Our SolaRise team explored several of the above payment models. Initially SolaRise began as a charity, raising donations and using these funds to buy the Solar Kits, which they then distributed for free.
However they quickly realised that this was not a sustainable business model – they simply wouldn’t be able to raise enough funds to reach as many people as they wanted.
SolaRise then switched to a ‘pay on delivery’ model, charging customers upfront to buy their kits. However the cost of the Solar Kits, at over $250 per unit, was simply too much for most of their customers to be able to afford.
SolaRise realised that they had to develop a payment model that would enable their customers to be able to pay over time. They decided to team up with a local micro-finance bank to offer a ‘Solar Loan’ to their customers, under which the customer could borrow $250 to buy the Solar Kit, and then pay that loan back over 48 months. This meant that the monthly payment would only be around $10 per month, which was below the $20/month which customers were currently paying for low quality kerosene products.
Some of SolaRise’s competitors adopt the hire/purchase or the leasing model. SolaRise expects to move to leasing its Solar Kits in due course. The leasing model is more complex, but means that they have an ongoing relationship with their customers, and can monitor the performance of the Solar Kits going forward. They are also willing to take back defective Kits and replace them for free, which is a very attractive feature for their customers.