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Online Prices vs Installer Prices


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Hi All,

As I am getting quotes from various installers, I have noticed that the installers typically charge between 20%-35% more for the itemised equipment compared to websites like Livestainable, The Power Store etc.

Typically for the Inverter (Victron), MPPT (Victron), Battery and Solar Panels.

Why is this? 

Would Installers not would have preferential prices with the distributors/wholesalers, and should at least match (or slightly higher) the online guys.

1 - is the installer double dipping (i.e. mark up on equipment and installation fee) OR

2 - are the online guys doing parralel importing (grey products).

As I am new in this industry, I am trying to figure out what will my risks be regarding warranty and after sales support buying direct vs using the installer to source the equipment.

Thanks All

Danie

Edited by daniemare
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My local installer quoted me a Pylontech at 50% higher than what I could source it from reputable local online shops. I was blunt and told him - and we agreed that I would source it and he would install it for me.

On the rest of the stuff (panels and installation materials) he was in line or 5-7% higher than what I could find online. So definitely agree with PJJ about the double dipping. However, the difference was not big enough for me to do piecemeal-ordering the stuff from different websites - so I took the lazy way out and just sucked it up...

But I also know of other installers (that are very active on the forum here) whose prices are in line with the online shops (but unfortunately not located in my neck of the woods for the installation...). So not every installer does the double dipping

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I would think the installers are in some cases buying equipment on overdraft moneys from banks, this costs money, plus the risk of a customer not paying, In my opinion it is just fair for installer to have a mark up on goods. Otherwise the customer should rather supply the goods if he want to save that mark up. 

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27 minutes ago, Gerrie said:

I would think the installers are in some cases buying equipment on overdraft moneys from banks, this costs money, plus the risk of a customer not paying, In my opinion it is just fair for installer to have a mark up on goods. Otherwise the customer should rather supply the goods if he want to save that mark up. 

I have no problem with a installer adding a little extra margin on the hardware cost, prices can change overnight, there are shipping costs, admin costs etc.

But there is a line.

Adding 40-50% markup on hardware while charging a massive installation fee I think goes over that line.

Not all installers are guilty of course, many charge fair prices and do great work.

But as with every corner in life, there are guys looking to make a quick buck.

Edited by PJJ
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27 minutes ago, Gerrie said:

I would think the installers are in some cases buying equipment on overdraft moneys from banks, this costs money, plus the risk of a customer not paying, In my opinion it is just fair for installer to have a mark up on goods. Otherwise the customer should rather supply the goods if he want to save that mark up. 

Well, although I agree on a markup for working capital, the self same quotes I got was very specific about the deposit I have to pay upfront. So no, there is financing of stock by the installer

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4 minutes ago, PJJ said:

Adding 40-50% markup on hardware while charging a massive installation fee I think goes over that line

Herein lies my problem. If they do it on the equipment lines, how inflated is the service lines which I cannot check or quantify myself. 
 

Yes, I am getting more than a few quotes, but it becomes impossible to compare apples with apples as installers do not lump their generic lines the same. And my address normally see service providers add another 25%
 

But, I have  basically concluded that there is no payback for a solar install at my level of self consumption, unless I can do every bit myself which I cannot really (like wiring into the DB)

So basic UPS it is for loadshedding 

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i openly mark up on my"dealer price"  as a registered  the lies herein, you study, pay your dues, use large distributors, and then suck it up folks.....those fackin distributors sell at the same price to tom dick and harry over the phone....ther is no special price for installers, we or i pay the same as a home user even tho i spend more than r1m to R2m between two distributors......and then i charge for installations. Even worse, most of the "customers" don't even want to pay a deposit and still expect a lower price.....I don't advertise, word of mouth only and here is to year 19.........if you dont offer service with a markup, you not going to be in business tomorrow....

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1 hour ago, Pietpower said:

Do you use a lot or little?

