As part of our overall business strategy, half of our efforts are devoted to aerial photography services for Real Estates, developers, hotels and similar industries. We need revenue coming through the door to stay alive, limit the early capital-raising equity giveaway, establish comprehensive networks and fund the R&D! When we first started the services side of the business, we copied the business models of our competition...a costly mistake. If you’re copying someone else in almost every way, you are almost by definition securing yourself in last place. Let’s talk about the old business model and then the new one we have adopted at Skyborne Tech.
Most media companies take a cost-per-photo or cost-per-video length approach to pricing and add significant premiums to things like aerial shots. When aerial photography was first possible with drones, regulatory and start-up costs were high and the premiums were justified. The reality is that now Aerial photography is around at the same level as standard photography. However, the same pricing model has remained. On the other end of the tech spectrum, 360 (Virtual Reality) photos and videos and becoming more and more commonplace and allow a real immersive experience for the property buyer. We have spoken to some hotels about providing VR content with our in-house remote-controlled camera rover (the Scorpion) and they have expected quotes around the $40k mark!! Ridiculous considering the technology price point for this kind of thing is crashing through the floor.
This old-school business model also has a lot of admin overheads. There’s a significant back-and-forth between the services supplier and the estate agency. Sales pitch from service company, discussion on requirements, quote, modifications of quote, doing the job, invoicing, chasing unpaid invoices... and then you MIGHT get some repeat work that tightens the above process somewhat.
At Skyborne, we’re evolving from the standard cost-per-photo business model and one-off shoots. It just doesn’t deliver the best value for the client (or us!). We take a two-pronged approach to mix things up.
Firstly, let’s break down the old pricing model. By the time we drive to the estate agency to collect the key, drive to the property and unpack our equipment, the extra effort to get cutting-edge virtual reality (360) media and extra aerial shots is a tiny percentage of our total effort doing business with the customer. We might as well deliver maximised value for the customer while we’re there because the extra time it takes to grab and edit another 3 aerials or 5 ground photos is in the order of minutes! So we decided to just include everything in our baseline package. Ridiculous value for money compared to an estate agent buying everything individually through our competitors. FYI, this would also require multiple suppliers. Skyborne is the only company I know that’s a one-stop-shop.
Secondly, let’s look at how to kill the inefficiency of the old business model. Look at the overheads of the mobile phone plan business model – it’s very minimal! There’s a predictable, bite-sized payment made once per month. Everyone knows it’s coming and it just falls into the ‘necessary expenses’ category for consumers. Let’s apply the same subscription model to the real estate services. Depending on the throughput of houses per agency, a subscription plan can be selected. Because Skyborne has reliable and consistent income over a number of months, we can bring our service prices to very reasonable levels. Our services are streamlined because they are the same for every property, which makes our in-house training simpler and enables our editing processes to be faster than a bespoke solution per house.
We’re trialling this new model over the next few months and we’ll let you know how it goes. Naturally there will be barriers to getting the advantages over the line with realtors, but the value-added benefits for this model are insane! We’re talking about up to 70% added value for some of our subscription packages! We’ll likely have to make the subscription flexible enough for poor throughput months. Until next time!
P.S. much credit goes to Tim Kastelle for encouraging me to think about business model innovation as well as product innovation. Check out his blog http://timkastelle.org/theblog/ and follow him on twitter @timkastelle