Newbie looking at solar install in Fremont, CA

[J.P.M.]

I think you guys are being too cynical. These kickbacks are budgeted as marketing costs. They are spread across all customers as are all marketing costs. A company that is able use their marketing budget effectively and reduce customer acquisition costs will have more competitive pricing. By the same token, if a company can tack on an extra $500 because you aren't paying attention then they will (regardless of whether a referral is involved or not).

If a $500 kickback drives more business then $500 worth of google adwords or a $500 AM radio spot then that's what a company will do. According to you cynics the lowest price provider will be the one with zero marketing budget.

I guess you can put me in the camp that is in the market for a bridge...

While respecting your opinion:

1.) Kickbacks are budgeted as marketing costs and are assigned to specific jobs as opposed to general marketing costs which are spread among all customers.

2.) General marketing costs such as broadcasting, net, phone canvassing etc will not be reduced in any measureable way by kickbacks. The Google plugs or radio ads will still cost the same, meaning the kickback costs will add $500 or so to the cost of a specific job, be identifiable and assignable to that job, and also, a justification, ethical or not, as a way to pad that specific job. That cost must be made up some way or have the total marketing costs increase, leading to reduced profits or higher marketing costs, or some combination of both.

4.) If I was a project engineer for such a job and/or I was responsible for that job's profitability, which in effect started out $500 in the hole, I'd feel a strong motivation to find a way to add $500 worth of profitability to that job in any # of ways from padding/creating adders to skimping on materials, to hedging perhaps bloated factors or safety etc, etc. in ways solar ignorant customers can't even conceive much less understand. I don't like it or excuse it, but I do recognize it as possible reality. Some think that unethical. Some think not. Either way, it can happen and is driven by the profit motive. Often, the methods remain hidden and thus fear of consequences reduced or eliminated, increasing the likelihood of such actions.

3.) Kickback costs may be spread among all customers, but are easily identifiable and assignable to specific jobs and thus easy to recover from those same specific jobs. This is usually easier to do because the customer is often "presold" by the referring "friend" and less likely or unfavorably predisposed to get other bids. Great for the vendor. One possible outcome is that the price does not go up, but job quality suffers. There is little to prevent or offset such deterioration except the integrity of the vendor. If chances of being caught skimping on quality are slim to none, I'll bet on the profit motive as having a better chance of winning out. Call me cynical.

4.) Nice try but, I did not write, say or imply, nor do I believe that the lowest priced vendor will be the one with a zero marketing budget. Such an idea makes little sense to me. IMO, If connected at all, prices and marketing budgets are f(market conditions, management savvy, luck, hard work). One is only peripherally connected to the other, if at all.

5.) I'd suggest your statement : "If a company can tack on an extra $500 because you aren't paying attention they will..." is one that, IMO, is at least as cynical as mine. I agree with you that the kickback costs will be made up any way they can. I've been saying that from the beginning. Perhaps the difference in our two statements is more in the wording than the substance. What you call tacking on an extra $500 because someone is not paying attention, I call screwing the naïve who think they got a deal. I see little difference in the meaning or substance of our statements except the choice of words. If so, calling some of us cynical seems a bit like the pot calling the kettle black.

Selling solar doesn't appear all that much different in some ways from other businesses I've been associated with. I didn't make the rules, and I don't like all of them, but that's how I see the game run, with apologies to vendors who take offense to my opinions.

[russ]

While respecting your opinion:

1.) Kickbacks are budgeted as marketing costs and are assigned to specific jobs as opposed to general marketing costs which are spread among all customers.

2.) General marketing costs such as broadcasting, net, phone canvassing etc will not be reduced in any measureable way by kickbacks. The Google plugs or radio ads will still cost the same, meaning the kickback costs will add $500 or so to the cost of a specific job, be identifiable and assignable to that job, and also, a justification, ethical or not, as a way to pad that specific job. That cost must be made up some way or have the total marketing costs increase, leading to reduced profits or higher marketing costs, or some combination of both.

