JOE3223

The Challenges of Running A UAS Business

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What's good, my fellow UAS Entreprenaurs? As I'm sure you all know, the UAS community is embarking on some EXCITING new times and opportunities, that continues to not only revolutionize how different industries operate, but more importantly, how we provide top notch and very needed services to our consumers. 

However, with that being said, I'm sure many of you regardless of how long you have been operating your business, have or are, experiencing different challenges that I'm sure has provided some discouragement. So my question to all of you is, WHAT CHALLENGES are you or have you faced running your UAS business?

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Great question!  Hopefully people will share thier thoughts and experiences.  

In 2002 my partner sold a company that we founded to Apple and I was fortunate enough to "retire."  Prior to my almost 20 years in the entertainment industry, where digital imaging and photography were at the core of my career I was an Army aviator, flew UH/AH-1's. Like a lot of drone entrepreneurs,  I thought this industry would unite all of my experiences and passions into one business.  That turned out to be only partially the case.  

In 2008 there weren't any off the shelf drones that were stable and could lift enough so I started building my own multirotors.  It became apparent that in order for drones to have any real value in the collection of aerial data that the cost and weight of the instrumentation required exceeded potential customers willingness to fly on a drone with $10 Chinese components.  So we started a company, Aerial Alchemy where we have spent the last three years engineering out most of the hobbygrade components.  

This would be a success story if it were simply an issue of building a better mousetrap.  A real challenge for a lot of companies in this nascent industry is access to capital.  Because of DJI, VC's have been reluctant to invest in the development and manufacturing of drone hardware. This has had a profound effect on competition and has probably slowed this market by two or more years.

A lot of people don't realize the effect the military ban of DJI is having.  Most view it from the perspective of how it might effect DJI sales, I'm sure it will have a significant effect.  However, it had an almost immidiate effect on access to capital.  VC's who just a few months ago would not consider investing in hardware are now investing.  Companies that were only considering purchasing DJI are not only considering an alternative, they're considering the alternative first.  This is resetting expectations and enabling real competition.

Its too early to know for sure, I'm sure DJI will be fine but for us, and companies like us, early indications are this is really opening up opportunity. I'm sure that opportunity will effect payload developers, service providers, integrators and resellers, filling in a lot of the holes in the commercial drone eco system. 

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Yes, I work for food!

I'd really like to broaden this sort of discussion to people who are interested in the eco system that will eventually surround this industry.  Not everyone wants a "drone" business, but lots of people might be interested in "supporting" this industry and might very well make more money than those "drone" companies.

I posted this in another thread:  https://www.bloomberg.com/news/articles/2017-08-28/drone-king-dji-has-a-serious-pentagon-problem

Given the scope of what this might represent, can you imagine the supply chain challenges that this will represent?  Politicians often talk about manufacturing here in the US, here's the perfect chance.  People think that it's too expensive, we moved the manufacturing of our flight controllers from Bulgaria to the US and save money.  When we were producing a run of 50 -100 controllers at a time it was manageable, but as we've approached 1000 per run we were taxed at a much higher rate so we could no longer afford to manufacture there, it became less expensive to manufacture here. 

That is probably the case with just about every aspect of the drone and the payloads.  Can we compete with toys manufactured in China, no, but we're in a different market where the cost of the drone is measured in the value of the data it collects.

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55 minutes ago, Av8Chuck said:

Can we compete with toys manufactured in China, no, but we're in a different market where the cost of the drone is measured in the value of the data it collects.

YES, wholeheartedly agree.

I'm wondering if we'll see more DJI acquisitions over the next few years as they fight to stay relevant / maintain their market position. They're valued at $10 billion, and while I don't know what kind of cash they have on hand, I'd like to think they're in a position to make those kind of moves. All we've seen on the acquisition front from them so far is their majority stake in Hasselblad, but I think that's it.

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DJI is mostly vertically oriented and closed, they seem to think they can do it all themselves rather than acquire companies.  Don't know about their valuation, I believe that they did $1.4B in revenue last year.  My guess is that commercial drone sales account for less than 10% of total sales.  

