How to Price Solar Installations

Quote in dollars per DC watt, and say which watt

Residential solar is compared in dollars per watt: the total price divided by the DC nameplate capacity, which is the module count times each module's rated watts. Berkeley Lab's Tracking the Sun reports installed prices that way, per DC watt and before any incentives or tax credits ¹, and any customer comparing quotes can do the same division.

The watt you divide by changes the number. NREL's cost benchmark for the first quarter of 2021 put its modeled residential system at $2.65 per DC watt, or $3.05 per AC watt ². Same system, same dollars: the AC figure is higher because the modeled inverter's AC rating is smaller than the array's DC nameplate. Quote per AC watt against a competitor quoting per DC watt, and their number looks lower at the same total price. (NREL, the National Renewable Energy Laboratory, was renamed the National Laboratory of the Rockies in December 2025 ³.)

Three rules for your own quotes:

• State the system size in kW DC, and list the inverter's AC rating separately.
• Calculate price per watt on the gross price, before incentives, rebates or financing costs.
• Treat price per watt as a yardstick, not a formula. Two 8 kW systems on different roofs do not cost the same to install, so build each price from that job's costs.

Size the system from usage and a production estimate

System size drives most of the price, so it should come from the customer's own numbers.

1. Get 12 months of usage. A full year of bills, or the utility's usage download, shows the seasonal swing. Ask about planned loads such as an electric vehicle or a heat pump, and agree with the customer whether to size for them now.
2. Estimate production for this roof. PVWatts, the calculator developed at NREL, estimates monthly and annual output from the location, system size, tilt, azimuth and loss assumptions you enter. Set the losses from your site survey's shade readings rather than trusting the default. What you want out of it is annual kWh per kW of DC capacity at this address.
3. Divide and round to whole modules. Target annual kWh divided by the estimated kWh per kW gives the size. Round it to a whole number of modules.
4. Check the limits. Usable roof area after required setbacks, the electrical service and the utility's own rules can cap the size below what usage suggests. Tell the customer which limit applies.

Example: A customer used 10,800 kWh over the last 12 months. Your production estimate for their roof comes to 1,200 kWh per year for each kW DC. 10,800 ÷ 1,200 = 9.0 kW. With 400-watt modules that is 22.5 modules, so you design 23 modules, or 9.2 kW DC. These are round, made-up numbers; run a real estimate for every address.

The value of exported power changes the right size. Under net metering, customers get credit for power they send to the grid, but the rate and rules vary by state and utility. Where exports earn less than the retail rate, panels that mostly export are worth less to the customer, and sizing closer to on-site use, or adding storage, can make more sense. Put the export assumption in writing; how to write a solar proposal covers the assumptions customers should see.

Build your base price from cost buckets

Your base price per watt has to cover everything it takes to win, design, permit, build and connect a standard job, plus profit. NREL builds its national benchmarks bottom-up, cost by cost ². Build yours the same way, from your own invoices and payroll rather than a national figure.

Three of these deserve extra attention in solar.

Install labor is a per-kW number. Track crew hours per kW installed for each roof type you work on, since attachment time is what moves. Price those hours at a loaded labor rate that covers payroll taxes, workers' comp and nonbillable time; how to set your labor rate walks through the math.

Per-job costs make small systems cost more per watt. The permit, plan set, interconnection paperwork, inspection visit and truck rolls cost about the same on a small system as on a large one, so they add more per watt to the small one. Berkeley Lab's data shows the effect: among residential systems installed in 2016, systems of 10 to 12 kW had median prices about $0.8 per watt (19%) lower than systems of 2 to 4 kW ¹. Set a minimum job price or a small-system adder instead of one flat rate per watt for every size.

Customer acquisition is a real cost. A solar sale takes a usage review, a design and often several conversations, and plenty of proposals never sign. Divide a period's marketing and sales spend by the jobs signed in it, which is your customer acquisition cost, and carry that on every job.

Example: An 8 kW (8,000 watts DC) roof-mount job with round, made-up costs: modules $3,200, inverters and electronics $2,400, racking and attachments $1,200, electrical parts $800, install labor $2,400, design, permit and interconnection $1,200, customer acquisition $2,400 and an overhead share of $2,400. Total cost is $16,000, or $2.00 per watt. To keep a 20% net margin, divide by 0.80: $16,000 ÷ 0.80 = $20,000, or $2.50 per watt. Adding a 20% markup instead gives $19,200, which is only a 16.7% margin.

If the gap between those last two prices is news to you, read markup vs margin before you set targets.

Then compare your cost-based price with the market. Berkeley Lab's annual Tracking the Sun report is one public check; the 2024 edition is based on 3.7 million systems installed through the end of 2023 ⁴. Local markets differ: in the 2018 edition, state median prices for residential systems installed in 2017 ranged from $2.6 to $4.5 per watt ⁵. Far above comparable systems in your area? Find the bucket that is out of line. Far below? Check that you counted customer acquisition and overhead.

Price adders as separate lines

Your base price per watt should describe a standard install: a roof type your crews do every week, a normal wire run and a connection the existing panel can take. Anything beyond that is an adder, priced from its own costs and shown as its own line. That keeps the base price comparable between jobs, shows the customer why their price differs from a neighbor's, and protects your margin on hard sites.

