We were reviewing our revenue forecasts and realized how much we’ve learned about running a profitable drone business since we started. After we refined our revenue plan, I decided to write this article on how to build a profitable drone business. Hopefully, the insights will help you with your business.
When building a drone business your equipment choices, the market for your services, and the specific jobs you get all play a role in determining profitability. Revenue, operating expenses, business models, and hourly rates are also important. We will look at three specific projects to demonstrate what we mean.
What is Profit?
Your drone businesses can’t live on goodwill alone – you need to turn a profit. So, what exactly is business profit?
Simply put, business profit is the difference between what a company spends on operating costs and what it generates in revenue. The costs can include drone hardware and software, employee salaries, marketing, and insurance. If the revenue generated exceeds the costs, then the business is profitable.
The drone services market is becoming much more competitive. But with careful planning and a willingness to adapt as the drone industry changes, drone businesses can find success. For more details on starting your business see our article “First 9 Steps To Start A Drone Business“
How A Business Plan Determines Your Profit
A business plan is important because it provides a framework for how the company will generate revenue and profit. It also outlines the company’s value proposition and the unique benefit that it offers to customers. The business plan also helps determine what products or services to offer, how to price them, and how to market them.
There are many types of drone business models. You can for direct drone sale or rental. However, most new businesses start with a service-based model. Whether it is aerial photography, inspections, or even drone repair.
Recent technological advancements in drone aircraft have opened up a whole new world of opportunities for businesses – drone-based services, for example. This type of business model involves using drone aircraft to provide goods and services to customers.
In the agricultural sector, drone technology can be used to monitor crop growth, deliver fertilizer or seeds, detect pests, and much more. In the construction industry, drone technology can be used to take aerial photos of construction sites, inspect hard-to-reach places such as roofs and building frames, and autonomously construct structures. For details on drone photography see our article “Drone Photography: A Practical Guide”
Drone technology can also be used to create 3D maps of areas from multiple high-resolution pictures and inspect power lines for faults. The possibilities are virtually endless with drone services – businesses just need to choose where their drone skills will best serve their customers.
Ultimately, the best drone business model is the one that best aligns with your company’s strengths and weaknesses.
How Business Revenue Determines Your Profit
Business revenue is the money that a company brings in from its normal business activities. This can come from the sale of products, services, or both. Revenue is important because it is the lifeblood of a business. Without it, a company would quickly run out of money and be forced to close its doors.
You’ll generally set prices per job, so the total revenue = the number of jobs x price per job. You can increase your revenue by getting more jobs or by increasing your pricing.
Let’s run a few numbers to how this works. If we charge $175 for photography jobs and $500 for video jobs, after 12 jobs we’ve made almost $10,000! But as we’ll see, if you only think about revenue then you’re in for a surprise.
How Pricing Determines Your Profit
Here are factors to consider when pricing your drone services.
What is the cost of operating your drone business? This includes the cost of your drones, the pilots, and any other overhead expenses. Once you know your costs, you can start to think about what price point will allow you to make a profit.
What is your hourly rate? This includes the entire time to complete the job: roundtrip travel to the site, on-site drone work, and post-flight production. Your hourly rate is the amount you charge divided by the total time. I did a quick analysis based on our pricing for photography ($175) and videography ($500), and estimated time to complete the job.
The value of your services. If you’re providing a service that is unique or in high demand, you can charge more. On the other hand, if there are many other businesses offering similar services, you’ll need to be competitive with your pricing.
Your competition. Take a look at what other businesses in your area are charging for similar services. This will give you an idea of what customers are willing to pay and help you determine where to price your services.
How Operating Costs Determine Your Profit
A drone business can have significant operating costs. Businesses need to factor in the cost of drone hardware, maintenance, storage, and insurance when they are calculating their operating costs. In addition, there are regulatory costs associated with drone use, such as obtaining a commercial drone pilot license. By understanding all of the potential costs associated with drone use, businesses can make more informed decisions about whether or not drone technology is right for them.
Starting a drone business can be a great way to tap into the growing demand for aerial photography and videography services. However, there are some significant costs associated with getting started in the drone business, including the cost of hardware. A quality drone can cost several thousand dollars, and you may need to purchase multiple drones to meet the needs of your business.
In addition, you’ll need to invest in other hardware such as controllers, batteries, and chargers. Depending on the size and scope of your business, these costs can quickly add up. Therefore, it’s important to carefully consider the hardware costs before starting a drone business.
We have a small business and needed to minimize our startup hardware costs while still being able to provide all of our services. We settled on two drones that fit our requirements, I would fully recommend either drone for the applications.
