Drone Program Startup – A Cost Benefit Analysis

Drone Program Startup – A Cost Benefit Analysis

What DOES it Take to START A Drone Program?

By Mark Watkins, November 10, 2021

The Cost / Benefit Analysis

There are countless examples of efficiencies that can be realized when a company decides to run their own drone program. In many cases, the demand for flying is just so specific or frequent, that it only makes sense for a company to do it themselves. Having said that, no matter what the size or complexity of your drone operation, there are certain considerations that every operator should be aware of. In this article, we’ll show you how to decide if an internal company drone program makes sense, or if that is something that would be better outsourced to a third party.

“To build an in-house drone program, we estimate that your initial costs will be between $32,600 to $75,100 for your first drone. Each additional drone will have an initial cost of $12,600 to $55,100.”

Drone Program Cost Factors

To make an informed decision, we’ll start by pricing out the costs that should be considered when planning and building an internal drone program. There are 6 major categories that we’ll consider: 

  1. Training
  2. Insurance
  3. Compliance
  4. Equipment
  5. Pilots 
  6. Administration

It’s important to note that the prices that we have used for each component of a drone program may vary compared to what your actual costs would be. Tinker with our data to tailor the results to more accurately reflect your actual costs.

Training

In Canada, whenever you are flying a drone weighing between 250 grams and 25 kg you are required to have either a Basic or Advanced Drone Pilot Certificate. For those thinking of starting their own corporate drone program, the Advanced Drone Pilot Certificate is likely what you will want for a few reasons. First, if your employees are flying around thousands of dollars’ worth of equipment above millions of dollars’ worth of assets, then you probably want a higher level of training. Second, the odds are very good that your insurance company will probably also share this line of thinking with you. Finally, if you are flying your drone near an airport, then your decision may already be made since you cannot fly a drone without an Advanced certificate within about 5.6 km of an airport or 1.8 km of a heliport.

Using our training costs as a sample, you can expect to pay $600 per employee to get their Advanced Drone Pilot Certificate. For renewals, we offer a course that is $50 and this must be done every 2 years after gaining your initial certification. Our Advanced training is approximately 20 hours of coursework, plus a few additional hours of studying for the exam, and then the time required to complete the in-person flight review, usually a couple hours including site travel.  Additionally, if your work involves operating around uncontrolled aerodromes, it might be prudent to consider getting your ROC-A radio certification, which typically costs around $50 for the online exam.

Insurance

There are a number of factors to consider when looking at insurance for your drone program. The three most relevant types of insurance are; Aviation Liability; Commercial General Liability and Errors and Omissions and they cover you for different aspects of your operation.

Insurance types:

  • Aviation Liability: used to protect against property and personal damages resulting from operating the drone. Hull insurance may be included as part of the Aviation policy and that protects the drone in the event of damage.
  • Commercial General Liability: used to protect against bodily or personal injuries that may have resulted from negligence. Additionally, this insurance can protect against damages from slander or false advertising.
  • Errors and Omissions: used to protect against damages resulting from data that was provided while using the drone. Essentially, if costly business decisions are made from inaccurate drone data, then this insurance can cover financial losses that resulted from those decisions.

Having a compliance program may get you a slight reduction on your policy, but more importantly, without it you may not be eligible for Errors and Omissions (E&O) and Commercial Liability Insurance. A compliance program can make you a more desirable candidate for E&O and Commercial Liability insurance.

Insurance costs depend on a number of factors, including which types of insurance you decide to use, annual revenue of your company, experience, safety and many others. Depending on what insurance you decide on, you could expect to pay between $1,000 to $6,000 annually to insure a single drone for your business. Keep in mind that our numbers may not match what you are able to find, so please do your own research!

Compliance

Compliance is all about how you are meeting or exceeding the regulatory requirements. A great way to demonstrate your adherence to the rules is to have a document that states how your company intends to comply with the regulations and to have a way to verify that you are meeting the standards you have set in your document. Finally, you should also have a way within your compliance system to follow-up on failures of the system to try to address the root cause of an issue.

 

If you ever end up having an incident or an accident, then you will be required to produce records surrounding the flight. By developing and implementing an internal company compliance system, you can help your company stay compliant with the regulations. A good compliance system has many components, and we can help you develop a Company Operations Manual, Standard Operating Procedures and a robust auditing system. Contact us for more information about these services.

