Negotiating with vendors... manufacturer reps or resellers?

[HollySprings]

I am new to the industry and this forum and am impressed with the depth of knowledge of participants. A few newbie questions.

- When buying components (panels, inverters) and not a turn-key system, who do you negotiate price with? the manufacturer directly or a reseller (wholesaler)?
- Does your vendor provide volume discounts? if so, do you aggregate other buyers with your negotiations?
- Panel costs per watt (STC) have fallen considerably over the years. I would guess there could be substantial 'deals' on slow moving inventory? Is this correct?

I am working with an installer who has a 'preferred' vendor. I assume this means they get better pricing or better margins or both. I'd prefer to not pay extra middlemen thousands of dollars for just picking up the phone or filling out an online form. The application I have will be ground mount and I have plenty of open and sunny space.

[J.P.M.]

1.) Do not reveal or share prices with anyone. You will only pay more, with prices stopping at some mid point if different equipment/panels are involved, or around the same price for the same mfg. equipment. Besides, vendors pretty much know what all their pricing from their sources is anyway , as well as what the rest of their costs are - you don't. Their task is to maximize their profit. Your task is to minimize your cost. If you reveal competition's pricing, you're doing their homework for them and locking in a price that could possibly be lower if they don't know where they need to be on price. When I was a peddler, the competitions' pricing was always a VITAL piece of information for me to get, because, when I had it, I knew my price floor. Without it, I was guessing where the competition was and that often meant I left money on the table when, not knowing the competitions' prices, I bid lower way than I needed to. Think about it like the person on the other side of the negotiating table.

2.) Unless you know what you are doing, have the install done by a quality vendor. Basically. DIY is often false economy.

3.) Do your homework and know what you want and equally important WHY you want what you want. Do not rely on those with skin in the game for answers - get your own and know the answers to your questions before you ask vendors. You'll get better answers on your own with the added benefit of being able to see/learn how/when some vendors may be B.S.ing you. Also a good negotiating tool. One tool vendors use to help maximize their profit is their customer's solar ignorance. Minimize your ignorance and don't reveal the extent of the remaining ignorance any more than necessary. Your education will minimize the effectiveness of their tool.

4.) Write up what you want in concept and equipment with as much detail as possible. Use that list as a request for proposal to bidders. Do not solicit bids without it. Make it, or what's the final result of negotiations, part of a written contract.

As for your questions:
- Negotiate with whoever you will be giving money to.
- Possible aggregation, but that can get sticky from your side, particularly when multiple buyers start to change things and/or get porky with one another in their ignorance or assholiness.
- Perhaps, but I'd guess that's information that can be hard to dig out. I'd use my homework acquired knowledge to understand that "old" inventory, particularly when it comes to panels, often takes the form of lower Wattage panels - say 260 vs, 280 Watts, etc.. Often, the lower Wattage is "older" but of equal quality and sometimes less $$. Inventory control is much better than it once was. I'd suspect the "old inventory" line, while still valid to some extent, is more often used as a tool in tough negotiations to justify a price break for an otherwise, or up until then, intransigent seller's position. I've done that myself in a different, prior life as a peddler.

Good luck. Welcome to the neighborhood.

[HollySprings]

Thank you very much for the detailed reply.

Regarding your response under #2, I agree completely. I have no intention on 'touching' much of anything. I do, however, want to understand the system design and money flow. The vendor I've
selected is competent. But I'm not sure if they are necessarily efficient with my money. I have no problem paying quality vendors, but I do have a problem with overpaying quality vendors.I think many of their installs are rooftop. Mine isn't. So space, weight, absolute dimensions, etc., are not quite as important to me. Even a low watt/sq.ft. isn't that important as long as the 'system' doesn't increase racking significantly.

I guess in a nutshell, I am looking at the solid state components of a PV system more as commodity products.I don't (yet!) know the technical differnces among the vendors (list below) since I am still educating myself. But I am astonished at the range of prices. What I want is conceptually simple: to get a proven, reasonable, reliable product at the lowest price. Nothing new.

From Canadian Solar SEC filings, their average selling price (in $ per watt) for their solar modules last calendar year was $0.58. I'd expect their average selling price (in $ per watt) NOW would be about $0.50 or so. I am an average Joe, and expect to pay $0.50 or so too. Their manufacturing costs (per 2016Q1 conference call) were $0.41 and at 15%-18% Gross Margin, $0.50 seems to be a reasonable expectation. But if the PTC numbers work in PVselect... does it really matter which vendor I use, especially if thre is a 50%+ price difference? From internet searches... and SB1 Compliant PV module data:

STC PTC model
REC 280 257.1 REC280TP BLK
LG 280 257.6 LG280N1C-G3
LG 280 255.2 LG280S1C-B3
SolarWorld 280 251.2 Plus SW 280 Mono
SolarWorld 280 251.0 SW 280 Mono Black
Trina Solar 280 253.5 TSM-280PD14.18
Trina Solar 280 255.8 TSM-280DD05A
Canadian Solar 280 253.9 CS6K-280M

Quantity = 1, distributor pricing:
REC - $235 - $270
LG - $360
TSM-280PD14.18 - $420
TSM-280DD05A - $255
CS - (in theory, unknown what quantity) $127

I guess I will call REC, LG, CS, etc., and get price quotes.

