How to Price Your Drone Services
There is no doubt that the drone service industry is booming. Since the Part 107 regulations were enacted into law more than 2 years ago, there have been hundreds of thousands of commercial drone pilots who have been granted their drone licenses. This number continues to grow, a testament to a growing market demand for commercial drone services.
If you have gone through all the trouble of getting a Part 107 drone license, taking some training courses, and getting all the right equipment to start a business, then you’re probably at the stage where you are getting ready to offer your service. However, many budding commercial drone pilots have run into the dilemma of not knowing how much to charge for their services. Worry not, because we’re here to help. Read on for our comprehensive guide on how to price drone services.
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Different strokes for different folks
This early in the game, you need to determine just which specific service you will be offering.This plays a role in setting your service price range. For instance, a drone mapping service will require more technical skill and specialized equipment. The clients that a drone mapping service will attract will likely also be bigger companies, such as construction firms, energy providers, or government organizations.
In contrast, a basic drone photography service more commonly attracts smaller clients – couples that are about to get married, event coordinators, or small private companies. You can also market yourself to serve exclusively real estate clients who want to advertise their properties using aerial photos and videos.
The differences in the target clientele and the skill level required by any particular service means that they can also be offered at different rates. Before you decide, you can take stock of your options – you might have existing contacts within a specific industry, or you may already have skills that can be used to help offer a service. After all, you need to be a good photographer first before you can claim to be a good drone photographer.
The costs of running a business
With a service in mind, it’s time to start listing down the expenses that you will need to consider when determining a price point. Since the whole point of running a business is to generate a profit, you need to determine just how much you will be spending to start the business and the recurring expenses needed to keep the business running.
1. Initial expenses
The initial or capital expenses will include the cost of getting the Part 107 license, taking any sort of training, buying the drone and its accessories, and registering your business. This may be a huge amount, somewhere in the neighborhood of $2,000 to $3,000. You don’t have to get it back all at once. If you can price your service to make up for the initial investment within the first year of your business, then your business will be in good shape.
You will also need to consider all the expenses involved in running the business. You will likely have to spend some money on marketing, such as for web hosting or for printing of business cards and flyers. You may even need to hire an SEO expert or email marketer to reach a wider audience.
All commercial drone pilots are advised to get a liability insurance policy which protects them from expenses that may be incurred should they run into a drone-related accident. Having a policy ensures that you do not run into financial difficulty should your accident result in personal harm or property damage.
Most clients require a liability insurance policy for drone service providers. Large companies, such as construction or mining firms, require insurance policies with coverage of between $1 million to $4 million. A large coverage also means a large premium – a cost that you should consider in the pricing for your service.
4. Replacement of drone accessories
You might start out with a complete set of drone accessories, but this stock can dwindle over time. Batteries can die, and propellers will break. You will have to buy replacements for these parts immediately if you want to still offer your service reliably.
If you are running large-scale operations, then it’s likely that you will not be running them alone. While doing a gig, you may need extra manpower to act as a dedicated visual observer or photographer. If you offer video and photo editing on top, then you may also need to hire an experienced person to provide higher quality results. If you offer a drone mapping service, you may also hire a GIS expert to process the data into meaningful maps.
There are a lot of paid apps and software that you can use to make life easier and to deliver better results. Many commercial drone pilots use apps such as Hover or Skyward, which provide indicators for no-fly zones, provide real-time weather updates, and have flight logging capabilities. Commercial drone pilots have to be receptive to such information to make sure that they do not violate any Part 107 restrictions.
Some services require post-processing software that cost money. Since we are encouraging the use of licensed software, then you might need to purchase licenses for the most common photo and video editing software such as Adobe Photoshop, InDesign, and Lightroom. For a drone mapping service, then an ArcGIS license may be instrumental.
You may also consider getting a G Suite app package or Dropbox that will help you sync your files automatically between different devices. These apps allow you to automatically back up photos and videos even while you are still out in the field. Although not absolutely necessary, having such apps will help you keep your data safe and make the business generally easier to run.