Main panel upgrades

The solar connection has to meet the electrical code your jurisdiction has adopted, and an older or full panel may not accept it as is. Depending on the panel and the design, the fix might be a panel replacement, a different point of connection or a change to the main breaker, each with its own parts, labor, permit scope and utility coordination. Price each option from your electrician's time and parts plus any utility fees, and show it as a line item.

Roof work

An array stays on the roof for many years, so roof condition is a pricing question. If the roof is near the end of its life, removing and reinstalling the array later is a separate job the homeowner pays for, so offer the reroof first, by your crew or a roofing partner, as its own line. Tile, metal and low-slope roofs need different attachment hardware and crew time than composition shingle, so carry a roof-type adder for each. Structural reinforcement, when the engineer calls for it, is an adder too.

Trenching and ground mounts

Ground-mounted arrays, and services in detached garages or barns, need a trench. Price trenching per linear foot with a minimum charge, and adjust for boring under driveways, rocky soil and restoring the yard. Build in the time to get underground utilities marked before anyone digs. Ground-mount racking, foundations and engineering are their own lines.

Batteries

Price a battery from the unit cost, any backup gateway or critical-loads panel, the added labor and any extra permit or utility paperwork. For comparing storage options, price per kWh of usable capacity is cleaner than folding the battery into your price per watt. Whether storage pays off depends on the customer's export credit rules and how much backup they want, so recommend it on those grounds, not to grow the ticket.

Keep a written adder list

Put every adder on one price list so every salesperson prices it the same way: extra arrays on separate roof planes, long wire runs, critter guards, meter or service equipment changes the utility requires, tree work (usually by others) and engineering for unusual structures.

Example: Start from the $20,000 base above ($2.50 per watt on 8 kW). The site survey finds the panel can't take the connection, and the service sits in a detached garage 60 feet away. A panel upgrade adder of $3,000 and trenching at $25 per foot ($1,500) bring the price to $24,500. That is about $3.06 per watt overall, but the base is still $2.50 and the customer can see what the extra $4,500 buys. All figures are made up for illustration.

Write unknowns into the quote

If you sell from satellite imagery and a utility bill and survey after the signature, the price rests on assumptions. Name them in the quote, for instance roof framing that needs no reinforcement and a panel that can take the connection, and list the price of each exception. When the survey finds one, write a change order before the work; how to handle change orders covers what to include. A customer warned up front about a possible panel upgrade takes the change order far better than one who hears about it after the permit is filed.

Price for the end of the federal homeowner credit

If your proposals used to show a net cost after the federal Residential Clean Energy Credit (section 25D), they need rebuilding. That credit equaled 30% of the cost of qualified clean energy property installed from 2022 through December 31, 2025, and no credit is allowed for expenditures made after that date ⁶. The IRS treats an expenditure as made when installation is completed, so a system finished in 2026 does not qualify, even if the contract was signed in 2025 ⁷.

What that means for your price:

• A cash or loan customer now pays your full price, less only the state, local or utility incentives they actually qualify for. Remove any federal credit line from your proposal template.
• Your price per watt did not change, but the customer's net cost did. Cutting margin to replace a lost credit just moves the loss to you.
• Show other incentives as conditional until confirmed, and tell customers to ask their own tax professional how the rules apply to them.

Example: On a $24,000 system completed in 2025, a qualifying homeowner could claim 30%, or $7,200, for a net cost of $16,800. The same system completed in 2026 has no 25D credit, so the net cost is $24,000 less any state, local or utility incentive the customer qualifies for. Round numbers, for illustration only.

Leases and power purchase agreements work differently, because a business owns the system and may claim a business credit instead. For the Clean Electricity Investment Credit (section 48E), IRS Notice 2025-42 explains that the credit terminates for wind and solar facilities placed in service after December 31, 2027 when construction begins after July 4, 2026 ⁸. If you install for lease or PPA providers, ask how those deadlines change what they accept and what they pay you before you commit crews and inventory. Have a CPA review anything you tell customers about credits.

Present the price so it can be compared

• Lead with system size in kW DC, estimated first-year production, total price and price per DC watt.
• List adders under the base system, each with its price.
• Keep incentives out of the headline price unless they are confirmed.
• If a finance partner charges you a fee to offer a loan and you build it into the financed price, show the cash price and the loan price side by side so the difference is visible.
• Put an expiration date on the price. Module and inverter prices move, and a quote with no end date can lock you into last quarter's costs.
• Tie the payment schedule to real milestones, such as signing, permit approval or equipment delivery, installation, and inspection or permission to operate. How to invoice solar installations covers milestone billing and the deposit rules to check in your state.

Check every job against the price

A price per watt is only as good as your actual cost per watt. After each job, compare actual costs with the estimate bucket by bucket: crew hours per kW, equipment as bought, adder costs, permit and utility fees, and return trips for failed inspections. Job costing is how you find the leaking bucket. If your last payment waits on inspection or permission to operate, those delays cost you too, so track how long each jurisdiction and utility takes and price the slow ones accordingly. Review your base price per watt and adder list on a set schedule, such as every quarter, and sooner when equipment prices or crew productivity change.