margin or less, just calculating it differently - actually, if those are your prices, then you're probably one of the companies forcing our prices down, though it's a bit of a vicious cycle in that respect.

FWIW, we're mostly selling for around more like £6k, but using power-one or steca, maybe with a lower priced option using the samils, but most go for the medium priced option IME.

And you're calculating tax wrong as that gets paid on overall company profits after all other costs, not the per job profit margin.

 

[t4sltd]

good luck in the future - drop me a line with contact details and I will let you know if we have work over your way (West Midlands?). Paul