The number of US photovoltaic (PV) systems has grown rapidly in recent years, driven by a wide array of government incentives and other supportive policies aimed, in part, at reducing PV system prices. This article draws from a sample of more than 200,000 US residential, commercial, and utility‐scale PV projects to summarize price trends for PV systems installed from 1998 through 2012. These data show that the average installed price of US residential and commercial PV systems declined 6–7% annually during 1998–2012, although the pace and source of price reductions varied. In 2012, the median reported installed price of residential and commercial PV systems was $5.3/W for systems of 10 kW or smaller, $4.9/W for systems of 10–100 kW, and $4.6/W for systems larger than 100 kW. The capacity‐weighted average installed price of crystalline, fixed‐tilt, utility‐scale PV systems (ground‐mounted systems at least 2 MW in size) declined from $6.2/W during 2007–2009 to $3.3/W in 2012. Recent price reductions are associated primarily with a precipitous drop in PV module prices, while non‐module costs have remained relatively stagnant since 2005. Further system price reductions will be needed to expand US PV deployment as incentive programs reduce their financial support. Because further module price reductions are limited, additional deep reductions in installed prices will require significant reductions in non‐module costs, particularly non‐hardware (“soft”) costs. Lower installed prices in international markets suggest that deep near‐term soft cost reductions in the USA are possible with the help of targeted policies. Copyright © 2014 John Wiley & Sons, Ltd. Analysis of more than 200,000 photovoltaic (PV) projects shows that average installed prices of US residential and commercial PV systems declined 6–7% annually during 1998–2012, reaching $4.6–$5.3/W in 2012. The capacity‐weighted average price of crystalline, fixed‐tilt, utility‐scale PV systems declined from $6.2/W during 2007–2009 to $3.3/W in 2012. The additional system price reductions needed to expand US PV deployment will require significant reductions in non‐module costs, particularly non‐hardware (“soft”) costs, through market development and targeted policies.