Calculate your exact ceiling for customer acquisition costs before high-ticket solar commissions and hardware bills erode your net profit.
Industry avg CAC for this tier: $3,000–$5,500/sale
Panels, inverters, racking, electrical BOS, permit fees, and installation labor.
Usually 6% to 12% of gross contract or redline delta split.
Percentage of leads that qualify and sit for a full pitch.
Blended overall lead-to-job conversion: 5.00%
Max Allowable CAC per Closed Sale
per signed installation contract maintaining your 15% profit margin
With a 5.00% overall close rate, paying over $303 per raw inquiry means sacrificing your target net margin.
Solar deals often take 60 to 120 days from ad click to final PTO. Use gometrify to tie signed residential agreements back to the exact campaign that initiated the first contact.
Start Tracking Solar Funnels Free →In the residential and commercial solar industry, top-line contract values look massive. A typical residential solar plus battery setup easily clears $30,000 to $45,000. Because the numbers are large, many solar executives and sales managers fall into the trap of overpaying third-party lead brokers and digital ad agencies—assuming there is plenty of room in the deal to absorb customer acquisition costs (CAC).
However, once you strip away the true equipment cost per watt (panels, inverters, racking, battery modules), local permitting and interconnect fees, balance of systems (BOS), and heavy sales commissions to appointment setters and closers, the actual net company margin shrinks rapidly.
If your gross system price is $28,000 and direct installation/hardware costs run $15,500, your gross margin is $12,500. If your closer takes an 8% commission ($2,240) and you require a 15% net corporate margin ($4,200), your maximum allowable CAC is exactly $6,060. If your blended lead-to-close conversion rate is 5%, you cannot afford to spend more than $303 per raw inquiry without operating at a loss.
How you acquire solar leads dictates both your allowable cost per lead and your cancellation rate before PTO (Permission to Operate):
Digital Search Ads (Google & Bing PPC):Homeowners actively typing "best solar panels for home" or "solar tax credit expiration" have immediate intent. While cost per lead is high ($80 to $250), sit rates and close rates outperform generic interruption advertising.
Social Media Interruption Ads (Facebook / Instagram / YouTube):High volume at a lower cost per lead ($25 to $65). However, many leads are motivated solely by "free government program" curiosity hooks, causing high appointment no-show rates and strict credit disqualifications during the sit.
Third-Party Lead Aggregators & Call Centers: Purchasing aged leads or shared live-transfers ($40 to $120) requires a massive internal inside sales team. Blended close rates rarely exceed 2–4%, forcing your maximum allowable cost per lead down to $50 or less just to break even.
| Lead Source | Typical Cost / Lead | Lead → Sit Rate | Sit → Close Rate | Avg CAC / Sale |
|---|---|---|---|---|
| Google Search Ads (Exclusive) | $120–$280 | 30–45% | 22–35% | $1,800–$3,500 |
| Facebook / IG Funnel Leads | $35–$75 | 18–28% | 15–22% | $1,600–$3,200 |
| Door-to-Door / Canvassing | Setter Split | 45–60% | 25–35% | $2,500–$4,500 |
| Shared Lead Aggregators | $40–$90 | 10–18% | 8–15% | $3,500–$6,500 |
| Customer Referral Program | $500–$1,000 | 70–85% | 45–60% | $500–$1,000 |
In a redline pricing structure, the solar installation company establishes a baseline equipment and labor cost per watt (e.g., $2.20/watt). Anything sold above that redline (e.g., $3.30/watt) is split between the sales organization and the installation company. When calculating allowable ad spend, you must deduct the closer's delta check first to ensure the company preserves its required margin above the redline.
Between contract signing and final installation, residential solar experiences an industry-average cancellation rate of 15% to 30% due to HOA rejections, bad roof inspections, financing denials, or competitor poaching. When determining your maximum allowable CAC per signed contract, you must discount your true gross revenue by your historical cancellation percentage.
A homeowner rarely buys a $30,000 solar system after clicking a single ad. They might discover you through a Facebook awareness ad, research reviews on Google three weeks later, and finally submit a form after clicking a brand search ad. Using attribution software like gometrify ensures you don't cut upper-funnel campaigns that actually initiated the customer relationship.
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