There are probably freeware alternatives for any of this software, but let’s face it: the paid options are easier to use, provide better support, and deliver better results.
7. Business expenses
There may also be some costs that are incidental to the job that you are taking. A wedding coverage may take you out of town, so you will have to add the expenses of travelling to your service charge. If you are doing road surveys inside a moving car, then you can probably charge the client for the costs of renting a vehicle. It’s entirely up to you how you will incorporate standard business expenses, such as meals or accommodation, into your service rates.
The value you offer
Drone services are very cheap compared to how things used to be done before drone technology. Back then, aerial photos and surveys were done using a manned aircraft, a process that involved hiring a highly-skilled pilot, renting an expensive helicopter or biplane, and consuming costly jet fuel. Nowadays, drones can deliver the same services faster, at a fraction of the price, and with better output.
There will not be a lot of expenses associated with the actual service you will offer since it does not involve any consumables. Instead, the price for which you offer your service is a reflection of the value you are providing your client. After all, you will be using your skills and equipment to serve a business need.
Aside from your business expenses, it is important to analyze your market position and your value offering when determining a price point for your service. There is no hard and fast rule for how these factors affect your price, but these can be good points of comparison.
1. Your level of experience
If you are still quite new to the industry, then it makes sense to offer your services at a discounted price. Some commercial pilots who are just starting out have to resort to operating at a loss, or even for free, just to build up valuable experience. You don’t necessarily have to resort to the same strategy, but you need to recognize that your lack of a portfolio or a list of past clients will put you at a disadvantage.
If you have other qualifications on top of being a licensed drone pilot, then you can probably use them to offer a premium. A construction firm will probably be willing to pay higher rates for a drone pilot that also has an engineering background. A licensed surveyor may also charge higher when doing a drone mapping survey.
2. Your equipment
The level of sophistication of your hardware will also determine how much you can charge for your services. After all, if you are using a DJI Mavic Air, then you cannot expect to charge as much as another guy who is using a Phantom 4 Pro.
It is important to communicate to the client what equipment you will be using, including technical details such as camera specs, stabilization, and any post-processing treatment. Even if the client does not fully understand these details, it sends a message that you know exactly what you are doing.
3. Auxiliary services
In most drone service applications, it is not enough to know how to fly a drone. Being a good drone photographer means having a creative eye to look for excellent angles and vantage points. If you have photo editing and video editing skills, it is important to communicate these to the client to justify charging premium rates.
Working with geospatial data is a crucial skill if you will be offering drone mapping surveys. Raw data collected from a drone mapping survey is useless without any processing. To offer the client a complete end-to-end solution, you need to be proficient with GIS and other 3D mapping software to process the data and make meaningful maps.
4. Your deliverables
When marketing your service, it is important to communicate to the client the deliverables that you offer. If you are a drone photographer, will you be providing prints of your photos? How many shots are you going to take for the duration of the coverage? Are you going to provide digital copies of all raw and edited photos? It is important for these matters to be well-defined at the start of client engagement so that there will be no surprises down the road.
Drone mapping service providers usually provide a basic 3D map at the very minimum. This can be considered the basic package, with additional processing commanding premium rates. Additional maps can include a normalized difference vegetation index (NVDI), a thermal map, or a higher resolution 3D model. These maps will require additional spatial analysis and probably a dedicated GIS software.
5. Competitor prices
The price charged by your competitors is probably the single most influential factor in determining how you price your service. After all, you want to remain profitable but still competitive. Keep in mind that price ranges can be very localized – you need to look at competitors within the context of your immediate city or town.
It may be a good idea to determine where you are in terms of expertise level, equipment, and the deliverables you offer. You can then use this ranking or matrix to set your prices accordingly. It may be tempting to try and undercut your direct competitors, but you may also end up undervaluing your service.
Are there standard rates for drone services?