 

On the topic of pricing, to develop internal documentation would likely require several months of time if it were tasked to an internal staff person. For a company with limited aviation experience to develop their own compliance documentation, I’d expect they’d spend $20,00 to $30,000 on wages on months of work to develop a product that would be potentially inferior to what a competent drone consulting company could produce.

Equipment

The cost to purchase your own drone gear could vary a great deal, depending on your requirements. Some factors to consider when you are deciding on a drone are:

 

  1. What equipment or sensors do you need on your drone?
  2. Is your drone capable of flying in the weather conditions where you will be operating it?
  3. Costs

 

Drones can be used for a wide range of tasks. For example, you can detect water damage using thermal sensors, map large areas with high precision using RGB and LiDAR and you can detect the health of farm crops using multi-spectral imaging. The cost of a camera is reflected in its capabilities and the price of the drone will vary largely based on what type of camera is (or can be) mounted to the drone. 

Remember to check what weather limitations apply to your drone before you make your purchase. If your drone is limited to operating at 0°C or above, but your intended drone site spends half the year below freezing, this would be an issue for a year round operation. Remember to check the temperature and moisture limitations that apply to your drone!

 

Finally, pricing for drones that would be useful in various contexts can vary in price from $3000 to well over $30,000. When pricing drones, it would be wise to have some portion of money set aside for fleet renewal. Perhaps something like 33% of the cost of the new equipment set aside per year so that you can have a renewal program to keep your equipment up to date and in good working order. This fund can also help with repairs or replacements for damaged or unusable equipment.

Pilots

To maintain an internal corporate drone program, you will also need to have drone pilots. Some companies will decide to combine pilot roles with other company duties and others will make those roles separate. A quick search on Workopolis shows a broad range of salaries for drone pilots in Canada. The salaries tend to vary depending on the industry, but out of about 20 advertised jobs, the salaries range from $40,000 to $110,000. Obviously this cost would need to be factored into the equation also.

Administration

With any good drone program, there is a fair bit of administrative work to keep things up and running. You will need to keep track of:

  • Pilot certificates
  • Pilot rest
  • Insurance
  • Permissions
  • Mission planning documentation
  • Maintenance
  • Incidents or accidents
  • Safety documentation

If your company has created its own drone program, then the odds are that they have enough flying to justify the expense. This amount of flying will generate a fair amount of paperwork. Managing and tracking this can justify a new administrative position. Based on our numbers, for every 10 drone pilots employed by a company, typically there is one administrative person on payroll. Keep in mind that your operation may vary from this average, but one way or the other you should be prepared to incur some administrative expenses from an internal drone program. Administrative positions in Canada listed on Workopolis tend to range between $40,000 and $75,000.

In the tables below, the admin and pilot costs are calculated on a per drone basis, with the assumption that managing 10 drones would be a full-time administrative position, and so a single drone in an organization would make up 10% of an employees workload and pay.

Initial Costs

Training

$600

Insurance

$1,000-6,000

Admin

$4,000-$7,500

Pilot

$4,000-$11,000

Compliance¹

$20,000

Equipment

$3,000-$30,000

Total

$32,600-$75,100

Recurring Annual Costs

Training

$50 per 2 years

Insurance

$1,000-$6,000

Admin

$4,000-$7,500

Pilot

$4,000-$11,000

Compliance²

$1,000

Equipment

$1,000-$10,000

Total

$11,050-$35,550

 

1) Initial compliance documents would be approximately $20,000 to $30,000 regardless of how many drones you have in your fleet and would not increase significantly with additional drones. All other categories would increase within the range of prices for that category on a per drone basis.

2) Recurring annual compliance costs estimated per drone.

Initial vs Recurring Costs

To build an in-house drone program, we estimate that your initial costs will be between $32,600 to $75,100 for your first drone. Each additional drone will have an initial cost of $12,600 to $55,100. The recurring  costs per drone would be between $11,025 and $35,525. When you break the prices down in this way, it becomes pretty apparent that for an internal drone program to be financially viable really comes down to how often you will fly your drone and how much the same data would cost if it was gathered from a third party service provider.

Drone Service Providers

As an alternative to using your own equipment and employees, you could  hire a drone operator that can do the jobs on your worksite for you. These services will vary in cost based on the capabilities and equipment required for the particular job. Prices could range from a few hundred dollars to thousands. For high end gear that can provide very detailed mapping data, for example, you may pay $2500 or more for a full day of mapping work.

