The drone industry is at a crossroads. If you are a drone pilot wondering how to navigate the uncertainty while still creating opportunities for yourself, this conversation is for you. I sat down with Amy Wiegand, an authority in revenue operations who supports organizations with sales and marketing growth, to talk about what is really happening in the industry right now. We covered the latest regulatory picture, how the current market is affecting pilots and drone service providers, and what we can do today to build and market a successful drone business regardless of what happens next.
Amy came into this space the same way a lot of aviation people did, through the manned side. She was in operations and heavily in sales, marketing, and growth while running a flight school, and what she does now is build programs of value for enterprise and small business. That perspective is exactly what most drone operators are missing at the moment.
The 99% Have Nothing American to Fly
Right now we are waiting for the United States to ramp up production on drones. We are waiting to get aircraft for commercial operation from American manufacturers that are not extremely niche specific. We are good at building large drones in this country. What we do not have is anybody really building a drone that is of value to someone who may be flying a Mavic or an Air or something of that nature.
That is what the industry is looking for and needing. When you look at who is actually flying these aircraft, the vast majority, what I call the 99%, are flying affordable jack-of-all-trades drones that people want to open up, go fly, and use for a wide variety of missions. Real estate, mapping, inspections. We just do not have that right now in the United States.
You can find purpose-built mapping drones, but they are also very expensive and most of the time they are built for much larger fields. Amy and I were talking before we started recording about how someone even gets started today. A lot of you watching may have picked up a Mini, and with a Mini you can actually go and map. You can learn how to map. It does not look pretty and it is not something you are going to sell, but it is something you can get started with and cut your teeth on. That entry point just does not exist anymore. You would have to spend a serious amount of money on a drone that may or may not work for what you want to do, and that is a big investment for a maybe.
A Ticking Time Bomb for the Fleet You Own
The risk in all of this is in the people. Whether you are a solopreneur or you have staff, the question is the same: what does your drone business look like in a year? Amy and I talked about this at Commercial UAV Expo last year, and here we are.
It is a ticking time bomb, because your drone is obviously good for the next few years unless you crash it. There are still drones available for purchase, let us not forget that. But what happens when the next model comes out and we cannot get it in the United States because it will never get approved? Do we have a replacement made here that is widely available and can be produced in the hundreds of thousands, because that is going to be the demand.
We have trained almost 50,000 remote pilots. There are half a million remote pilots in the United States today. If they all buy one drone, that is half a million drones. And we know pilots buy drones, and when the new one comes out they want it and they sell the old one. Eventually that supply dries up. Drones break, drones die, and the quality is not going to be good enough in five years. Look at a drone from five years ago. Not good. Not something you would want to use today. Meanwhile DJI is going to keep making drones and setting the bar. So where are we right now? We are probably fine. But the house is on fire and we had better get out before something happens. Where do we go? I do not have that answer. I know what we need. We just do not have it.
Ask anyone in our premium community how easy it is to get replacement parts for a five-year-old drone, or whether anyone is still updating its software. One of our team members who runs a one-man real estate operation flies an Air 3S and bought a second one, because he does not know how easy it will be to get an upgraded drone or parts for the one he already owns.
That behavior makes scarcity worse. If everybody starts doing it, it is the toilet paper of 2020. People are stocking up, rightfully so, because they do not know what tomorrow looks like in terms of availability.
Will people buy drones abroad and bring them in? Possibly. It is risky. I think you are going to see pilots who say forget it, I am buying it, bringing it home, and flying it. But your insurance company is likely not going to cover that aircraft. If you crash it, finding a replacement gets even harder. Registering it with the FAA is unlikely. And it is going to be illegal from an FCC perspective, so you are taking on the risk of a fine. For operators, that path is difficult.
Part 107 Is Fine, Part 108 Is the Question Mark
Part 107 is unlikely to change in any meaningful way. The FAA has not really hinted at anything that does not work under it. As rocky as the beginning was, with a lot of people complaining about it, I think Part 107 turned out to be pretty decent.
Part 108 is the big question mark. We know what it looks like in its proposed version, and if it goes out as proposed, the 99% I mentioned earlier will not be allowed to participate, because it is simply not designed for them. It requires a special aircraft because of the band that has to be used between the controller and the drone. Almost 100% of the drones in existence today, American, Chinese, whatever brand you want to look at, do not qualify. That makes Part 108 an elite rule for the 0.1% who are going to design a brand new aircraft to operate under it. That is your drone delivery folks, pretty much.
I am not excited about Part 108 coming out the way it was crafted. It was supposed to arrive in April and it is still delayed with no end in sight. What we are hearing from sources left and right is that it is being held up inside one of the federal departments. More than likely, what we hear, is that the proposed right-of-way rules are not acceptable to the Department of Defense. Whether that is true I do not know, but it comes from a pretty solid source.
You Are an Airspace Operator Now
Amy feels strongly about something here, and she is right. She got into the drone space through manned aviation because she wanted to help keep the national airspace safe. Her view is that if you are in this space, you need to be in it to win it. You are an aviator now. You need to understand the regulations, and you need to understand that they are going to change, because this is a regulatory environment. That is not new for any aviator.
You are an airspace operator now, and you need to be able to adapt and stay flexible. If you have never seen a FAR/AIM, get one. It is a brick. It could hold every door in your house open, and the FAA will keep adding to it and changing the interpretations inside it. As a drone operator, it is your responsibility to be a part of that successfully.