Keep in mind that they are the market leader in consumer drones and if they have half a brain that's the market position they'll protect.  They should spin off the commercial products in favor of selling tens of thousands MAVI's, SPARK"S and Inspires.  Any discussion or continued pursuit of commercial products that provide such a small percentage of your income is a bad idea.  

Apple used to be Apple Computers.  They dropped the "Computer" from their name and ceased development of just about all their commercial hardware and software.  They no longer provide pro level software, storage area networks, servers etc..  

I'm guessing Hasselblad was a fire sale.  They bought them because they thought they'd get a bounce in the market but why would you buy a $60K 50MP medium format digital camera when you can buy a 45+ and 50MP full frame DSLR from Sony and Canon for under $4K?

 

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Lots going on.  

I'm loosely following the Slack group and it's being reported by one of the engineers that there has been a brain drain going on at dji since just before the Mavic.

Quote

From what I understand, almost 50% of the coders that used to work on the P4 platform have been laid off ...

that's a serious brain-drain
because the remaining coders are on Mavic, I2 etc.

most were let go -before- the release of the Mavic


it's just that the attrition has continued over time .. some have even gone to work for GoPro


So, there's that
( Which is why I know about it in the first place --- trying to get more information through social engineering )


The first place to turn are people who know the code -- but who are no longer working for DJI

 

Edited by Dave Pitman
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I think the exodus started with the problems with the Wookong-M and the Zenmuse gimbal.  There was definitely something wrong with the WKZ that I don't think was ever fixed and then the A2 picked up where it left off.  The software might be completely different but DJI just doesn't seem to learn from its mistakes.

I have no idea what the issue was with the Zenmuse, it's a great gimbal that just kind of stopped, then they released the Ronin and it's comparatively a piece of crap.  Again, not continuity in their product line.

The idea that you can't use a P2 battery in a P3 or P4 or an M100 battery in an M200 or M600 etc.. For a consumer who doesn't care about those sorts of issues that's OK, but for commercial operators where scalability is important this is simply unacceptable.

It's like every model of drone is the first drone they've ever designed.  

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18 hours ago, Av8Chuck said:

<snip>

It's like every model of drone is the first drone they've ever designed.  

Yep.  They developed a modular payload connection with the Inspire 1 and then abandon it for a new one on the Inspire 2 leaving many with expensive thermal cameras blowing in the wind.  Terrible development choices.

I have always said that it seems like all of dji project teams are run independently from each other, it makes no sense.  They come out with accessory products that immediately are in need of adapters to fit the current generation of products in many cases.  It gives the perception that their success can be attributed to an equal dose of good innovation and good luck because a lot of what they do is shoot themselves in the foot constantly.

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I'd like to respond to Joe3223 re the challenges of running a UAS Business....

.....It was supposed to be the greatest thing since the light bulb. I was going to get slammed with business, it was....."a website". However, strictly speaking only for myself, in my experience I'm finding that no matter how sophisticated your web site or clever your SEO expert is, at the end of the day it cannot make personal contact of any kind, provide true traditional customer service or prospect for new business.

Unless one thoroughly understands html codes, web crawling, SEO, directory listings and etc., one will always be held hostage by an I. T. employee, notwithstanding the fact, that unless the service one hires is completely trustworthy, there seems to be no way to vet the info they are submitting re the site analytics and performance....it's all in cyberspace and if it's not working out....there's always some cyber rhetoric as to why.

For the record, my site does locally occupy the number one google listing slot. And the web team that works on it has impeccable credentials. According to Google analytics we got a 1000 hits last month (August). But no calls. Not one.  We can discuss cosmetics, content, SEO and the like but its becoming abundantly clear to me, that "Old School" prospecting and personal contact is the most formidable way to capture new business.

Every client we have landed thus far I have literally gone out to a construction site (on a Sunday), shot aerial footage, put together a report consisting of both video and stills, researched how to contact the upper level management of the construction company and sent said report (via drop box) to any exec that may be connected to the project with follow ups until I get some kind of a response, to include going back to the site to find the project manager and follow up or gain more insight as to how to land this elephant. 

