What is drop servicing?
Drop servicing, also known as service arbitrage, subcontracting, or an agency model, is a profitable business model in which a company sells services to clients and then hires lower-cost freelancers or agencies to complete the work.
Essentially, the drop overhauling organization acts as a point of contact, serving as a vital resource for its clients while its specialists or office associates work in the background.
That is, it is a type of outsourcing or “service flipping,” which is just a fancy way of saying reselling. You act as a middleman, marketing and selling the service to clients while the service provider completes the project behind the scenes.
If you’re not familiar with drop servicing, it’s basically the dropshipping model but for services instead of products. What’s important to note right off the bat is that this model isn’t anything new. In fact, it’s been around for many years.
The drop servicing model is best understood through the following examples:
- When you hire a construction company to build your home, they do not do everything themselves. They subcontract the work to experts (electricians, carpenters, bricklayers, and so on) and then mark up their prices to make a profit.
- You take your jacket to a dry cleaner, but they send it to a cleaning factory rather than washing it in the store. That is called drop servicing.
- When you go to a local bakery, you expect fresh baked goods, but they get their pastries from a factory rather than baking them in-house. That’s drop servicing, too.
Drop servicing is the same—just with digital services (usually).
You may never realize the difference between a service offered directly by a service provider and one sold through a drop service firm as a client. Some drop servicers prefer to keep this a secret, while others may inform clients that they are managed by a team.
Drop Servicing vs. Dropshipping: If you’ve ever heard of dropshipping, this is the same idea. Dropshipping is creating an online store that serves as a middleman between a physical goods producer (such as a watch factory) and the consumer (e.g. a watch buyer). They buy from your online store at a mark-up, and the factory sends them their product. Drop servicing involves clients purchasing services from you at a markup, and your freelancer handling the work.
How does drop servicing work
The process of starting a drop service business is extremely simple. You must first create a visually appealing website that sells the service you want people to pay for, and then go out and find someone who will really do the task.
Drop servicing business models in the current era frequently look like this:
- You create a website that provides marketing services.
- You then promote and advertise the service to attract customers.
- You then forward the project details to a freelancer who will complete the work.
- Finally, after the task is finished, you deliver it to the client.
Drop servicing entails offering a service at a high price and then finding someone to complete the task for a cheaper price while pocketing the difference.
What can you drop service?
Drop servicing may appear to be so popular these days because everyone wants to claim that you can drop service anything, which is almost true.
Drop Servicing Examples
- Copywriting
- Website setup
- Website design
- Lead Generation
- Blog post writing
- Technical support
- Pinterest account management
- Graphic design
- Social media management
- Website speed services
- Video creation and editing
- Search Engine Optimization (SEO)
- Guest posting and link building
While most drop service businesses provide some form of digital marketing service, such as web building, logo design, SEO, and so on, you can drop service anything as long as you have the two required elements:
- someone willing to complete the work for X amount of money
- a client willing to pay even more money
Is drop servicing legal?
Of course, Drop servicing is a totally legal business concept. There is nothing illegal in reselling someone else’s services and profiting from the price differential.
Drop servicing works exactly like any other business model: buy low, sell high.
It is absolutely legal to establish a drop service business as long as you can find a client prepared to pay your asking price and a person willing to do the work for a specific amount less.
But you could be thinking… Why would a freelancer labor for little pay when they could bypass you, work directly with clients, and earn significantly more?
The solution is pretty simple.
Many freelancers struggle with marketing and getting proper clients. It’s a win-win if you take that out of the equation for them so they can focus on their skill. You get low-paying labor, while they get projects handed to them on a silver platter.
A drop servicing business model, unlike freelancing, is easily scalable. Your income is not dependent on your availability. That’s the awesome thing about drop servicing! You can make it any size you desire.
Do You Need to Be an Expert in the Skill You Are Drop Servicing?
It’s usually ideal to give a service you’re familiar with. Because if you drop service something you don’t fully understand, you might find it difficult to manage and suffer a loss.
I’m not suggesting you have to be an expert in the service, but you should have a basic understanding of how it works.
How to Start a Drop Servicing Business For Beginners
These steps can be done all on your own, but if you want to get up and running as fast as possible (and maximize your chances of success), you may want to invest in a course.
- Choose your niche
First and foremost, what service will your company be based on? As previously said, there are numerous alternatives. In many circumstances, your imagination is your only limit.
If there isn’t an obvious drop service niche for you, consider the following:
- Are there any topics about which I already have knowledge and expertise?
- If not, which idea seems to be the most practicable or interesting to learn about?
- Which concepts appear to be the simplest to develop and implement?
- Which ideas appear to have the greatest market demand or need?
- Which proposals have the potential to increase my company’s profit margins the most?
There are a lot of paths you can take when choosing a niche. Consider what means the most to you and use that as a foundation.
- Find and train your team of service providers
This might also seem to be a simple task, but it is critical to properly select your team. After all, they’ll be the lifeblood of your drop servicing firm.
Consider establishing a checklist for interviewing and evaluating drop servicing team candidates:
- How much experience do they have with the service you want to offer? Request examples.
- How much training will they need before they can work in accordance with your expectations and standards?
- Will they be dependable and do their work on time?
- Are they simple to interact with and collaborate with?
- Do they reside in another region with a substantial time difference? Will this make it difficult to complete projects?
You might try looking on freelance marketplace websites such as Fiverr or Upwork. Once you’ve identified a few promising prospects, assign them a test project to see how they perform.
- Build your brand and bring it to life
Once you have a game plan and a solid team, it’s time to build your company! If you plan to get clients online, the most important order of business is your online presence.
Your website is the most important element—though you should also consider creating and managing social media profiles.
There are plenty of website builders to choose from, like Shopify or WordPress. Both website builders are explained step by step in the “Drop servicing mastery”.
Include the following elements on your website and other branding materials:
- A creative logo that reflects the tone and spirit of your brand • Background on your brand, why you do what you do, and what makes you the ideal choice
- A description of your services and what clients will gain from each (you can choose to list your prices or save that part for sales calls)
- If you want to go the ecommerce way, post your prices and select an ecommerce-friendly website builder that allows you to collect online payments.
- Attract customers with marketing
Marketing is an essential component of any organization. Isn’t it pointless to have a fantastic brand and website if no one sees it?
When it comes to growing your company’s reputation, gaining new clients, and keeping old ones, you have a number of alternatives. Here are a few examples:
- Affiliate promotion. One of the most cost-effective marketing tactics available. Begin a referral program to encourage existing customers to refer new customers.
- Content promotion. To educate, entertain, and develop brand awareness, invest in multimedia material such as blogs, videos, emails, graphics, ebooks, and even a podcast.
- Social media marketing. Is your intended audience active on social media? Determine the platforms they use, and then develop a specialized content strategy to engage them on those channels.
- Make your first sale … and keep going!
Some believe there is no better feeling than making your first sale. It may come easily, or it may be pretty hard. Whatever happens, the important thing is to be committed and not give up.
As you contact and engage with more potential clients, you will understand what you should and should not do.
Take note of what these leads and clients are saying. Is your asking price too high? Are you missing a key detail that everyone is expecting? Does your competitor have a strong reputation for you to keep up with?
Whats next?
Whether you’re looking for something to do over the weekend or want a long-term gig, Drop servicing offers opportunities that should be on your radar. I hope this little guide has helped you and show you how much potential in this business opportunity lies. If you want to get a quick start, a step-by-step manual for developing your own online store and get a tons of clients, either with free or paid traffic methods, then you should definitely join my “Drop Servicing Mastery”.