Decision Paralysis Is the Bigger Threat
Cash flow pressure is felt at every size, whether you are a solopreneur or at the enterprise level. Enterprise has deeper pockets, but they still care about money. The bigger thing Amy is seeing is decision paralysis, that hesitation, and it hits both operations and finances.
You do not want to spend all your time monitoring updates and living in the weeds of what happens next. What you should be doing is looking at your pricing strategies, looking at your financial models, running what-if scenarios, and planning ahead.
Paralysis by analysis is real, because you can look at all the crystal balls you want and at the end of the day we do not know what Part 108 will look like, and we do not know whether an American manufacturer will step into the commercial space and build something for us. We do know what we have. So go with that, look at contingency, and buy the equipment that covers you if something happens. Then, at some point, you have to make a decision. When I left the university in Florida to come here, I asked one of my bosses for a piece of advice, and he told me: do not not make a decision. Make a decision. Good or bad, do not just sit there looking at it.
Part of making a decision might be deciding you are not going to be a drone pilot, or that this is going to be recreational only and not a business. That is a legitimate answer.
People are waiting to make decisions right now, and they are not investing. They told us that in the survey we ran before the FCC came out with its final ruling. A large share of respondents said they were putting any UAS-related decisions on hold. It is the same for us, quite frankly. We are not going full in until we have a better understanding of where this lands. I am not going to spend hundreds of thousands of dollars on drone equipment until I know what is coming next, so we are using the drones we already have rather than investing in new platforms. I think that is the smart thing to do.
Operational Continuity Beats Waiting
Amy’s advice to drone service providers comes down to operational continuity. Stick with what you are doing right now. Look at your pricing models, look at your margins, and run scenarios for what you may need to do. You can only do so much until Part 108 lands, so prepare and plan ahead, or decide you are not going to do this.
You are solving a problem for your client. That is the business. And you might have to get creative. You might be using a drone today and needing something else tomorrow, because the drone is not always going to be the platform. If you build your business entirely around the drone, look at diversifying so you are doing ground and aerial work at the same time. If something happens tomorrow and everybody gets grounded, and I am not saying that is happening, you still have an out, because you have a ground camera and you can keep delivering that footage. If you are a mapper, remember we used to do maps a different way. We rented airplanes and helicopters and shot aerial photography and videography from other types of aircraft.
Get educated on what is actually available out there, and listen to people like us who keep you updated on new drones from different manufacturers, because that is what helps you make the call. A new drone comes out, it might do what you want, it is a little more expensive, and you may have to pass some of that cost down to your customers.
Amy talks a lot about building programs of value, and she is right that value is the whole game. Your customer’s value is what you need to be concerned about. That may mean niching down, diversifying your fleet, or changing your business model. Have a plan A and a plan B. You always have to adapt and find what the next thing is going to be. I spend time inside this company trying to figure out what the future looks like. As a solopreneur, you spend most of your time doing the work, but 15 to 20% of your time should go toward what you are going to offer next. That is how you diversify, and that is how you make your business more predictable and more valuable to your clients.
Raising Prices Without Scaring Customers Away
For the drone service providers who need to increase prices, Amy’s answer is one word: transparency. Communicate with your customers. Your customer needs to be a partner and needs to see you as a partner. Give advance notice, grandfather existing rates, honor existing contracts. That preserves trust, and transparency preserves trust. Offer longer warranties or faster response times. Be a person of value. When you talk about the value and explain why the rates are going up, they understand, because your customers have to raise their rates too. Price increases happen annually for pretty much every business.
You can also add more value to what you provide so the customer gets more, and adding value does not always mean incurring more cost. You could simply give your customer more throughput. The increase also does not have to land all at once. Raise prices for new customers first, grandfather the older ones, and have a conversation with your big clients: over time we are going to have to expand, so there will be an increase, and here is why. Your customers need to know that you are going to have to change platforms because you can no longer buy the one you have, and the only platform available is much more expensive.
As a client, I would rather hear that than get a Netflix price increase with no explanation. Are you giving me more shows? Is the platform going to be faster? Is the video quality going to be better? Or are you just raising my prices? As a small operator, people are more likely to understand, because you have to make a living, and everybody knows this is not an easy time. Everything is more expensive.
Protecting the Fleet You Already Have
For established providers with a fleet, protecting that investment comes down to maintenance and buying replacement equipment before you need it. It really depends on which industry you are in, because in some you will find a replacement drone that is more expensive, and in others there is simply no equivalent. That is a lot harder, and I do not have an answer beyond buying equipment now, stocking it, hoping your gear does not break, and being careful about who you hand the controls to.
Then there is the awkward part. Say your mapping drone goes down and the replacement costs ten or twenty thousand dollars when the one you had was under two thousand. How do you communicate that? Amy’s answer is to think about a photographer. A photographer is not going to go to a client and say they had to buy a more expensive camera. You still want to be transparent, but the transparency has to be about how it adds value to them. What is the outcome that adds value, and which features and benefits in the hardware and software you are buying will improve those outcomes?
That is a tough sale, because you are paying more and not necessarily getting more out of the drone. None of this is easy. It is a very difficult transition.
For more on building and marketing a successful drone business, Amy filmed three workshops for our premium community covering customer acquisition, pricing services, and marketing and sales. The link is in the video description.
This article is based on a video from our YouTube partner Greg Reverdiau. Watch the full video on the Pilot Institute YouTube channel, and find more of Greg’s work on his DroneXL author page.