4.) If I was a project engineer for such a job and/or I was responsible for that job's profitability, which in effect started out $500 in the hole, I'd feel a strong motivation to find a way to add $500 worth of profitability to that job in any # of ways from padding/creating adders to skimping on materials, to hedging perhaps bloated factors or safety etc, etc. in ways solar ignorant customers can't even conceive much less understand. I don't like it or excuse it, but I do recognize it as possible reality. Some think that unethical. Some think not. Either way, it can happen and is driven by the profit motive. Often, the methods remain hidden and thus fear of consequences reduced or eliminated, increasing the likelihood of such actions.

3.) Kickback costs may be spread among all customers, but are easily identifiable and assignable to specific jobs and thus easy to recover from those same specific jobs. This is usually easier to do because the customer is often "presold" by the referring "friend" and less likely or unfavorably predisposed to get other bids. Great for the vendor. One possible outcome is that the price does not go up, but job quality suffers. There is little to prevent or offset such deterioration except the integrity of the vendor. If chances of being caught skimping on quality are slim to none, I'll bet on the profit motive as having a better chance of winning out. Call me cynical.

4.) Nice try but, I did not write, say or imply, nor do I believe that the lowest priced vendor will be the one with a zero marketing budget. Such an idea makes little sense to me. IMO, If connected at all, prices and marketing budgets are f(market conditions, management savvy, luck, hard work). One is only peripherally connected to the other, if at all.

5.) I'd suggest your statement : "If a company can tack on an extra $500 because you aren't paying attention they will..." is one that, IMO, is at least as cynical as mine. I agree with you that the kickback costs will be made up any way they can. I've been saying that from the beginning. Perhaps the difference in our two statements is more in the wording than the substance. What you call tacking on an extra $500 because someone is not paying attention, I call screwing the naïve who think they got a deal. I see little difference in the meaning or substance of our statements except the choice of words. If so, calling some of us cynical seems a bit like the pot calling the kettle black.

Selling solar doesn't appear all that much different in some ways from other businesses I've been associated with. I didn't make the rules, and I don't like all of them, but that's how I see the game run, with apologies to vendors who take offense to my opinions.

Totally agreed!

[gheewala114]

Totally agreed!

seems like alot of people here have too much free time to be endlessly debating this.

having said that, i believe that the market forces will dictate what referral kickback (and therefore price gouging the next person) is worth for a quality referral someone who was worked with the vendor before. this could be due to many reasons, one that comes to mind is likely saving time/hassle by taking a referral from someone that has seen that contractor's work.

again all this stuff exists because people are willing to play that way. likely people who value their time/convenience- maybe more than some people on this discussion board.

[russ]

seems like alot of people here have too much free time to be endlessly debating this.

having said that, i believe that the market forces will dictate what referral kickback (and therefore price gouging the next person) is worth for a quality referral someone who was worked with the vendor before. this could be due to many reasons, one that comes to mind is likely saving time/hassle by taking a referral from someone that has seen that contractor's work.

again all this stuff exists because people are willing to play that way. likely people who value their time/convenience- maybe more than some people on this discussion board.

Whiny type? Unless you personally know the person recommending a solar sales company you can't believe anything the person says - he wants the 500$ kickback.

[J.P.M.]

seems like alot of people here have too much free time to be endlessly debating this.

having said that, i believe that the market forces will dictate what referral kickback (and therefore price gouging the next person) is worth for a quality referral someone who was worked with the vendor before. this could be due to many reasons, one that comes to mind is likely saving time/hassle by taking a referral from someone that has seen that contractor's work.

again all this stuff exists because people are willing to play that way. likely people who value their time/convenience- maybe more than some people on this discussion board.

I'd wager a guess about the free time comment and say that would be me.

In the time/convenience area, I've found the value of those things to be different as people choose priorities in life. Some people save the planet. Some hang out in bars. I like solar. That, IMO, does not make my time more or less valuable to me (at least, and I've got the only opinion that counts in the area of where/how I spend my time).

