The financial tab allows you to enter specific information such as pricing, incentives, and to estimate install costs. As you adjust the pricing and costs, you can see the effect it has on your profit as the installer and your customers savings/return-on-investment.
QUICK REFERENCE PANE
Once you have completed the previous pages and as you adjust the different fields on the financial page, use the quick reference pane on the left side of the window to see how changes to important fields affect the profitability of the sale- such as Out-of-Pocket cost, Annual ROI, Savings, etc.
In the field under System Design, you will find some basic characteristics generated from the previously created design. If you want to expand the number of panels, you will need to go back to the sunMAX design page and modify the design to include more panels. Forms entered in the Proposal will be saved and automatically recalculate as panels are resized/moved.
The upfront cash amount required given the method of financing. In the case of a loan, any down-payment amount will be included under Out-of-pocket.
- Avg. Monthly Savings
Provides an estimated dollar amount of the monthly savings the customer can expect over 25-years. Cash will always be higher than loan.
- Avg. Monthly Savings %
Percentage of cost saved of the projected utility costs over next 25 years.
Number of years required to recoup the initial product cost based on financing method. Note that longer term loans, i.e. 20-yr loan will often never have the cost of payments exceed the the savings at any point in the loan term. Even though the customer will never pay more than they save from month-to-month, the Loan Years-to-Payback represents how long it will take for the monthly savings to payback the total cost of loan.
Calculated by dividing (Customer Profits over 25 years - Cost)/Cost. Annualized over 25 years to represent annual average of return on investment. Solar often will exceed the annual ROI of other popular investment methods like bonds (5%), stock (9%), etc.
- System Revenue
Amount estimated to be paid to installer upon completion of the install. Represents sum of all expenses, equipment costs and installer net profit margin.
- Materials Total
Total cost of equipment after adding estimated sales tax and shipping.
Total of all estimated expenses specified under Provider (including Labor, Overhead, Site Audit, Line Drawings, and Permitting). As expenses are adjusted subtracts directly from Net Margin.
- Net Margin
Amount left over of sale amount after expenses and materials. If net margin is not large enough to justify the cost of the system, either seek to lessen install costs or increase $/watt rate to improve profit margin for solar provider/installer.
Represents the total proposed cost of the system to the customer. Calculated by multiplying total System Size (in Watts) by Cost per Watt.
- Cost Per Watt
Cost per watt is the most common pricing term in the solar industry. Because of varying solar equipment, dollars per watt tells you how much you are paying for each watt of your system. By default, this is set at $2.00/watt, though in the sales process you may opt to change this amount to optimize the sale for the customer. See here for guidance on pricing the system.
- System Size
Represents the total amount of watts in the proposed system to the customer. Each panel is 260 watts, so a 20 panel system would be 5120W.
Total amount of Federal, and if entered, other state/local incentives. Most incentives are issued as rebates, so these typically will not modify up-front-cost of system but can be discounted in savings in the estimates.
- Federal Tax Credit (30%)
The Federal Tax Rebate is offered to all US residents who purchase a solar system. We have automatically included this rebate in the estimates. The 30% amount is provided as a rebate in the next tax cycle. As such, it will not modify upfront cost but will add value to the savings calculations.
- Additional Incentives
Click "Add an Item" to create additional fields to be used to calculate improved savings based on State/Local incentives. The example above has included an actual tax credit offered in Arizona to purchasers of PV systems.
- Effective Loan
Represents the amount the proposed loan will actually cost once incentives are discounted when received in the first year.
- Loan Downpayment
Enter the amount the customer is able to pay upfront to limit interest paid on full-term of loan. Downpayment will be included in up-front-cost for the loan, but can greatly improve savings over the loan term.
- Loan Amount
The total amount of the system that cannot be paid for with cash. Is calculated by subtracting the downpayment from total cash cost of the system.
- Loan Term
Enter the term of loan in years, that you would like to use to provide an estimate of the system savings. Note that a longer loan like a 20 year loan can be affordable to a greater number of customers, and although it lessens total savings, it can allow customers without cash to start saving immediately as savings will often be greater than the loan payments. Conversely, a shorter loan will have higher savings but require some more difficult payments in the short term.
- Interest Rate
Provide an estimate for what the customer could expect to see in interest rates for loans in your area. By default, 4% is entered in this field.
This section provides an opportunity for you to estimate costs associated with the install. Note in the calculator, all increases are taken from the Installer Margin, meaning that if you need to charge more for services than a typical install, that you may want to adjust the cost per watt to ensure profits are viable after estimated costs.
Represents a total sum amount of all of the following fields for estimated costs.
- Labor, Overhead, Site Audit, Line Drawings, Permitting
Use each of these fields to give yourself a general idea of what additional costs will be involved with the installation. Do not be overly concerned with specifically containing costs under each category- these fields are just used for your benefit in making the estimate, and only the Total field is used in calculations.
NET CASH FLOW & FINANCING METHODS
This graph provides an projection over the next 25-years of how Customer Savings will be impacted by the two financing options of Cash and Loan (as specified in the form). See the following example (using a 20-yr loan):