My opinion is if you can have a system that has a payback when using 10kWh per day then you can have the same with 40kWh per day and a system that is four times the size.

The payback gets killed with off grid systems if you need batteries to last a few day or have solar array that is dormant half the day etc.

I use 588 kWh or just under 20 a day (R1075 per month)

I even deducted the 1 2.4kWh battery and basic inverter charger from the prices quoted (as I see this as my basic load shedding luxury charge) and I still don’t get to a decent 5-7 year payback. 

I might not know allot about solar (yet), but I can run numbers, and all the examples I see never take into account opportunity costs. But I have no problem to be corrected. 

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4 hours ago, daniemare said:

Yes, I am getting more than a few quotes, but it becomes impossible to compare apples with apples as installers do not lump their generic lines the same. And my address normally see service providers add another 25%

Then you got quotes from the wrong suppliers. My prices after markup in most cases are lower than the online stores. Area or address plays no role in my pricing.  I ask for a postal code for calculation of delivery costs, but that it. 

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I like to add my 2c:

I think it is fairly standard for a supplier of any product to add margin. It does not seem to me that installers get any preferential pricing from distributors, some do scale for volume, but not a lot - and this is actually where large online retailers have an advantage. In any other industry, you will see the same, an installer will add some margin, because there is usually a lot of overhead. Even if you build, most builders will have their fee and add ~15% on top of everything they source. Most of them don't mind if you source material yourself, and most that choose that route quickly learn that 15% is a small price to pay for the amount of work involved.

How much margin you can get away with depends on demand as well as the reputation of the installer.

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People talk apples with apples ...markups percentages.

Apples with apples... do the research ...spend the time creating a cost sheet ...list all the materials you require for the project and what  you exactly you want ...how long the cables must be...scaled layout drawings etc etc etc ...then you can can forward all the information and request a detailed quote... see what it costs to get a consultant out ot prepare a quote. 

percentage markup... have you seen how quick people call when the product you supplied is not doing exactly what you requested it to do or it is faulty ... Who pays for the product to be disconnected and removed if it is faulty (certainly not the supplier) in the old days ...using crabtree as an example ...they had a few issues with their socket outlets ...you could contact crabtree and get them to send their technician out ot replace the faulty part ...not anymore ...the cost falls on the installer for the entire warranty period ...no matter how many time he has to return.

In some cases it is better to get the customer to supply the product ...because then the installer is not responsible for all the work involved in stripping removing ...returning and replacing ...then you can charge the customer full rates....in some cases that little markup is not worth all the hassles.

 

 

 

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14 minutes ago, isetech said:

percentage markup... have you seen how quick people call when the product you supplied is not doing exactly what you requested it to do or it is faulty

In some cases it is better to get the customer to supply the product ...because then the installer is not responsible for all the work involved in stripping removing ...returning and replacing ...then you can charge the customer full rates....in some cases that little markup is not worth all the hassles

Good point. Is that worth a 35% markup, debatable, but the concept makes sense. Of course this then goes with selecting a reputable installer that will come back. 

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1 hour ago, Pietpower said:

What opportunity cost do you refer to?

Exactly what you said. 
Either bond interest rate if you borrow or investment return if you have the cash. 

But for ease of calculation, I also do high level assumption that the electricity increase washes the opportunity cost. 

I guess I was only so surprised that marketing wise, savings and ROI is toted all the time, yet it is not there. 

Edited by daniemare
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There's an old story about the company that bought a computer to run their production line. It was fine for months then one day started putting Orange Juice labels on bottles of Cream Soda.

The company calls IBM.

IBM sends a man.

Man says "show me the computer please".

He walks around it a couple of times and then gives it a kick and say "it'll be fine now". And it is fine.

The next week they get a bill from IBM for $100 (OK... this is a few years back). They query this.

The breakdown from the service agent is
1) Kick $10
2) Knowing where to kick $90

There are three broad categories of people who have solar installed
1) those who know what they are doing
2) those who think they know what they are doing
3) those who have no idea but want a reliable system.