Now that approach can be dangerous. When I go out on a prospecting Safari if you can bag the elephant you can eat for quite some time but sometimes it can land on you when it falls. As in the case of the prospect responding positively but needing a service I can't provide like 3D imaging or thermal searches. Nothing feels worse then having to retreat locked and loaded, knowing the elephant is right there for your best shot.

Yes, the "Old School" way is labor intensive and the research can be tedious but the results have been undeniable (for us). In my humble opinion, web sites are a great advertising vehicle but the car can't drive itself. I had to personally put the wrench work in and drive it to the finish line myself.

Being "Old School", business 101 always dictated that businesses succeed by employing principles that have proven successful over the test of time. I haven't seen a web site that can take the place of personal contact, prospecting or servicing.

If Joe3223 or anyone out there can share some insight and help me cast off my ignorance re the above, I sure would like to hear from ya....I'd certainly appreciate a better way to work smarter and not harder....

  

 

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3 hours ago, L&L DRONE VIEWS said:

Every client we have landed thus far I have literally gone out to a construction site (on a Sunday), shot aerial footage, put together a report consisting of both video and stills, researched how to contact the upper level management of the construction company and sent said report (via drop box) to any exec that may be connected to the project with follow ups until I get some kind of a response, to include going back to the site to find the project manager and follow up or gain more insight as to how to land this elephant. 

I love this hustle. This is what it takes.

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23 hours ago, L&L DRONE VIEWS said:

I'd like to respond to Joe3223 re the challenges of running a UAS Business....

.....It was supposed to be the greatest thing since the light bulb. I was going to get slammed with business, it was....."a website". However, strictly speaking only for myself, in my experience I'm finding that no matter how sophisticated your web site or clever your SEO expert is, at the end of the day it cannot make personal contact of any kind, provide true traditional customer service or prospect for new business.

Unless one thoroughly understands html codes, web crawling, SEO, directory listings and etc., one will always be held hostage by an I. T. employee, notwithstanding the fact, that unless the service one hires is completely trustworthy, there seems to be no way to vet the info they are submitting re the site analytics and performance....it's all in cyberspace and if it's not working out....there's always some cyber rhetoric as to why.

For the record, my site does locally occupy the number one google listing slot. And the web team that works on it has impeccable credentials. According to Google analytics we got a 1000 hits last month (August). But no calls. Not one.  We can discuss cosmetics, content, SEO and the like but its becoming abundantly clear to me, that "Old School" prospecting and personal contact is the most formidable way to capture new business.

Every client we have landed thus far I have literally gone out to a construction site (on a Sunday), shot aerial footage, put together a report consisting of both video and stills, researched how to contact the upper level management of the construction company and sent said report (via drop box) to any exec that may be connected to the project with follow ups until I get some kind of a response, to include going back to the site to find the project manager and follow up or gain more insight as to how to land this elephant. 

Now that approach can be dangerous. When I go out on a prospecting Safari if you can bag the elephant you can eat for quite some time but sometimes it can land on you when it falls. As in the case of the prospect responding positively but needing a service I can't provide like 3D imaging or thermal searches. Nothing feels worse then having to retreat locked and loaded, knowing the elephant is right there for your best shot.

Yes, the "Old School" way is labor intensive and the research can be tedious but the results have been undeniable (for us). In my humble opinion, web sites are a great advertising vehicle but the car can't drive itself. I had to personally put the wrench work in and drive it to the finish line myself.

Being "Old School", business 101 always dictated that businesses succeed by employing principles that have proven successful over the test of time. I haven't seen a web site that can take the place of personal contact, prospecting or servicing.

If Joe3223 or anyone out there can share some insight and help me cast off my ignorance re the above, I sure would like to hear from ya....I'd certainly appreciate a better way to work smarter and not harder....