If so, I'd add I also have more time than money and more money than brains. However, that time it is still mine to spend as I choose, as is your choice to read or ignore opinions as you see fit. As for my mental spoor output, sniff what you want, leave the rest. Opinions vary. I think this is a place, among other things, to exchange opinions.

I strongly agree that market forces will dictate the value of kickbacks, just like wages, commodity prices and anything else considered to have value in the marketplace. That's nothing new. It's just business. Part of the problem(s) w/kickbacks is that they set up a framework that can enable more deception of the type most consumers, IMO, are abysmally ignorant about. In effect, the fix is in, has been for a long time, and most folks are clueless about it.

One possible example: Time is money and there ain't no free lunch are 2 notions most folks seem to agree with. If I value my time to be better spent on some other endeavor(s) than doing homework researching solar vendors, and instead go to my neighbor and get his (probably) equally ignorant input about solar vendors, my choice. I'll save time - and money, right ? Seems to make sense. Until I think a bit more critically, and like the vendor, and come around to the realization that my actions (creating the referral) have just added $500 (say) to the vendor's cost. The vendor is in business to make money. That $500 expense will be made up one way or another, probably in the easiest way from the vendor's standpoint, i.e., bury it in the job somehow/way. If I thought more than 5 min. into the future and/or beyond the end of my nose, or like the other guy ( the vendor), I just might come to the opinion that my actions created a situation that is ripe for costing me money in ways I hadn't considered before. I saved my time (and thus any $$ value I place on it) up front - and I paid it out in the end, either with bogus adders (perhaps), or lower quality in ways I hadn't thought of or even know about and thus have no knowledge of the consequences or any way to find out it's even happening . Pay your money, take your choice - just think a bit more/harder and try to know/learn the consequences of the time = money equality and remember the no free lunch thing.

[prhamilton]

I agree with most of what you are saying. What I don't agree with is the notion that somehow an installer is going to try to squeeze $500 out of a job with a referral fee but not squeeze $500 out of a job without a referral fee. If there is $500 to be squeezed out of any job, any for profit installer is going to squeeze. The profit motive is there on all jobs and they have only their reputation/future to protect. Doing shoddy work on a referral job is going to catch-up with you just as fast as doing shoddy work on non-referral work.

I think what I agree with is that referrals tend to be less informed (better targets) then other customers that walk in the door. This is mainly because referred customers will have a higher level of trust in the company because they have a referral. They also probably have just started thinking about solar because their neighbor/buddy just did it. Those two qualities are what they are paying for and I think sales people do very well with these type of consumers. I would guess that on average they can close deals with higher than average margins and that justifies the kickback.

Just because the cost is 'assignable' doesn't mean that it is. I would agree with a smaller vendor it might very well be directly assigned. With larger vendors I doubt it is. I think the sales people are compensated based on the deal parameters. The pricing model is probably very dynamic and includes a minimum margin. I would imagine they report out each month on the margins of referred business vs. all other business and see their margins justify the expense/kickbacks.

It would be interesting to hear perspectives from folks in the industry. Especially people in some of the larger vendors to hear how things are structured.

[bando]

there is truth to both sides on the referral fee debate. yes the installer has to make their money back somehow. HOWEVER, that said, there is such a thing as average acquisition cost of new customers, which in many industries is very high. so let's say Solar Company A spends some $$ each month on advertising, web search engines, etc. and they acquire 10 new contracts as a result of those efforts to get these customers. let's just say for instance, it's $800 on average. if you gain a referral, who is neighbor/friend telling neighbor/friend about your company and signs a contract with you, the acquisition cost of that particular customer is $0 at that point, so paying $500 for a referral instead of $800 is actually cheaper.

obviously you can argue all kinds of points, like - well their advertising sucks or they are paying too much to acquire new customers , etc. etc. but the point is, they all spend some money on getting their name out there, and there is some guess-timate by their in house team to determine how many dollars it takes to get a new customer.