Applications: Photography, Videography, Inspection
Cost: I paid $1300 with the “Fly More” combo package (extra batteries, ND filters, prop guards, multi-battery charger, plus s few extras) + $169 DJI replacement insurance. I ran the numbers and it’s definitely cheaper than buying everything individually. Three batteries may seem like overkill – I’ve never used more than 2 on any job. However, I have come very close to using up two batteries and having that 3rd battery gave me peace of mind. So for me, it was worth it. I was new to drones when I bought my Air 2S so the replacement insurance made sense for me.
Specs: You’ll see lots of different specs for drones but most of them are useless. For example, they give the maximum speed. But seriously, when am I ever going to fly a drone at 30 miles per hour? For me, the most important spec is flight time, and the Air 2S has about 20-25 minutes of flight which is decent.
Why We Chose It: When I purchased the Air2S it was the newest tech at the time. It has a 1″ sensor which was the largest sensor for a drone that size. Also it has amazing intelligent flight modes, I do a lot of my photography using the “quick shots” capability. It’s small and quiet. so it doesn’t attract too much attention and I can fly it indoors which opens a lot of potential work. For a detailed comparison see our article “DJI Air 2S vs Competitors: Return on Investment“
Problems: I have nothing bad to say about this drone. We have been very satisfied.
Applications: Mapping & Survey, Inspection, Photo, Video
Cost: I bought a refurbished unit for $2000 on Drone Nerds (DJI didn’t have any in stock) – it came with a full warranty which I’m glad I got. I tried eBay because you can get awesome deals but after I lost several auctions I couldn’t take the emotional stress.
Specs: The basic performance is similar to the Air 2S, with a slightly longer flight time
Why We Chose It: Mechanical shutter to minimize image blur in orthomosaic maps. Well-respected, solid all-around drone. 1″ sensor.
Problems: It’s an old drone with older technology. The Gimbal system is very fragile. The technology is a bit temperamental (the compass needs constant recalibration). It’s bigger and louder so it draws attention, but that’s OK for our construction jobs. The Phantom product line has been discontinued so they are very hard to find.
For a more detailed review see our article “Phantom 4 Pro Drone For Aerial Mapping“.
The software you need depends on your services. In our business, the software falls into four categories: video editing, flight automation, map generation, and website.
Photo & Video Editing – we use Adobe products. For photography we use Lightroom, and for video, we use Premiere Pro.
Map Generation – map generation software performs photogrammetry and collected data to generate geo-referenced Matt. We use Maps Made Easy, this was an easy choice for us.
Website Software – website software consists of web design applications and plug-ins to support website operation. For website design, we use WordPress which is a standard for professional websites.
The total cost of all the software is less than $500 per year which comes out to approximately $40 per month. For details on the software you need to run your business, you can read our article “Hardware and Software To Start Your Drone Business“
you will need a minimum of $1 million in liability insurance for most jobs, that is what we recommend. Currently, we use Skywatch which charges on a per hour basis. When you start your business this is the most cost-effective option. For a one-hour job, you can expect to pay between $12 and $30 depending on the location.
As you grow your business and get a larger number of contracts you will want to transition to standard yearly insurance service. We’ve been quoted $900 per year for $1 million in liability insurance.
Three Example Projects: Profit Analysis
We found this customer by basically driving around to different construction sites and handing out business cards to project managers. While this is not terribly efficient we found it is a great way to advertise your business and meet potential customers. Turns out that this customer hired us to do some work that same day, and it turned into several follow on jobs at this site.
We found this customer by doing some pro bono work at a local construction site. We sent the results to the site manager to show him what we can do and the company decided to hire us to work on another project. This was a long-term contract but I’ll just consider one visit.
We found this job the old fashion way, cold calling. First, we sent emails to local commercial developers, then followed up with phone calls. One guy got back to us and said he might have something in a few months, when we called a few months later they hired us.
So these three examples should give you a good sense of revenue versus profit versus an hourly rate. The job with the highest revenue and highest profit also had the lowest rate.
For these three jobs are total profit was $848, but we still need to account for the upfront cost of our drones, so we were still a long way from being profitable.
As a result of this analysis, we made several changes to our pricing structure
1. Increased price for video services to increase the hourly rate.
2. Added a travel fee for jobs outside a certain radius.
3. Added an online content marketing program to advertise our business (you’re reading it right now).
This is the type of analysis you to determine if or when your business is profitable. I hope you found this helpful. I’m always reminded of a quote by Robert Kiyosaki, “Mind Your Business”.
Lightwave Aerial is a professional drone service company based in Northern Virginia. Our pilots are all FAA Part-107 certified. We offer a full range of aerial photo/video production services, aerial mapping, and aerial inspection.
At Lightwave Aerial, we are dedicated to providing professional drone services that help our clients achieve their goals. Contact us today to find out more about how we can help you with your next construction project!