 

Keep in mind that price is not the only factor. Using a third party service provider may be less expensive in some instances, but you also need to have confidence that they understand your job well enough to deliver the data that you need. Availability of qualified pilots may also be an issue in some areas as this technology continues to be incorporated into various Canadian applications.

 

If you’re looking for someone to complete a drone job for you, remember that Coastal Drone Co. also operates the Remote Pilot Network. We can connect you with pilots in your area to get your drone flights accomplished.

Conclusion and Solutions

When deciding if an internal drone program is right for your organization, be sure to consider all of the factors that we discussed above. Up until this point, how was this data collected? What were your data collection costs prior to using drones? If the ability to gather this data is new, then what value does it create and what is that worth for your organization? If you aren’t sure if an internal drone program is right for you, then maybe dip your toe in with a third party service provider. This is a less expensive way to see some data, and decide if it creates value for your organization.

Although there are a lot of variables and a wide range of prices that apply to those variables, hopefully this article has shed some light on the sorts of costs you could incur by creating a company drone program. Coastal Drone Co. offers training, compliance solutions and remote pilot services and we’d love to help you if you intend to incorporate drones into your business. Contact us if you would like any help with the services that we offer and we’d be happy to help.

Managing a Drone Program Can Be Simpler - Ask Us How

 

Reduce your costs with Coastal Drone as we help you develop a comprehensive drone compliance program. We have the expertise and aviation experience to be able to help you build manuals, procedures and policies that will make sense for your business. Best of all, we’re confident that we can build a compliance package that will work well for your operation for less than it would cost for you to do it internally. 

We’d love to hear from you, drop us a message with your thoughts or ideas and we’ll be in touch as quickly as possible! 

 

     

    Site Survey Primer

    Site Survey Primer

    Blog

    Site Survey Primer

    Site Surveys? No Problem.

     

    We get a lot of questions from people wondering how to properly conduct a site survey. From physical obstacles, to airspace restrictions, to weather and site safety considerations, the process of a site survey can seem a little overwhelming!
    Wonder no more!
    We’ve made a video that will run you through the site survey requirements, resources to use and how to efficiently and safely prepare for flights. Check it out below!

    For more information on site surveys, flight planning and more, check out our Basic and Advanced flight schools!

    Meet the Team: Alec

    Meet the Team: Alec

    Blog

    Meet the Team: Alec

    At Coastal Drone Co, our team is what sets us apart from the rest. We are proud to have some of the most knowledgeable, passionate, and experienced people in the business with us. We are excited to introduce you to the people who work every day to help you become the best drone pilot you can be!

    The next team member to be featured is our sales manager Alec!

    Hey I’m Alec,

    I’m a commercial helicopter pilot and sales manager with Coastal’s sister company SKY Helicopters. I got involved with Coastal in the summer of 2017. The market for training has always been interesting to me and led by Kate, Coastal Drone was moving in a direction that I saw to be disruptive. Being almost fully online, the scalability combined with the professionalism of the management and staff was a killer combination. As an aviation enthusiast I’m drawn to the potential of RPAS operations also as it relates to traditional manned aviation industry. I have a background working in startups and my passion for entrepreneurship is a great fit for Coastal and the management team. 

    Most excited for what we don’t know. We are moving and changing and evolving so fast that next month we could be looking at a totally new vertical to pursue and we’re getting in on the ground floor in the industry. We’re on the training side an as the technology and aircraft evolve, the training will evolve with. I’m excited to be right at the forefront of that space. 

    Check out the other members of our team!

    Kate Klassen

    How to Get Your Advanced Certification

    How to Get Your Advanced Certification

    Blog

    How to Get Your Advanced Certification

    If you are someone who enjoys flying drones, you’ve probably been looking forward to summer all year long! As the good weather approaches, flying conditions get more reliable and the opportunity to do cool things with your RPAS is always nearby. As of June 1, Transport Canada has released new regulations that affect all RPAS heavier than 25 grams. If you aren’t familiar with the rules, it can be difficult to understand exactly what kind of certification you need for the flights you want to do. Fortunately, we at Coastal Drone Co. have put together a handy guide to help you learn exactly what you need to get ready to fly!

