Solar & battery
Solar Installer Margin Calculator
Works installer margin, where equipment's share limits how much there is to work with.
Result
Markup is measured against your cost, margin against the price you charge. A 50% markup is a 33.3% margin, not a 50% one. Pricing off the wrong one is the most common way a job that looked profitable turns out not to have been. Gross profit is what is left after the cost of doing the job. Overhead comes out of that: the building, the office wages, the vans, insurance, software and advertising. A healthy gross margin still loses money if overhead is larger.
Get a Free Business AuditHow the calculation works
Revenue less direct cost as a percentage of revenue, with the components shown. Because equipment is a large share of a solar job's cost and its price is largely set by the market, the margin available is narrower than in trades where labour dominates and the contractor controls more of the cost base.
What moves the number
- Equipment cost share, which is largely market-set.
- Labour efficiency, which the installer controls.
- Soft costs including permitting and overhead.
- Competitive pressure on price.
Where this one goes wrong
With equipment cost largely fixed by the market, margin is made in labour efficiency and in the soft costs, which means an installer competing on price without an efficiency advantage is competing away their own margin. Measure labour hours per kilowatt installed by job type, because that is the figure the installer actually controls and the one that distinguishes a sustainable operation from a busy one.
Before you quote
- Measure labour hours per kilowatt installed by job type.
- Separate equipment cost from the costs you control.
- Check margin by job type, not blended.
Questions
About this calculator
Why is solar installation margin narrow?
Because equipment is a large share of cost and its price is largely set by the market, so the installer controls less of the cost base than in labour-dominated trades. Margin is made in labour efficiency and soft costs rather than in procurement.
What is the key efficiency measure?
Labour hours per kilowatt installed, tracked by job type. It is the figure the installer actually controls, and the installers who measure it find that certain job configurations have been losing money consistently.
Can an installer compete on price?
Only with a genuine efficiency advantage, since without one they are competing away their own margin on cost they cannot reduce. Describing scope and workmanship is the alternative, and it is what allows a higher price to be justified.
The formula
margin = (price - cost) / price; markup = (price - cost) / cost
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How to use this calculator
- Price charged ($). Enter your own figure; the page starts at $21,500.
- Direct cost ($). Enter your own figure; the page starts at $15,200.
The result updates as you type, so you can try a figure, see what it does to gross margin, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Price charged | $21,500 |
| Direct cost | $15,200 |
What comes out
| Result | Value |
|---|---|
| Gross margin main result | 29.3% |
| Gross profit | $6,300 |
| Same thing as a markup | 41.4% |
That job earns $6,300 of gross profit, a 29.3% margin. The same job described as a markup is 41.4%.
How sensitive the answer is
Holding everything else steady and changing only price charged, this is what happens to gross margin. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Price charged ($) | Gross margin |
|---|---|
| $10,750 | -41.4% |
| $16,125 | 5.7% |
| $21,500 example above | 29.3% |
| $32,250 | 52.9% |
| $43,000 | 64.7% |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Price charged ($)
- A money amount, starting at $21,500.
- Direct cost ($)
- A money amount, starting at $15,200.
What the results tell you
| Result | What it is |
|---|---|
| Gross margin | The headline result. A percentage. |
| Gross profit | A money figure. |
| Same thing as a markup | A percentage. |
A design still needs a site visit
Output and sizing figures use the assumptions you enter, not measured irradiance, shading or roof orientation at your address. Real production depends on all three, plus inverter behaviour and local interconnection rules.
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.