  

 

L&L Drone Views, I understand where you are coming from and thank you for sharing your candid insight. As for myself, I'm learning and getting a true feel regarding professionals in the business such as yourself and others, who have shared their experiences regarding this issue and others that has posed challenges to the dreams many of us share, of either developing or further developing these awesome and useful services. Recently, I talked to a business consultant/instructor who gave me some tips. He also handed me this book to read called, "All In Start Up". Now let me be clear, im not promoting anything here, but I just thought I would mention that this book I'm reading has some potentially helpful tips that may or (may not) give you or others some helpful tips regarding our different and possibly simular plights.

An to be honest, in my opinion, "The Old School Way," is not bad at all. 

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Regarding websites and SEO:

SEO-focused companies treat websites as though they are lead generators. In my experience (having worked as the SEO expert at a website company), a good website is little more than a business card or portfolio. Most people are going to find you through word of mouth, go to your website to reassure themselves that you are reasonably competent, and then either call you or a competitor. A website will most likely not attract business on it's own. However, that said, a good website goes a long way in SUPPORTING the sales process. It lends legitimacy to smaller businesses the way a suit and tie and business card lend legitimacy to a business professional. If it were me, I would focus less on SEO and much more on google PPC ads and facebook ads. You will get much more bang for your buck with those methods. But like you said, nothing beats good, old-fashioned hustle. Pounding the pavement and wearing out your shoes (both literally, and over the phone) is a tried and true, if not easy or appealing, method.

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2 hours ago, Jason Clark said:

Regarding websites and SEO:

SEO-focused companies treat websites as though they are lead generators. In my experience (having worked as the SEO expert at a website company), a good website is little more than a business card or portfolio. Most people are going to find you through word of mouth, go to your website to reassure themselves that you are reasonably competent, and then either call you or a competitor. A website will most likely not attract business on it's own. However, that said, a good website goes a long way in SUPPORTING the sales process. It lends legitimacy to smaller businesses the way a suit and tie and business card lend legitimacy to a business professional. If it were me, I would focus less on SEO and much more on google PPC ads and facebook ads. You will get much more bang for your buck with those methods. But like you said, nothing beats good, old-fashioned hustle. Pounding the pavement and wearing out your shoes (both literally, and over the phone) is a tried and true, if not easy or appealing, method.

Well said, @Jason Clark. I love Google + Facebook ads, and while they can get expensive if you don't know what you're doing, with the right approach and deliberate geographic targeting, it can yield fantastic ROI as a marketing / sales channel. The mistake most people make when it comes to this stuff is that they're asking for someone's hand in marriage without having a few dates / basic courting process. Meaning, instead of driving a Facebook ad to a sales page, it's a lot more effective to demonstrate thought leadership / address potential objections / teach / consult and to send someone not to a sales page, but to a blog post, a webinar you're doing on drone regulations, a free guide you put together for drones and real estate, etc. It's important to take a step back and to understand human psychology and the buying process, and to craft a marketing and sales process around that. To your point, the website won't drive sales by itself, but it can do a good job supporting the marketing > sales funnel.

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Excellent reply, @Alan Perlman! Yes, Content is definitely King. If you have the knowledge and resources, establishing yourself as a thought leader and writing an informative and helpful blog definitely increases the value of your site. But that method can take a while before you are noticed by the public and/or google. However, most people, for whatever reason, simply use their website as a business card or brochure. For those people, ads are critical. 

That said, I worked at a website company for several years and one thing I noticed is that most business owners take the knowledge and expertise they have for granted. People tend to assume that "everybody knows that" with the simpler areas of their business and think that because they aren't the foremost scholar in their field, that they can't offer any insight. It's easy to forget that the vast majority of the general public doesn't know ANYTHING about your field, even the basics. I always had to encourage business owners to write about the stuff that the think "any idiot knows." LOL

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On 9/2/2017 at 2:48 PM, L&L DRONE VIEWS said:

Every client we have landed thus far I have literally gone out to a construction site (on a Sunday), shot aerial footage, put together a report consisting of both video and stills, researched how to contact the upper level management of the construction company and sent said report (via drop box) to any exec that may be connected to the project with follow ups until I get some kind of a response,

Love that hustle! 
From what I've seen, far too many people are pushing that idea that a drone business is all about flying and processing data, but no one is really talking about the prospecting and lead management side of things which has to be a top priority for any service business. 

do you @L&L DRONE VIEWS have a specific 'recipe' or pipeline process when you do this type of prospecting, or are you literally just going out and looking for local construction sites with possible opportunities?