[foo1bar]

I guess I will call REC, LG, CS, etc., and get price quotes.

Er, why?
Do you call electrical wire manufacturers when you hire an electrician?
Do you call JM Eagle when you hire a plumber?

Unless you're paying your installer on an hourly basis or a cost + model it doesn't matter really what it costs him for his materials. He's probably already finding a good deal on modules and inverters because it directly affects his bottom line.

What you need to do is figure out:
1> How (physically) big of an array do you want?
2> Where do you want it?
3> How many kwh do you need it to produce? (And from that what DC watt size system do you need)
4> Are you better off with it pointed west a little because of TOU tarrifs?

Once you have DC watt size and footprint size figured out, that sets the minimum watts per panel.
Since you're residential, it's mostly standardized on 60cell panels.
I took a look at pricing at one vendor (renvu - who I used)
250W to 260W panels are probably around $.55/W to $.60/W
285W panels are probably going to be around $.98/W
300W panels are probably going to be around $1.05/W
320W panels are probably going to be around $1.11/W

None of those are taking into account labor and racking costs.
So 285W may be the most cost effective once that is taken into account.
And often people are somewhat space limited, and 285W instead of 250W means 15% more power produced or ~15% less space/panels needed.

Once you have module size in mind (ie. 250W is fine or you want to fit it in a small space and need it to be >300w), then you can look at giving vendors a chance to give you proposals.

For a typical roof-mount residential system $3/W is a good price. I've been negotiating a large system (>50kW) where there are multiple installers at around $2.80/W. (And a few at >$3.50/W )

I would expect that ~$3/W for a system with 285W or 300W modules would be a good price for you.
Assuming not huge distance for the wires.
And no big extras needed like replacing a breaker panel

Good luck.

[J.P.M.]

Before you go further, get educated, and internalize the idea that the self education and multiple quotes will produce better results than trusting a single vendor.

1.) Download a copy of "Solar Power Your Home for Dummies". It's free, but a bit dated. If you want, spend $20 on the latest hard copy. Pay special attention to the conservation portions. This is an exercise in lowering your electric bill, not throwing solar at it. Remember, solar PV is almost always the most expensive way to reduce an electric bill, and therefore almost always the last thing done if most bang for the buck means anything.

2.) Figure out how much electricity you use by month. Most POCOs ( POwer COmpanies) have this information, often in 15 min. to 1 hr. or so increments. It's also on your monthly bill.

3.) Figure out how you are charged for electricity. This is usually a real pain, but worth it. Work backwards until you can generate a bill that matches prior POCO bills and you'll know you're on the right track.

4.) Search the net for "PVWatts". Read the help screens twice. Try a few runs and you'll get the hang of it fairly quickly. Use a 10% system loss parameter.

5.) Zero in on size.

6.) Get quotes from least 3 reputable, and I'd suggest local electrical contractors who've been around at least 10+ years and who have also sold solar PV for a at least 5 of those years.

7.) Skip Sunpower equipment unless you want to overspend. Good quality stuff, but way overpriced for what it delivers and similar to buying a Mercedes as a grocery hauler when a Toyota will do. Solar equipment is pretty much a commodity these days. Know this: All equal (electrical) size equipment in the same location and orientation will produce about equal annual output for as long as you're likely to own it. Check out another site: PVOutput.org for actual output of systems near you for confirmation on that, and note similarities in output per installed kW for systems with similar orientations.

8.) Sounds like you are buying a turnkey system. In doing 6 above, once you decide the best size and panel and a few other major parameters, write up what you want per my first post and let the vendors come back with equipment and prices. Review the quotes and begin negotiating.

Come back here and ask questions to fill in knowledge gaps. Question everything everyone says until the answers make sense to you.

[solarix]

Manufacturers don't deal with anyone besides wholesalers (with the exception of large utility scale projects). But a lot of wholesale suppliers will deal with anyone - not just a solar dealer. They are so scrambling for sales they will sell to anyone - you might have to open an account with them but doesn't cost anything. You can buy your own equipment, but good luck finding a good installer that will do just the install for you. We make a serious percentage of our gross on the equipment markup (as well should) and with the industry being fairly busy these days, someone willing to do just the labor is a big red flag. Find a good local dealer and negotiate a good deal. On the other hand, prices have fallen so low that most dealers are taking advantage of people (imho) because people don't know what a fair deal is. Equipment prices are down below $1.25/watt (total - for quality, non-hyped up solarpower etc stuff), and if you know what you need and force dealer to give you what you want at a fair price - some of them will.

[Sunking]

In order to negotiate, you have to have something to negotiate with. Installers are over booked. No way can they do what they have booked with the very short period of time left for free money. Once the free money is gone, so is the biz. If you do not pay up, your neighbor will.

[J.P.M.]

