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In this section, we will take a look at the ROI calculation.

Before starting any business, a prudent businessman will make a few important calculation.

In this lesson we will discuss the ROI calculation, which is basically a calculation on the return of your investments.

We will have a look at rates and pricing for drone jobs, initial investments and how quick they may return.

In this section we will take a look at the pricing options, volume of initial investments, time it takes for return of your investments and the ways for improvement.

First, let's talk about pricing. 

From our experience you may be charging from 15 to 25 euros per hectare for different drone jobs and different application rates, for example 15 liters per hectare. If the client requires bigger rates, or the fields are very small, you might have to re-calculate your pricing based on the hourly rate.

In some cases for remote locations you might have to ask for a daily rate, since you will spend most of your time travelling.

Or if you are very unlucky to receive an order from a farmer from a remote location with various small fields, you may have to make an individual calculation.

Spraying of wineries or orchards requires large application rates and has to be calculated individually.

Needless to say, don't forget to offer a discount whenever a farmer offers a contract for substantial amount of work.

Also, we recommend setting minimum order price, which client has to pay even if the amount of work is very small. For example, our company is charging clients 250 euros per order even if the field size is one hectare.

You might ask, what is normally included in the price and how do you calculate the cost? We will talk about this in the following sections.

Next, let's take a look at your initial investments.

Currently, the cheapest drone package with good productivity is DJI T30 package priced at 15 000 euros + VAT and we will use this drone for further calculations. In addition, you will have to buy a generator for battery charging for around 3000 euros, accessories for 3000 euros, spend some money on pilot training, Civil aviation agency permit and insurance. Additional investments might be required, like renting or buying a trailer.

In any case, you should have a budget of at least 30 000 euros. This business start-up is ideal for a team of two business partners as you will have to work in pairs.

You might ask, is it possible to minimize initial investments? Yes, it is possible - you might find a second-hand drone with generator for half price, just like any other used equipment.

Generally, return on investment calculation is based on the minimum or maximum amount of hectares per drone per season. As a minimum you should be targeting 1500 hectares and maximum around 3000 hectares per season. In this case the return on investment will be approximately from 1 to 2 years. Of course, ROI depends on your work efficiency and marketing of your services, which will be discussed in the following lessons. In any case, you should have a plan for a minimum of 2 years. Why is that? Because it doesn't make sense to offer your services during a single season, as at the start most farmers will have cautious approach and only give you small fields for demo jobs. Following season they will be willing to give you more jobs, but if your company is terminated they will find someone else.

This is very important conclusion - please plan your activities for at least two years, as after first year of hard work you might not get results you expected.

Next we have some tips and tricks to improve your overall ROI.

First, please make safety your main priority. You should be working safely without any injuries or drone crashes. 

Second, focus on pilot work efficiency. Based on user experience, you would normally get from 10 to 15 hectares per hour on the DJI T30. 

Third, make sure you have two persons in one team and best possible drone technologies, as both of these factors will influence work efficiency.

Fourth, focus on the client needs - make a study which service is or could be in high demand, for example some services are subsidised by government agencies.

Fifth, make sure to focus on the jobs with lowest application rate, since these jobs can be done much faster. 

As we mentioned many times, focus on spreading jobs and bio organic products, which are main application cases for agricultural drones in Europe.

You may increase prices during the high season and sign contracts with clients before the season begins. Basically, the more contracts you sign before the start of season, the easier to plan the jobs, equipment and necessary workforce. Also, if you know the locations of client fields in advance, you will be able to get CAA approval well ahead of time. 

 What can we say in conclusion? We recommend setting the price at some average value, for example 20 euros per hectare, and as the season goes you will be able to increase or decrease the price, or offer discount to big clients.

We don't recommend buying more than one drone, unless you are 100 % sure you will have enough workload for both of them. We will discuss how to make drone workload more efficient in following lessons.

We don't recommend starting such business, if you don't have budget and financing to run the company for at least two consecutive seasons.

We do recommend starting such business to companies, which already provide some agricultural services to a group of clients in farming as they have easy approach to clients.

If you don't have any idea what price you should set, look for the average tractor spraying pricing in your area. Let us know in the comment section if you have any other concerns or questions.