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Hello cdyoung 42....Yes, there is a method to my madness and I'll try to keep the response as succinct as possible. If I'm on the road handling  for example domestic chores and see a construction site, I'll shoot a photo of the company info which is usually affixed to the security fence or sign post. Then I research the company to find where I can contact the principles. I'll then make a decision as to whether or not I'll return to shoot a progress report and send it on it's way. There are several considerations re same before I invest in the process.

The more regimented process of prospecting consists of either obtaining a directory of construction companies in your region, or trade publications, associations or even the net which will list the top 25 companies. Dependent upon size, corporate locations and etc., I would determine if contact is warranted. 

In most cases those major companies have a web site that will include in their content what projects they are currently working on. Some even provide the site address, architect, bid amount, projected finish date, lender etc. This is golden for not only can the construction company become a potential client, but I will also solicit the architect and lender to see if they can utilize our services on future projects or other projects they are currently connected with and if I can, I would also send them a progress report re the project they are currently engaged in. 

Once again, this type of prospecting can be labor intensive, however, it will help you cut thru the qualifying process of which companies are worth pursuing. I hope this helps. There are several other factors involved in qualifying these potential clients but this missive would turn into a novel the size of War and Peace. Good luck and successful prospecting! 

 

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3 hours ago, L&L DRONE VIEWS said:

Yes, there is a method to my madness and I'll try to keep the response as succinct as possible

Very interesting method.

It is definitely labor intensive up front, but I'm sure it will have huge returns once you build a reputation in a certain market and start to see repeat/referral customers that come from the work you put in on this process.

Then you just need a good software to track all your bids that are in process, scheduled flights, etc. to stay on top of all the workload. 

Thank you for sharing! 

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I think one of the challenges of running a UAS company is getting away from the mentality of being a UAS business and more of end product service provider that offers a full spectrum of services beyond the flying system.  When I started 7 years ago it was all about the drone.  That was for the exact same reasons AV8Chuck mentioned.  You could not just get one that was easy to fly and ready to go with some minimal setup.  You were soldering and integrating components to try to piece together a reasonable platform to do a job.  You did not have to be an engineer.  However, you needed to have some technical understanding on how the systems worked.  You were constantly tuning and tweaking the systems to handle a variety different operations.   To get quality components came at a cost.  Even with the top grade hobby components, you did not have a true professional system.  Our first camera gimbal was driven by belts and pulleys attached to hobby grade servos.  The quality of the stabilization and the camera movements were very poor.  Even when you had the system tweaked to the most optimal settings you had to a bunch of post stabilization to do. 

This is not the case anymore.  I can do ten times the professional work now with a Phantom 4 Pro than I could with the very first large octocopter that I started out with.  Because of this, the barrier to entry in the equipment is low.  And due to the 107, the barrier in the regulatory environment is also low.  The price of admission all around the board is very low.  When you have a low barrier to entry to any market you now have to step up your game.  You have to provide the end product better than the guy down the street.  This means you need to understand the fundamentals of what you are trying to do better than the other guy.

Many novices trying to get into this do not understand that.  They think if they get their 107 and go out and get a Phantom or like drone, put a website together that clients will come flocking to your door.  That is simply not the case.  In many cases most newbies do not know how to even use a camera without being auto functions.  Many times I laugh when I see posts where they do not understand why their photos or videos do not come out looking vivid or crisp like some other guys post.

So the lesson there is if you are looking to do aerial photography.  Learn photography and become a photographer if that is what you want to do.  There are lots of tutorials online and lots of local photography groups to join and learn the concepts. If you think you do not have the aptitude for this, partner up with someone who does.  This same concept goes to the other applications of these.  If you want to data gather for mapping, get with someone who knows that aspect and get appropriate equipment.  This goes my point as a new challenge and that is internal hiring to established job.

