The Number That Makes or Breaks Your Solar Company
Customer acquisition cost (CAC) is the single most important metric in your solar business. Get it wrong and you'll bleed cash while thinking you're profitable.
The industry average is $2,580 per installed customer -- about $0.43 per watt. But that's an average across all channels and company sizes. Your number could be wildly different.
Most solar companies miscalculate their CAC because they leave out half the costs. Here's how to find your real number.
The Wrong Way (How Most Companies Do It)
Most solar installers calculate CAC like this:
Ad spend / Number of installs = CAC
So if you spent $15,000 on Google Ads last month and closed 8 installs, you'd say your CAC is $1,875.
That's wrong. It's not even close.
The Right Way: Total Cost of Acquisition
True CAC includes everything you spend to turn a stranger into a paying customer. Not just ad spend.
Full CAC formula:
(Marketing spend + Sales team compensation + Sales tools/CRM + Lead costs + Proposal/design costs + Appointment setting costs + Marketing team/agency costs) / Number of installed customers
Hidden costs most solar companies forget:
Sales rep compensation. If your closer earns $80,000/year base + $2,000/deal commission, and they close 5 deals/month, that's $3,333/month base + $10,000 commission = $13,333 in sales cost. Across 5 deals, that's $2,666 per deal in sales labor alone.
Proposal and design time. Your design team spends 2-3 hours per proposal. At $35/hour loaded cost, that's $70-$105 per proposal. If you propose 3 deals for every 1 you close, the proposal cost per install is $210-$315.
CRM and tools. Salesforce, Aurora Solar, proposal software, call tracking, appointment setting -- these add up to $200-$500/month per sales rep.
Lead nurturing. The leads that don't close immediately still cost money. Drip campaigns, follow-up calls, re-engagement -- someone is spending time on those.
Agency or marketing team. If you're paying an agency $5,000/month to manage your Google Ads, that's on top of the ad spend.
A Real Example
Let's calculate true CAC for a mid-size solar installer:
| Cost Category | Monthly Spend |
|---|---|
| Google Ads spend | $15,000 |
| Google Ads management (agency) | $3,000 |
| Door-to-door reps (3 at $4,000/mo) | $12,000 |
| Inside sales rep | $5,500 |
| Sales commissions (8 deals x $2,000) | $16,000 |
| CRM + tools | $800 |
| Proposal/design (24 proposals x $90) | $2,160 |
| Total | $54,460 |
Installs per month: 8
True CAC: $6,808 per install.
That's 2.6x higher than the "ad spend only" calculation of $1,875.
On a $32,000 average install with 20% gross margin ($6,400), this company is actually losing $408 per install when you account for all acquisition costs.
They think they're profitable. They're not.
How Different Channels Compare on True CAC
Once you know your true CAC, you can compare channels honestly.
Google Ads (full cost):
- Ad spend per lead: $206-$1,929
- Close rate: 15-25%
- Add sales labor, proposals, tools
- True CAC: $3,000-$8,000+ depending on market
Door-to-door:
- Rep cost: $4,000-$6,000/month base + commission
- Average rep closes 3-5 deals/month
- True CAC per deal: $2,500-$4,000
- Plus: burnout, turnover, increasing regulations
Handwritten direct mail:
- Cost per piece: $1.35 (Mailbots pricing for 200-999 cards)
- Response rate: 1.89% average
- Cost per lead: $67-$122
- Close rate on warm leads: 25-30%
- True CAC: $250-$500
The direct mail number looks too good. Let me show the math:
500 cards x $1.35 = $675 campaign cost. 1.89% response = 9.45 leads. 25% close rate = 2.4 installs. $675 / 2.4 = $281 CAC.
Even if you add $500 in sales labor per deal (calls, proposals), that's $781 total CAC. Still a fraction of Google Ads.
Why Low CAC Matters More Than Revenue
Two solar companies can have identical revenue and wildly different profitability:
Company A: $500K/month revenue, $6,800 CAC, 15 installs
- Acquisition cost: $102,000
- Gross margin (20%): $100,000
- Net after acquisition: -$2,000 (losing money)
Company B: $320K/month revenue, $780 CAC, 10 installs
- Acquisition cost: $7,800
- Gross margin (20%): $64,000
- Net after acquisition: $56,200
Company B generates less revenue but is 10x more profitable because their acquisition engine is efficient.
How to Reduce Your Solar CAC
1. Diversify away from Google Ads
Google Ads is the most expensive lead source in solar. It's also the most competitive. When every installer bids on "solar installation [city]," nobody wins except Google.
Add channels with lower CAC: direct mail, referral programs, strategic partnerships with roofers and HVAC companies.
2. Improve close rate
CAC drops when your close rate goes up. The best way to improve close rate: better leads. A homeowner who responds to a personalized handwritten card is warmer than someone who clicked a Google Ad while comparing five installers.
3. Speed to lead
Contacting a solar lead within 1 minute boosts conversion by 400%. If your response time is 4 hours, you're losing deals to faster competitors. Set up instant notifications on every lead source.
4. Track true CAC by channel
Most solar companies lump all costs together. Break it out by channel. You'll almost certainly discover that one channel is subsidizing another.
When you see that Google Ads has a true CAC of $6,800 and direct mail has a true CAC of $780, the budget reallocation decision makes itself.
Start With the Math
Pull your last 3 months of data. Include every cost -- not just ad spend. Divide by installs. That's your true CAC.
If the number scares you, good. That means you're finally seeing reality.
Then test a lower-CAC channel. 200 handwritten postcards at $1.35 each is $270. You'll know within 3 weeks whether it works for your market.
Test direct mail for your solar company at mailbots.ai -- 200 handwritten postcards for $270. Track every response. Know your real CAC.