Receiving my MBA certificate from the MBA School of MBA Credentials – after 45 minutes of tuition at Adelaide Fringe.
Every now and then, someone asks: How does SolarQuotes make money?
Fair question. We run a popular site, send thousands of referrals a month, and have a reputation for helping people avoid the dodgy end of the solar market.
So here’s the simple answer: we charge solar installers a fixed fee for each referral we send them. That’s it. No commission, no backend deals, no dark arts. You can see our ‘price list’ here.
But here’s an important aspect of our business model I’ve never discussed in public before: we deliberately leave money on the table. A lot of money.
There are hundreds of ways we could make more. Every so-called ‘growth advisor’ we’ve ever spoken to has a spreadsheet full of them. But almost all of them come with a catch: they make the platform worse. Worse for consumers. Worse for installers. Worse for the solar industry.
Here are two examples from opposite ends of our business that show what I mean.
#1 – No auctions for leads.
Basic business theory says if lots of people want something, you should auction it off. Make solar installers bid for each referral. That’s what a ‘rational’ profit-maximiser would do to maximise the value of each sales lead. Plenty of lead generation companies already run this way.
We don’t. We’ve never done it. Our leads are fixed price, published on our site, visible to every installer.
Why?
Because auctions might make us heaps more money, but they make life harder for everyone else. Installers wouldn’t know what they’re paying from one week to the next. Only the highest bidders – the ones with the fattest margins or slickest salespeople – would get through. That brilliant local solo installer just branching out after ten years with a bigger firm? He doesn’t stand a chance. And you, dear reader, pay more for solar.
So we keep it fixed. Because the goal isn’t to extract the last dollar. It’s to make the system fair, sustainable, and useful.
#2 – No misdirection in our ads.
We spend a lot of money on marketing. Google. Facebook. You’ve probably seen our ads. Could we cut those costs in half? Absolutely. Just start running the kind of ads some of our competitors use (such as the ones making misleading claims recently about Labor’s proposed battery rebate):
“Get Solar For ‘No Net Cost’!”
“Rebates Ending!”
“Govt Pays You To Go Solar!”
The problem? They work. Really well.1
But they attract the wrong crowd. People expecting magic. People chasing something for nothing. People who’ll waste time asking good installers about deals spruiked by multi-millionaire cricketers on late-night TV.
So we don’t do it. It costs more to run these ads because they get fewer clicks per impression, but it saves our installers time and keeps our recommendations worth acting on.
Those are just two examples. There are dozens more, baked into how we operate. Decisions made every year – sometimes every week – where we choose not to chase the highest return, because we care more about building something that works for both the consumer and our installers.
It’s a shame they don’t teach this in business school.
In fact, judging by the MBAs I’ve met, I reckon they teach the opposite.
Footnotes
- As to why no one ever gets pinged by the ACCC for these misleading ads, I’m not sure. Maybe because – ethics aside – you could mount an argument for each one being technically true. If your repayments are less than your existing power bills, you could argue it is no-net-cost. Rebates will end – in 2031. And the government-organised SRES scheme gives you money towards solar via STCs (although the money does not come from the government) ↩
About Finn Peacock
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The number one business lesson i learned in my 40 year career?
– Things never get better once the consultant bean counters get involved.
Perhaps you could reach out and educate the builders who are offering the cheapest of systems on new builds. The builder is getting their information from somewhere, could it be an MBA?
Hi Ian,
Most Australian builders couldn’t give a toss.
They build crap houses and their industry bodies actively campaign *against* energy efficiency standards that would make houses cheaper and more comfortable to live in.
Australia. The wasteful country 🙁
Finn – congratulations and I only wish I had found your site sooner. Your business is based on providing valuable advice, so your integrity is the path to consumer trust, and you’ll still have a valuable business long after the shonks are gone. Go well.
If an installer using SolarQuotes makes one sale for every 5 quotes written, and pays $55 per quote, they will spend approx $275 to get a sale through our service.
Compare that to the United States where right now US solar companies can easily pay a mind boggling $5000 to acquire a sale.
If Australian companies paid that, the cost of a 6.6 kW solar system in Australia could easily double.
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Kind of explains a little of the US PV costs vs Australia !
Even doubling our cost here, the difference in pricing for solar in the USA is astounding.
I am still gobsmacked that US solar consumers pay around 3.5 to 4 x what we pay here for same system size / quality.
Usually economies of scale we pay the Australia tax on most things.
You’re dead right Les,
And tariffs mean they’re only going to pay more.
Typically over half of the cost for a US residential/small commercial PV installation is due to Local/State govt filing & permitting fees which can delay a project by up to 6 months or more (over 7 different States/areas report such delays).
It is a bit like their real estate system where the ‘accepted’ sales commission is 6% of the sale price. 3% goes to the selling realtor and 3% goes to the buyers realtor.
Yes, and it gets worse. Most States privatised their property deed/title businesses and the private sector entities running them may not be accurate. So there’s an additional cost thrown in ‘Title guarantee’ insurance.
And we thought Japan had some backward ways…
Brilliant. I have been working for a like minded business for the last 25 years. Profit does not have to rule to do good business & success with ethics is so more satisfying.
I just hope that Origin shares your ideals.
https://www.solarquotes.com.au/blog/solarquotes-origin/
I have been following Finn for a long time since I was living in Chicago, IL USA. His blogs and newsletters are the best on the planet: straightforward and honest.
Without his guidance I was not able to make an informed decision which solar system is appropriate for my needs.
His business model is unique and hard to find these days. Lots of common sense.
Thank you Finn for making this world a better place. What you don’t get in dollars, you get in karma many times over.