Part 107 The Market

The Business Of Drones – What Do I Get?

The questions have been swirling around the Internet and coming through private messages – now that this is legal what do we charge?  Very relevant and timely question as the drone rush officially started August 29th, 2016.

I’m reaching back into my experience as a legal commercial drone operator many years ago, imparting some from posts and discussions I’ve read and postulating on some of the others. I  also have to add that prices, salaries and what people can charge for professional services vary from State to State as well as urban and rural areas. The following is meant to be a thumbnail sketch for reference and your reading enjoyment.

First, it must be reiterated that the promise of drones has always been self-guided data collection with data, of course, being the commodity. The other maxim is that  that drones augment existing business who can add another service to its existing customers. If you are starting a new business, you will have to incur the costs of business development including setting up, printing, advertising and the time it takes to find customers. You’ll have to determine your cost of sales as well as your monthly overhead and decide how much you’d like to make an hour. I’d caution anyone to use some of the industry group salary forecasts. While $40 to $55 an hour to start sounds great, it may be hard to get jobs if you are still just learning the craft. Another word to the wise, scare up some customers before you drop thousands of dollars on pro equipment & before diving into industries you know little or nothing about.  

The low hanging fruit –

Let us (lettuce for the kitty) start with Ag. Sure there can be money in Ag, but it may not be for everyone. The reality might be that in your area, they only grow crops with smaller profit margins that can’t incur more overhead. Further considerations would be proximity to where you live. I like to use the pool route model or the wedding photographer, whatever the case the bottom line to the bottom line is that it doesn’t make sense to travel four hours by car to do a job where you’ll only make $50.  Yeah, I gave you the downside so where the heck is the upside potential? Well, that depends on what type of data you are providing the farmer. Farm drone pretty pictures may have some value to farmer Green but not so much for the more conventional farmer Brown.

I’d start out with a set price and work your way up with services you can provide. Here in California, we have a wide diversity of crops. The most profitable are almond and pistachio nut trees. Wine grapes are also very popular with the drone folks, but I don’t know why that is. ;-) Applications of pesticides and biocides are another service that is repeatedly cited as a moneymaker. Light research that includes talking to rice farmers would suggest that locally they average about 10 gallons of pesticides an acre. So the Yamaha R-Max holds +/- 8 gallons and costs $250K carry the two, add your hourly and maintenance and you’ll have a hard time making the monthly nut.

Real Estate and Construction –

Sure there is money to be made here.  However, as the expense cuts into commission, many of these folks are all about the bottom-line and percentages. My experience was that few real estate agents have the imagination to sell in a realistic climate. If the market is hot and properties are moving, they are not as motivated about marketing.  I used to ask $150 for several obliques of a property that highlighted its location or surroundings e.g. Golf courses, Vermont waterfront and or a superfund clean up sites.

As the projects get larger, you could naturally ask for more, but you have more overhead to carry. Most condo or commercial sites required that I had liability, a commercial vehicle, and workman’s comp insurance certificates before stepping foot on the property to bid the job.  So you could ask $2000 for a low altitude aerial project with a straight face. I was the only game in town for a while, and there was no way you could get a manned aircraft into the locations where I was flying.

Then the competition showed up. You had some middle of the roaders, part way above board and charging less, and then came low ballers. The LB’s were doing real estate shoots for $45 a snap. I’d talk to these guys and say you’re giving it away, but they didn’t care as they weren’t paying the overhead for insurance or any of the other trappings of business, so it was all profit.

I’ve seen projects since where folks have gotten $5k for Real Estate/Development marketing videos. Great stuff by an Emmy-nominated director that was a combination of ground, car and aerial video that highlighted the property, developer and broker, a real Hollywood quality production. Original ask was $7500 to showcase a development with multimillion-dollar homes but they caved to a lower price, still turning out top quality. In the end, the Real Estate agent said she was going to buy her own drone for next time…  an old Han Solo quote springs to my mind ;-)

Then there are the latest rounds of big money jobs folks are drooling over. Thermal solar panel inspector for example. A conversation on Facebook mentioned a cost of sales estimate at an hourly rate somewhere in the neighbourhood of $400. Fair enough, but that’s not including Mean Time Between Failures (MTBF) and pilot error. The FOIA’d MTBF testing numbers are substantially lower than the Micro ARC’s scientific guestimate of 100 hours per. You start factoring it all in, and your equipment insurance is going to have to be paying off like a slot machine, or your cost of sales are going through the roof holding up the panels you were going to make a bundle inspecting.

The other big money ringer is Cellphone tower inspections. You’ve got folks out there getting north of a $1000 a tower. Hmm, five towers a week will still leave me enough time for a few selfies on the Yacht. Before you pick out the slip, you should probably know that the still-evolving process resembles something Rube Goldberg would have drawn out. Unmanned systems are supposed to cut down on labour not put more men on the job.  

Roof inspections are also a popular new venture. Sure, you can get $200 to $250 a snap and complete several in a day, tonnes of profit there. Well hold on flyboy/girl, you may want to check into some Errors and Omissions insurance. If you miss something that results in a leak you could be staring down the barrel of a lawsuit claiming you owe hundreds of thousands of dollars for repairs or remediation.  Mapmaking and other professional services may require licensing in your State, check the local nomenclature.

One of my favourite wishful thinking lucrative careers is filmmaking. There are delusions of grandeur, and then there are delusions of working for Spielberg.  You took the Herzog Director’s MasterClass of Film-making two-week online course, prepaid for an hour of drone liability insurance on your 310 area code cell phone, bought a Cinestar 8, four Red Epic-x Dragons (who’s the mother of dragons now Khaleesi?!) and the perfunctory newsboy hat. As soon as Disney green lights BFD 2 you’ll be on set at a day rate of $8500! It’s all gravy until the union goons threaten to break your transmitter fingers.  You may think it’s just a 5-second B-roll clip for the trailer, but the way Mr Shades sees it you’re degrading the integrity and quality of the movie industry, not just taking work from a union cinematographer.  

The moral of this long story is, do some research before investing in professional equipment or leaving scorched Earth at the ‘ol day job. You may want to make sure you are in compliance with local State and Federal laws beyond those from our friends at the FAA. Well,  it’s time to get cracking and work through competition, licensing, insurance and the other trappings of business to see what this commercial market will bear.

Good luck, and don’t forget me when you are rich and famous!

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