this is pretty similar to loyalty rebates in the auto industry which are quite common now among luxury brands. because they have all figured out that it takes thousands of dollars to attract a new customer to their brand. so now they just offer $1500 loyalty rebates if you are moving from a competing brand. literally they just deduct that money from your drive off or down payment. same goes with auto leasing - why do you think they waive your disposition fees and security deposit requirements if you get another car? because that is the cheapest way to get someone into a new car!


at the end of the day, the customer who is buying the system needs to evaluate the proposal's competitiveness and cost effectiveness. when i started on this forum, my general impression was that people didn't do much negotiating. well i didn't have much to lose and did it anyway and knocked off $2200-$2500 each proposal i got before i decided which one i wanted. there was no referral fee involved. so just push for a price you are happy with and enjoy your solar system !

[russ]

this is pretty similar to loyalty rebates in the auto industry which are quite common now among luxury brands. because they have all figured out that it takes thousands of dollars to attract a new customer to their brand. so now they just offer $1500 loyalty rebates if you are moving from a competing brand. literally they just deduct that money from your drive off or down payment.

The kickback comes to you off your total - gain to you - different story.

When hiring someone they always show up with references which I discarded first thing - if the guy was dumb enough to provide a bad reference it was going to show up in his interview.

To me - references are useless or worse unless you know and trust the person giving them.

[bando]

The kickback comes to you off your total - gain to you - different story.

yes and no. in the car industry they care about moving units. if i leave the brand i am leasing, it's pretty painful for them to spend thousands to acquire someone new to the brand to "replace" me. so they do everything possible to get you to stay (e.g. pull-forward accelerators to waive remaining payments, waive dispo fees, etc.). the dealer doesn't care how many units are sold/leased to existing customers vs. new customers. they just need to meet their monthly numbers. obviously with solar, one job/client usually amounts to one PV system/unit.

i don't think they consider these things kickbacks, they are net acquisition costs of moving one more unit. if i am owner of solar company A and need only pay someone $500 to get a new client vs. the average $800 in advertising budget per new contract, i would be pushing the referral program as hard as possible. at some point you probably want your advertising "hit rate" and avg $/new contract to level off with referral fees, but the fact remains that it works and results in a lower net acquisition cost for the company, so it doesn't necessarily result in the new customer's proposal being jacked up by $500.

To me - references are useless or worse unless you know and trust the person giving them.

i agree 100%. i only called one reference which was a neighbor. they had dozens on the list, but to me, seeing the system in person and the install on the roof was the only way to go.

[JCP]

System has been installed. Last stop is getting the net metering agreement from PG&E. The 4080 DC watts systems currently cranks out 29 KWh a day. Happy camper.

[KRenn]

The kickback comes to you off your total - gain to you - different story.

When hiring someone they always show up with references which I discarded first thing - if the guy was dumb enough to provide a bad reference it was going to show up in his interview.

To me - references are useless or worse unless you know and trust the person giving them.

It always boggles my mind when people ask for references. Do they somehow think that you're going to give an honest sampling of your overall body of work or just the most cherry-picked references possible?

[JCP]

Just got PG&E net metering approval. So about, 2 months from initial install, 3 months from contract signing. Not too bad.

[sdold]

Congrats! Have you fired it up yet? How long did PG&E take to give you the approval? I'm finishing up my self-installed system now and will be sending in the Net Metering agreement as soon as the inspector signs it off, hopefully in about a week. Just curious how long PG&E is taking.

[sdold]

In case anyone's keeping track, I sent my initial email application to PG&E six days ago, and received my approval email this morning. I was expecting it to take a lot longer.

[russ]

In case anyone's keeping track, I sent my initial email application to PG&E six days ago, and received my approval email this morning. I was expecting it to take a lot longer.

Great! Please continue to keep everyone in the loop - real life experiences are the best guide.