All the solar sales reps out there, are you ready to maximize your earning potential? Trust me, it’s not as difficult as it sounds! In fact, with explosive growth in the solar industry, it’s an exciting time to be in the solar industry. According to a report by Allied Market Research, the global solar energy market had a value of $94.6 billion in 2022. The report projects that the market will grow at a CAGR of 12.3% from 2023 to 2032, and is expected to reach $300.3 billion by 2032. This means that there will be a significant increase in the sales of solar-powered systems, equipment, and services.
But, before you start dreaming of the big bucks, you need to understand your commission structure. After all, your earnings are directly tied to your performance. Don’t worry, we’ve got you covered! In this article, we’ll explore the most common commission models for solar sales reps, reveal additional factors that can influence your paycheck, and offer some tips on how to maximize your earning potential. So, buckle up and get ready to become a solar sales commission expert!
Understanding Commission Structure for Sales Reps (How It Works and Why It Matters)
Solar sales reps are commonly paid only through commission, with no base salary. However, their commission structure is only sometimes straightforward and can be quite complex due to the various commission calculation methods that are used. Here are the different ways in which sales reps can be compensated for their sales:
- Percentage of Sale
This straightforward approach offers a pre-determined percentage of the total sales price of each solar panel system you sell. The higher the system value, the larger your commission. This structure is ideal for reps who thrive on exceeding sales targets and enjoy a high degree of autonomy.
(Industry Fact: According to Allied Market Research, the global solar energy market was valued at $52.5 billion in 2018. Their research projects that the market value for this industry will continue to grow by as much as 325% over the next 3 years!)
- Gross margin percentage
In this commission structure, sales reps are paid based on the gross margin rather than the overall sales price. This means that the commission amount depends on the profitability of the sale. Sales reps are incentivized to prioritize the sale of more profitable systems. This helps the company reduce the amount paid in commissions for less profitable sales.
- Base commission plus multipliers
This commission structure provides a base commission amount to sales reps and allows them to earn additional commissions by meeting certain quotas. These additional commissions are called multipliers, and the amount of commission is calculated based on the percentage of the sales quota attained.
- Base commission plus margin splits
This commission structure is determined by sales that generate more revenue than expected. If a system sells for more than the regular listing price, a sales rep would receive their base commission plus an additional commission from the increased profit margin. This increased margin is split between the company and the sales rep.
(Salary Snapshot: The median base salary for solar sales reps in the US in 2023 was $62,000, with top performers earning over $100,000 when commissions are factored in.)
- Tiered Commissions
This model incentivizes closing larger deals by offering increasing commission rates based on your sales performance. For example, you might earn a 5% commission on sales up to $10,000, but 7% on sales exceeding that amount. This structure rewards ambition and strategic salesmanship, encouraging reps to focus on high-value projects.
(Stat Power: The average solar panel system size in the US in 2023 was around 10 kW. Targeting larger systems through the tiered commission structure can significantly boost your earnings!)
Beyond the Basics: Variables Affecting Your Commission
While the core structure is important, several additional factors influence your final commission amount:
- Upselling and Add-Ons: Many companies incentivize selling additional equipment or services alongside the core solar panel system. You might earn a separate commission percentage or bonus for successfully upselling batteries, monitoring systems, or extended warranties.
- Project Completion: In some cases, companies might withhold a portion of your commission until the project is fully installed and operational. This ensures quality control and customer satisfaction – after all, a happy customer translates to repeat business and future commissions.
- Team Performance: For some companies, your commission might be partially tied to the overall performance of your sales team. This fosters collaboration, encouraging reps to share knowledge, support each other in closing deals, and celebrate collective success
Challenges Of Solar Sales Commissions
Solar sales commissions can be challenging for various reasons. Such as
- Incorrect calculations
Incorrect calculations can occur due to multiple factors like the price, number of KWs sold, and whether it’s an own sale or an assisted sale. To avoid inaccurate calculations, it’s important to have a clear and standardized commission structure and to use a reliable commission management system.