    RPAS certification has been split into two categories depending on the type of flying you plan to do. We will be covering advanced certification here. If you’re looking for information on the basic certification, it can be found here.

    Advanced Certification

    While the basic certification may work for some operations, the limits of the basic certification may be too restrictive for the type of flying you plan on doing. If that is the case, then you will need an advanced certification. The advanced certification requires an extra step to get certified, but it allows you to legally fly in a wide range of areas that would be prohibited under basic certification. You will need an advanced certification if you plan to fly:

    • Less than 30m (100 feet) away from any bystanders
    • In controlled airspace

    If you plan flights that do any of these, you will need an advanced certification in order to remain legal. Follow the steps below to get your advanced certification.

    1. Register your RPAS:
      The first step you need to do before you fly this summer is register your drone with Transport Canada. Registering is a quick process that only costs $5 to complete. Once you have registered, you will be given an identification number that you need to put somewhere on your drone. This will allow your drone to be identified in the event of a flyaway or accident. You can register your drone here 
    2. Take RPAS Ground School Advanced
      While not mandated, Ground School comes highly recommended by both Transport Canada and Flight Reviewers (and us, of course). RPAS ground school advanced takes 20 hours to complete and covers all of the knowledge requirements specified for Advanced Category drone operators to fly safely and legally. It covers a wide variety of topics like meteorology, radio operations, and the regulations that you need to abide by. Ground school will teach you the skill you need to know in order to fly, but some of the questions in the exam can be unexpectedly difficult. Fortunately Coastal Drone Co has an exam prep course to hep prepare for some of the more difficult problems you might encounter. Exam prep is again not mandatory but has some similar questions to what you might encounter so that when you take the real exam, you won’t be blindsided. Our advanced ground school package can be found here 
    3. Take the Transport Canada Exam
      Once ground school and exam prep are done, your next step is to take the exam! The exam contains 50 multiple choice questions and it gives you 60 minutes to complete them. You need at least 80% in order to pass. Many of the people who take the Transport Canada exam fail their first time through, so don’t be discouraged. You are free to retake it after 24 hours and it only costs $10 to take, so failure isn’t the end of the world. You can take the exam here 
    4. Flight Review Prep 
      Your flight review (step 6) provider should offer a prep course or at least preparation materials. This course will give you an idea of what to expect during your flight review as well as giving you a handy list of documents and SOPs (Standard Operating procedures) that you will be asked to produce during the review. Once you complete it, you’ll both be and feel a lot more prepared to ace your flight review!  Flight review prep includes the cost of the flight review can be found here 
    5. Flight Review
      The final step in the process is your flight review. You will be required to fly your drone for an accredited flight reviewer who will assess your ability to operate safely as well as review your documentation to ensure you’re following the regulations. The flight reviewer will observe you performing various activities with your drone as well as review your safety procedures and SOPs to make sure they meet the requirements set by Transport Canada. If you pass successfully, your results will be uploaded within 24 hours after which you will be able to get your advanced certificate.
    6. Go out and Fly!
      Congratulations!! You did it! Once your exam is done, you will receive a certificate of completion that will allow you to fly your drone! It is important that you keep a copy if it ready to present any time you fly. Police officers may ask to see your license and can charge you a hefty fine if they find that you don’t have one. Make sure that you continue to follow the processes you demonstrated for the flight reviewer and all other applicable regulations. Have fun and fly safely!

    NEW CANADIAN DRONE REGULATIONS

    NEW CANADIAN DRONE REGULATIONS

    Last Updated: Friday, January 18th at 13:00 PST


    Transport Canada has Released New Canadian Drone Regulations

    Minister Garneau was in Montreal on January 9th to discuss the implementation of regulation for small (250g-25kgs) drones operated within visual line of sight. These rules were highly anticipated and industry experts agree they could impact the industry in a profound way.

    These amendments introduce a new Part IX to the CARs (Canadian Aviation Regulations) that establish rules for all RPA (Remotely Piloted Aircraft) weighing between 250 grams (g) and 25 kilograms (kg), as well as a general provision that prohibits RPA of any weight to be flown in a negligent or reckless manner. The weight threshold refers to the maximum take-off weight of the aircraft; it does not include the weight of the system used to control the aircraft. These amendments establish risk-based rules that mitigate the safety risks of RPAS through requirements for the pilot, the product (i.e. the RPAS) and the procedures to follow. The rules are divided into two areas: “basic operations” and “advanced operations.” The rules governing basic operations apply to the operation of RPAS outside of controlled airspace and more than 30 m away from people. The rules governing advanced operations apply to operations in controlled airspace, near people (between 30 m and 5 m of people), flying over people (less than 5 m from people), and within 3 nautical miles (NM) from the centre of an airport or within one NM from the centre of a heliport.