Now because the barrier to entry is fairly low.  A particular industry may decide it is more cost effective to use a drone for an already established function.  The power company who already employs a staff to do line inspections and understand all aspects of it.  They may see more benefit in simply investing in the equipment themselves and getting their staff trained to handle the flying appropriately.  Now this is in flux at the moment as there is not enough data out there to truly gauge the cost benefit ration of doing one versus the other.  On the surface it looks very low.  Now they will have to factor in what makes for their business model.  

Does it make sense to spend $300 a pop for a bunch of employees top get 107 cards? Now you are talking having to possibly set up an adhoc flight department with a competent manager who handles all of the back shop regulatory issues and is the oversight.  This is probably necessary to ensure your staff is properly trained and is being held to the arduous standards, so they do not go out and do something that could result in fines.  Plus large scale operations will need an internal standardization and safety system to lower insurance premiums.  The FAA sort of has set this system up with having the responsible person to adhear to the provisions of waivers and airspace COA's.  Now now that manager maybe someone currently at a supervisory level, or it may require an additional hire.  

These are the unanswered questions.  Maybe if you do a lot of inspections, like 100 in quarter in your system.  The cost of an additional service provider could run a couple thousand a pop for each inspection plus the labor that you are already providing on site.  It may make sense to get a competent flight manager at a reasonable yearly salary to develop and run flight department.  If you run a shop that the volume of that work is fairly low it may make sense to get the outside guy.  You require him to have a good liability insurance with a named cert and waiver of subjugation and he does the job cheaper than doing  it internally.  Those are the cost benefit that will need to be done to find the optimal outcome.  In the mean the Drone Service Provider will be somewhere in the middle.    

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Most people since the internet started have been making the "Build it and they will come" mistake. A website and ALL of your social media presence are part of your marketing practices. These will bring you exactly ZERO business. Only your SALES efforts (cold calling, chasing customers at events, making partnerships in your community, doing free work for low-budget/no-budget clients, etc...) will get you business. Your online presence will HELP you to close deals because it demonstrates your proficiency, but it WILL NOT find you new customers at all. 

The biggest challenge for me right now if that everybody thinks the drone media and engineering products are SUPER cool, but nobody wants to pay. Realtors have offered as little as $25/site for photo and video work. It takes a long time to wade through the goofball clients to find the real-deal clients that can make your business run. 

My recommendation is live LEAN, talk to everyone in the world, help poor people and businesses that have no budget for free to build goodwill in the community, shoot exciting local sites and post them to social, and do work no matter if you're paid or not. That way you're practicing your craft and building your skill and portfolio, and you can even sell that work later when people need stock images and video when the weather is ugly in the off-season. 

It's a long road, but the work is there if you can stick it out and earn the right people's trust.

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Amen to Drone Dave....some of the responses I have read re the running of one's drone business have truly been informative, eloquent and technically sophisticated but at the end of the day one still has to procure clients and Drone Dave is spot on.

A web site and social media can't do it for you. I don't actively solicit real estate business because very few agencies will invest in the service because it comes out of the agents pocket and there isn't by their way of thinking enough money in the deal to justify the cost. In most cases they just don't understand the "cost of doing business" and complain as to why the property has no appeal and still sitting on the books unsold.

What has worked for us in the past is contacting the few but most high end agencies that are handling residential properties of at least a half a million and over and/or commercial buildings for sale or lease. They understand the significance of aerial shots and how the right virtual tour can actually add 2-5% to a listing price. Getting in the door is easy. Just offer a trade. If they will let you shoot a few of their high end properties you will (free of charge) provide them with the unedited video and/or stills that they can utilize in their MLS listing or web site. If they ask or want an "edited" tour then you can talk rates. 

There's no guarantee they will sign on for any services but like Drone Dave has pointed out you have procured content, gotten more flight  proficient and made a contact that can refer or call you at a latter date. All the available technology is great but it will never take the place of utilizing sales and marketing principles that have proven successful over the test of time.

One can possess all the technical skills to build whatever flight platform they want or have enough financial capability to buy the most advanced craft available with all the optional extras..... but if you don't clients....all you've got  is a hobby. 

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