Let us preface this discussion by stating there are NO standard rates for drone services yet. Even with good growth in the last few years, the drone-based service industry is still very much in its infancy stage. At this point, the dynamics of the pricing of these services is still determined by the free market: prices will probably be lower where there is a lot of competition, while prices will be higher where there is a lot of demand.
Supply and demand conditions vary in each local area, so it will still be worthwhile to look at what commercial drone pilots near you charge. The rates we provide here are nothing more than rough estimates, so don’t be surprised if the rates in your area will be wildly different. Since drone services for each type of industry can vary greatly, we are separating this discussion per industry.
1. Drone photography
Companies that offer drone photographer services implement different pricing schemes which you can choose to adopt. Some offer per hour rates, half day or full day rates, or per project rates. The standard ranges for drone photography gigs are summarized below.
|Per hour||$150 to $450|
|Half-day session (4 hours)||$600 – $1,000|
|Whole-day session (8 hours)||$800 – $1,500|
|Per session||$500 – $1,500|
On top of the price of coverage, drone photographers often charge separately for photo and video editing. A whole day of video editing can cost around $900, while a half day editing job could cost between $500 to $600. For small editing jobs, you can probably charge a per hour rate of $100.
2. Real estate advertising
Real estate jobs are not time-bound so charging is often done based on output. The common packages and prices offered by drone photographers for real estate shoots are as shown below.
|Real estate photos||5 to 15 images||$75 to $150|
|Real estate photos and videos||5 to 15 images||$125 to $350|
|1 to 3 minutes of videos|
This kind of pricing scheme makes it easy for a client to scale up their request based on their expected deliverables or their budget.
3. Drone mapping
Most companies that offer drone mapping services have a per hour pricing scheme. This is an effective scheme to account for larger coverage areas, and for logistical complications in areas that are harder to access. The number of hours billed will also include any post-processing needs, such as map preparation and data analysis.
More than 30% of commercial drone pilots that offer drone mapping service charge an hourly rate of $150, although a range of $100 to $200 is generally acceptable. Prices also vary greatly depending on the industry being served: mapping services for oil and gas firms can cost up to $195 per hour, while agriculture and construction firms pay only $160 to $170 per hour. Next to oil and gas, firms in mining, surveying, and solar energy also offer above average rates.
Some companies choose to offer drone mapping surveys on a per acre pricing scheme. However, they are in the minority and there are currently no established per acre rates for drone mapping.
Is it wise to undercut the competition?
Undercutting means offering your services at a much lower price than your competitors in a bid to get as many clients as possible. This may be a good strategy if you are just starting your drone business. After all, you do not have the advantage of experience and of having an expansive portfolio,
However, it would be a good idea to raise your prices to the industry standard in the long run. Offering low prices means working harder to earn the same amount – generally not a smart business strategy. Undercutting for a long time also runs the risk of other newbies doing the same thing, resulting in the service becoming permanently undervalued.
The market for drone-based services has grown leaps and bounds in the past few years. With more industries recognizing the value of drone services and the technology becoming cheaper and more accessible, we expect the market to grow even more in the future. For a new entrant to the market, being competitive means offering high quality results at a lower price.
However, good business owners do not just offer a lower price thoughtlessly. They have to consider all the costs associated with starting and running the business, and price their services to generate a good profit. A drone business has to invest in certification, training, and technology before it can take off. On top of that, operating a drone business involves recurrent expenses on insurance, software, replacement parts, and manpower.
A drone business can be very lucrative, given how specialized the requisite skills are. The payout may vary based on the particular industry you are serving. For instance, an oil and gas firm will pay more for a drone mapping job compared to a couple paying for aerial photos of their wedding. Selecting an industry is a balance of knowing what you are good at and knowing what market you can get into.
Running a drone business is not that different to running any other business. All it takes to be successful is to provide good value to your clients. By knowing your market, identifying their needs, and providing high quality results, then there is no reason for your drone business not to thrive.