In order to negotiate, you have to have something to negotiate with. Installers are over booked. No way can they do what they have booked with the very short period of time left for free money. Once the free money is gone, so is the biz. If you do not pay up, your neighbor will.

Supply & demand at work. However, I try to think outside the box. I can almost always find (or fabricate) things to negotiate, just that sometimes I'll be more successful than other times and maybe need to reevaluate, or settle, or walk away, depending on market circumstances and a realistic outlook.

If labor is tight, as it may be at this time in some/many markets, I might have to work harder/smarter at the table, and perhaps lower realistic expectations a bit. But, if I choose to stay in the game, I'm betting on still winding up better than if I simply rolled over and not made an effort. I've found that for many goal oriented tasks, not many things can replace focused, heads' up persistence.

[Sunking]

It is always supply and demand. I would not want it any other way. But as you said, you have to have something to negotiate with. Kind of hard to negotiate offering $100 for the gizmo, when 5 people are standing behind you screaming and offering $150. You go to the back of the line when you can come up with more cash.

In a Sellers Market, about the best and only leverage you can have is CASH Payment. Money talks. . .

[HollySprings]

Thanks for all the replies.

I don't know enough about the supply/demand equation to know if they can mark up 50% (e.g. $100 vs. $150) or not. Like a lot of contractors, I think they will take what the market will bear.
Consumers can always try to get multiple bids. I don't even know if this is a seller's market or not. I do know there are a lot of options for installers within my state.

If no one will take my cash, I'll wait until 2017 and try again.


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[HollySprings]

foo1bar, I do understand your points and appreciate your response. This part of your post: "Are you better off with it pointed west a little because of TOU tarrifs?" is something I need to investigate and understand.

I don't call electrical wire manufacturers when I hire an electrician, but for big jobs I will compare retail prices for wire from HD and Lowes to get a feel where prices are. When we rewired the house where my son lives, I got a Lowes QSP for reference. The market for electrical wire (and other building materials) is much more stable, price wise, than buying solar equipment. Regarding the panel costs, specifically what you posted:

I took a look at pricing at one vendor (renvu - who I used)
250W to 260W panels are probably around $.55/W to $.60/W
285W panels are probably going to be around $.98/W
300W panels are probably going to be around $1.05/W
320W panels are probably going to be around $1.11/W

In my case, given I have plenty of open and sunny space for a ground mount system, I'll most likely be looking at the $.55/W to $.60/W panels ecause of the large per watt price difference compared to the small increase of rack cost.

J.P.M., I am going to follow your suggestions. I've played around with PVWatts and SAM. I plan to open up new posts with questions as I continue my quest to achieve conscious competence.

[J.P.M.]

Thanks for all the replies.

I don't know enough about the supply/demand equation to know if they can mark up 50% (e.g. $100 vs. $150) or not. Like a lot of contractors, I think they will take what the market will bear.
Consumers can always try to get multiple bids. I don't even know if this is a seller's market or not. I do know there are a lot of options for installers within my state.

If no one will take my cash, I'll wait until 2017 and try again.


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Potential solar users who do not get multiple bids almost certainly have a higher probability of leaving money on the table. Potential solar users who do not do their homework add the risk of getting less quality and bang for their buck.

A very oversimplified way to look at the situation:

Like any acquisition generally characterized by high initial coats with a goal of offsetting future operating costs - as is the common case with solar PV, the basic question is one of comparing the various bids (initial costs) of a known investment - the PV system cost - with future operating costs and savings (lower electric bills), with most of those savings being estimated and also perhaps increasing (or decreasing) over time. In effect, solar energy based power producing equipment is bought today at a fixed price to offset (mostly unknown in any hard sense) future costs.

Future costs must therefore, and usually, be estimated, with that estimated future cost "brought back" to some present value using time value of money methods. The goal is then to see if a PV system that meets the estimated output and avoided cost goals can be acquired for that present worth of the savings or less - all the time hoping estimates of future costs represent some form of reality. If those goals cannot be met, the project as defined is not deemed cost effective. Note, that is not to imply not done - there's a lot of non financial reasons to get PV that trump economic reasons - just whether or not it can be justified on the basis of economics - with that being only one aspect of the decision making process.

But, I'll add, the one piece of the decision process that's usually the biggest, and/or often the only piece, and unfortunately the least understood of all the aspects of residential PV, which is saying a lot.

So, from the economic standpoint, from conventional ways of looking at the economics, there are two goals. The first one is to determine if a PV system can be acquired that is cost effective given a set of stated goals and estimates of future costs. The second goal is select a vendor, usually through the bidding and evaluation process, that will provide the best "fit for purpose" product of sufficient quality for a price equal to or lower than the present value of the (estimated) avoided future energy costs.

Take what you want of the above. Scrap the rest.

[HollySprings]

I agree completely. The economics are very important.

I also have other motivations that I'm not prepared to post on a public forum.

[J.P.M.]

I agree completely. The economics are very important.

I also have other motivations that I'm not prepared to post on a public forum.

As I wrote, the economics are but one part of the decision making process, even if the most important one for most.