- Handling employee churn
Employee churn is another significant challenge in the solar sales business. The workforce is usually composed of reps who are frequently moving in and out of the workforce. It can be challenging to keep track of who needs to be paid when, especially when there are changes in the employee base. To solve this issue, companies need to implement an efficient and automated commission payment process.
- Implementing rollups correctly
Implementing rollups correctly is another challenge, particularly when there are multiple layers of management. It is important to have a hierarchy in place and to ensure that the commission structure is transparent and easy to understand for everyone involved.
- Manual Spreadsheets
Generating, archiving, updating, and distributing commission spreadsheets manually can be time-consuming and error-prone. It’s important to provide enough visibility to avoid losing reps, which can happen when there are discrepancies in commission payments. A reliable commission management system can help streamline the process and ensure that everyone is paid accurately and on time.
- Unexciting commissions
Finally, most solar sales commission structures lack bonuses or stretch goals, making it feel like grunt work. It’s essential to have an exciting and motivating commission structure to keep reps engaged and motivated. Companies can achieve this by offering bonuses, stretch goals, or other incentives to reward reps for their hard work and encourage them to perform better.
Strategies for Sales Reps to Maximize Earning Potential
Understanding your commission structure is just the first step. Here are some proactive steps you can take to maximize your earnings:
- Become a Product Expert
The more knowledgeable you are about solar panels, their efficiency ratings, financing options, and environmental benefits, the more confident you’ll be in educating customers and closing deals. (Customers are increasingly interested in understanding the environmental impact of their choices. Being able to quantify the CO2 emissions offset by solar panels can be a powerful sales tool.)
- Master the Art of Salesmanship
Develop a strong sales pitch that addresses customer pain points and highlights the value proposition of solar energy. Hone your negotiation skills and practice active listening to build trust and find solutions that resonate with each customer’s unique needs.
- Focus on Customer Relationships
Building trust and exceeding customer expectations translates to positive referrals and repeat business. Go the extra mile to ensure a smooth installation process and provide excellent after-sales service. (Referral Power: Studies show that referred customers are typically more loyal and have a higher lifetime value.)
- Track Your Progress
Monitor your sales figures and commission earned regularly. Analyze which sales tactics are most effective and identify areas for improvement. This data-driven approach allows you to adjust your strategy and refine your skills to consistently outperform your goals.
The Future is Bright for Sales Reps
The Golden State also offers many incentive programs and financing options for home solar systems, making it easier to purchase panels. The solar industry is on a trajectory for continued growth, with a projected 40% increase in solar installations by 2027. This translates to a growing demand for skilled and passionate solar sales reps. If you’re driven by exceeding targets, enjoy building relationships, and are passionate about sustainability, a career in solar sales could be the perfect fit.
Please visit our website to learn more about how our software can automate your incentives. We are excited to assist you!
Research and Notes
- As of 2022, the U.S. solar industry employs more than 346,000 employees who spend at least half their time on solar.
- The number of solar workers in the U.S. increased by 3.7% between 2021 and 2022. That’s 12,256 jobs added.
- The number of people employed by the solar industry increased in 42 states in 2022. California added the most with 2,404 new solar jobs.
- Solar is the electric power generation technology that employs the most workers. There were 12,000 new jobs in solar in 2022 (+3.7% growth).
- The amount of women working in the solar industry has increased from 27% in 2017 to 31% in 2022. However, women are still underrepresented in the solar industry, as only 31% of solar employees are women (despite representing 47% of the workforce).
- Minorities are also underrepresented in the solar workforce, especially African Americans. Just 9% of solar employees are African American (despite representing 13% of the workforce.
- In 2022, 44% of solar industry employers said it was “very difficult” to find qualified applicants—the highest such percentage ever recorded in the Solar Jobs Census.
- The solar industry is an industry of opportunity for veterans. 8% of all solar employees are veterans, compared to 5% of the U.S. workforce.
According to SolarStates.org, California’s solar companies employ more than 75,000 workers, which represents nearly 30% of the industry’s nationwide workforce.
