In my earlier blog about starting your own Virtual Tour business, I touched upon how to do in-depth research on different solutions in the market and what questions you should be seeking answers for when zeroing in on a solution. In this blog, I will dive deeper into the financial aspect of it all. Whether it is looking into the expenses, or analyzing revenue projections, or various marketing tactics that you can utilize to guarantee maximum returns, the following points will help you move forward in setting up a successful 3D Tour company.
Know Your Money
It should come as no surprise that the most important thing in any business is, well, making money. Yet, it’s incredible how many people don’t do proper budget planning when launching a business. It is vital to know exactly what your total investment will be, what are the revenue projections for your first few years, what is the return on investment (ROI), and what per-hour wage you would be looking to get for your work.
Expenses and Total Investment
While doing your calculations, you would need to consider what kind of salary you are looking to get as a photographer, how much money you would need to spend on the equipment like camera, drone, lightning, etc., you should decide what should be in your “Camera bag” for your clients. I would definitely recommend that you account for some “hidden” fees, as well, which are often not explicitly mentioned, especially when it comes to the 3D Tour industry. What are these elements which are often missed?
- Tripods and ball heads. Always double check if this equipment is included or not, and if it is, investigate what kind of equipment is required and how much more you would need to spend.
- Hardcases. You would need a hard case, especially if you are investing in a few-thousand dollars camera. Always double-check if it’s included in the price or not.
- Other electronic devices. Would you need to invest in some sort of an electronic device to operate your camera for a 3D Tour? For example, to create a Matterport 3D tour, you would need to have an iPad, which bumps up your capital investment by another $300-$400 USD.
- Import Fees. Another “surprise” expenditure is the fees charged by your own government customs. If you are importing the equipment from overseas, always check what these charges might be. They might include the Value Added Tax (VAT), Import Tax, etc. and can often distort your calculations if not estimated earlier.
Another important factor is the payment structure. Some of the companies, like iGUIDE, charge you a one-time per square footage fee, while others, like Matterport, will charge you a monthly subscription fee. Both models have their advantages and disadvantages, depending on the business model you have, and the number of orders you will be dealing with. Don’t forget to evaluate them properly and account for these variable costs.
Marketing Your Services
Another factor that you must plan ahead for, before you spend your hard-earned money, is to line up your marketing strategy and tactics. Without doubt, it’s easier if you have an existing photography business, as you can reach out to your existing clients for business. But, with the right marketing strategy in place, you can reach your target audience and fetch contracts even as a newbie.
There are various ways in which you can promote your business such as cold calls and presentations to the brokerages, google adwords, social media ads, and content marketing, to mention a few. Don’t forget to ask the company you are working with to get your 3D tours, what kind of marketing support they provide to their new service providers or operators.
Pricing and Revenue
While doing your research and planning your revenue stream, you would need to decide what you would like to charge for your 3D tour services. Once you’ve calculated your expenses and know your costs per tour, you would need to understand what is the market price for similar services in your area.
You can find out just by googling the local 3D tour companies and by simply finding the pricing information on their websites or by calling them up. In addition to that, you might want to utilize the tools provided by your 3D tour provider. For example, iGUIDE offers a Service Provider Map, where you can find other photographers in adjoining areas to see what they are charging.
Breakeven and ROI
Based on your cost projections and pricing, you should now calculate how many tours per week you would need to make in order to breakeven and what is your estimated Return on Investment. At this point, you must make a decision. Do you want to pursue this business or not? What is your return on investment? Does it pay itself back fast enough? Simply put, if the ROI on your 3D tour business is 5 years, it’s probably not the best business to get into for now. But, if you can pay back your investment within the first year, then it’s certainly, worth looking at.
Reduce the Risks
It is important to reduce your risks before you invest in the technology and there are several ways to do it. For example, it would be a good idea to touch base with the real estate agents you already know and see if they would be interested in your 3D tour services. It is way easier if you are already in the real estate photography business and have established relationships with agents.
You can also test the market by investing in a simple website and advertising first and see if you have any leads coming your way. If you do, then go ahead and buy the equipment ASAP and book those photoshoots. If not, then at least, you didn’t spend thousands of dollars on something that just won’t bring home any bacon for your family.
Starting your own 3D tour business is not a simple endeavor and it requires a considerable amount of thought and planning beforehand. The expenditures might rocket up unexpectedly while revenues might be a bit sluggish, especially at the very beginning. So, it is important to do a thorough research on all available technology solutions, market conditions, and industry trends. A proper financial planning and well-thought-out marketing strategy will provide a solid foundation for your business and growth thereafter.
For more details on the market and pricing research, see Building Blocks – Real Estate Photography Business Market Research, video series.