This is a hot question. How much money does an EPC make? As you can guess, there is no one answer because the extent of margins made by an EPC depends on the following:
- Quality of the EPC – Average / Good / Excellent
- Quality of the offering – Average / Good / Excellent
- Size of the project – Small / Medium / Large
Take a look at the EPC margins (% of total project cost) below. Please note the estimates below are only indicative.
|Segment||Gross Margins (%)||Net Margins (%)|
|Rooftop solar – high quality||20||10-15|
|Rooftop solar – average quality with price sensitive customer||10-12||7-8|
|Ground mounted power plants 1-10 MW for a quality conscious customer||12-13||7-8|
|Ground mounted power plants 1-10 MW at average quality and for price conscious customer||7-10||5-7|
|Large ground-mounted power plants||7-10||5-7|
Gross margins denote the total revenues that accrue to the EPC after he has paid off for all the procurements and to the outsourced sub-contractors.
Net margins denote the actual profit after the EPC has paid off his internal expenses. Net margins = Gross margins – all direct and indirect expenses to run the EPC operations.
Recommended investments by solar EPCs to get superior margins & returns on investments
- Design expertise – Web site design and marketing (especially social media marketing) – ensure that you are also able to put in a good amount of automation on the cloud for proposal writing, customer interaction etc.
- A good content writer to put in blog posts – invest time in the blog post to a certain extent yourself and don’t outsource everything to the content writer alone.
- A good customer care executive
- A good marketing executive
- Investments in attending key networking events
- Investments in publishing focused, useful white papers (so content writer)
- A cloud based CRM
- Investing in branding – get an advertising/branding consultant in the beginning stages to get a good name and brand ideas and then you can get a designer on contract to design your logo etc.
- Participation in key events and trade fairs – be careful about selecting these fairs, to begin with, you might want to look at local fairs that are both cheap and where you can get local audience to know you, with whom your chances are better in the beginning. Look for fairs not just on solar but also on construction, green buildings etc. where your target audience are likely to be.