I'm in (3) and for me the expertise, labour and support that the installer brings has value. Also they provided a supplementary COC, something that most people I know who have gone solar or were planning to never even considered (it's important for insurance purposes). 

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9 minutes ago, daniemare said:

Exactly what you said. 
Either bond interest rate if you borrow or investment return if you have the cash. 

But for ease of calculation, I also do high level assumption that the electricity increase washes the opportunity cost. 

I guess I was only so surprised that marketing wise, savings and ROI is toted all the time, yet it is not there. 

Put a value on convenience... If you just want to look at numbers it won't add up.

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12 minutes ago, Bobster said:

The breakdown from the service agent is

1) Kick $10
2) Knowing where to kick $90. 

I also in category 3 as you. And I do think the above holds true. 
 

But what I do hate is when someone quote me

1) Kick $50

2) Knowing where to kick $50

Same price, but it just feels like a rip off. 
 

I would rather see

1) Equipment quoted at competitive pricing

2) Installation cost (with markup off course)

3) Support cost with T&C of support. 
Then you know what you have paid for and what you can expect

Edited by daniemare
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5 minutes ago, PaBz0r said:

Put a value on convenience... If you just want to look at numbers it won't add up.

I am, I deduct the equivalent of a 1200v victron inverter charger and 1 Pylon 2.4 battery and basic installation as my “convenience” cost before seeing of the rest gives me payback. 
(And this basic setup can even be cheaper with different Inverter and Lead Acid Battery)
 

Still struggle

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7 minutes ago, daniemare said:

I am, I deduct the equivalent of a 1200v victron inverter charger and 1 Pylon 2.4 battery and basic installation as my “convenience” cost before seeing of the rest gives me payback. 
(And this basic setup can even be cheaper with different Inverter and Lead Acid Battery)
 

Still struggle

Add take-aways, homework by candlelight, a new baby in 9 months etc into the calc :D

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26 minutes ago, daniemare said:

I am, I deduct the equivalent of a 1200v victron inverter charger and 1 Pylon 2.4 battery and basic installation as my “convenience” cost before seeing of the rest gives me payback. 
(And this basic setup can even be cheaper with different Inverter and Lead Acid Battery)
 

Still struggle

It's also convenient to be able to charge your batteries and/or keep them charged when the grid is down and the sun is up.

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@Danie. Eskom is till cheaper than solar and will probably be for a while.

I decided i will not look at payback, yes we all want to save and pay back in 5 years. I installed a small system 2 panels 4 batteries and a 3kva inverter 2 years ago. I used my bonus because loadshedding started and it was school holidays.

3 month later I added 2 more panels. 

last week i bought 5 more panels. 

There are only 2 houses in our street with solar. the rest run on generators. My neighbour across the street uses R200 per day in fuel to run the generator. Durng tha last 2 weeks she spend R2800 on fuel and she bought the generator for about R9k. There are no returns on her investment

I have spend so far about R50k on my solar system. I have not monitored the power generation or anything but when the power goes off like 1am this morning all my fans kept running, my security lights stayed on and i did not even realise the power was off until i walked down the hallway and noticed the red light on my db is off that show when eskom is on.

That is worth the R50k i have spend.

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Just now, P1000 said:

How did this thread morph into one discussing the financial viability of solar?

I do feel that a thread like that is needed, because it seems like very few people understand how to model something like that.

I think the only area where solar really is financially viable as a cost saving measure is big grid tie systems with no backup.

But for Storage + PV I know my back of the envelope math puts its around R2.8 per kWh over the lifetime of the plant.

So should you ever have to pay a constant price over R2.8 kWh then its financially viable from day one. (Financing costs dependent of course)

But I think most of us on here don't even lie to ourselves, the financial savings are a bonus, the real reward is in the security of supply that we have.

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