    The new rules address three main areas:

    • The Pilot
      • Now requires individual certification (not covered under company-wide authorization)
      • Must demonstrate knowledge by passing an online test for the appropriate category of operations.
      • Advanced category applicants must pass an in-person flight review skill assessment
    • The Product
      • Must be declared by the manufacturer to meet certain standards if used in controlled airspace or within 3NM of airports/registered aerodromes and 1NM of heliports
      • Must be operated according to the manufacturer’s guidance (including temperature and maintenance requirements)
    • The Procedures
      • Operators in both Basic and Advanced category must have
        • Site Survey procedures
        • Standard Operating Procedures for normal and emergency operations
        • a method of tracking flight hours and maintenance

    You can read the regulations for yourself here or download the RPAS excerpt here.

    More to come! We’re researching and aggregating the key points as quickly as we can.

     

    Sensors and Payloads: The Way Drones Make Money

    Sensors and Payloads: The Way Drones Make Money

    When it comes to making money with your drone, it all comes down to the payload. Really, the drone is just a tool for putting the camera or another sensor into an area that was too expensive or prohibitive to do otherwise. This is where the drone industry gets exciting. What applications can you dream up using these cool technologies?

    Cameras

    Cameras are the most popular type of payload and are typically at least one of the sensors onboard. They can be as small as a keychain like on FPV racing drones or large, cinema-quality cameras with complex gimbal set-ups weighing tens of pounds. Some aircraft can even handle two cameras and have one for pilot orientation and the other geared for a specific purpose such as low light operations, 360 degrees or with zoom capabilities.
    Infrared Sensors
    This highly versatile piece of tech can be used in agriculture, surveillance, accident scene assessment, wildlife tracking, search and rescue, infrastructure assessments for heat loss or for machinery diagnostics for heat build up.

    Synthetic Aperture Radar

    The details of how this impressive technology works are a bit beyond this post but the ultimate result is that this sensor can “see” through cloud cover, foliage, even structures. Since it uses a lot of power, it’s currently on large aircraft and satellites and primarily used to do assessments and monitoring of ice caps, earthquakes, resource monitoring, intelligence acquisition etc.

    Multi and Hyper Spectral

    Multispectral imaging such as NDVI or Normalized Difference Vegetation Indexing is used in precision agriculture. These sensors read bands of frequencies reflected off the surface below and crunch that data through software programs. This data provides insights into crop health, land management and hundreds of applications outside of agriculture like ecology, oil and gas, oceanography and atmospheric studies.

    Chemical/Biological “Sniffer” Sensors

    Using spectrometers, drones can detect airborne biological information for atmospheric analysis, helping meteorologists make better forecasts. Through the aid of algorithms, these sensors can also detect abnormalities in the cases of chemical attacks or gas leaks.

    Releasable

    Covering everything from spraying pesticides to dropping off your Amazon order, releasable payloads are a huge opportunity. Think Hunger Games style parachuting supplies or aid to people in need. However, regulatory bodies are understandably restrictive when it comes to dropping things from aircraft. Once safe and reliable systems enable beyond visual line of sight flying and clean releases, we can expect to see this side of the industry grow beyond the current applications into areas like aerial pharmacies.

    RFID Scanners

    Providing asset and inventory tracking, airborne RFID scanners allow drones to scan areas in a repeatable, cost-effective manner. Anything you’ve attached your tags to can be traced by simply flying overhead.

    GPS Tag

    Similar to RFID scanners, drones can pick up on and follow tagged equipment, people or assets. New technology even allows tracking via camera image, rather than needing to provide a pre-established tag. Although there are limitations, this is a promising avenue for the future.

    Laser (LiDAR)

    Although there are some extra requirements before you’re allowed to sling a laser around the skies, laser payloads like LiDAR enable surface mapping through foliage, clouds and ground cover

    What did we forget? What payload technology gets you most excited about the future of drones?