Drop servicing can be very lucrative and rewarding if done correctly. This allows you to oversee a team behind-the scenes and deliver services to clients without being involved in the execution details.
Drop servicing is available on both large and small scales, whether you realize it or not. Here are some common examples:
A pest control company will send a professional to your home to deal with your pest problems.
A social media marketing company may outsource your daily management to a freelancer, or another agency.
A company licenses the digital content originally from a freelancer.
Drop servicing is what it sounds like, how does that work and how do you start?
This is what we will be doing. Let’s go.
What is drop service?
Drop Servicing, also known as service arbitrage, or white labeling is a high-profit model that allows a company to sell services to clients and then hire less expensive freelancers to finish the work.
Drop servicing companies act as a liaison and are the first point of contact for their clients. Agency partners or freelancers do the rest.
Let’s say, for instance, you run a graphic design business. For $3,000., you sell branding packages. You hire a freelancer to do the branding packages. You get $1,000 for the transaction.
Drop servicers may choose to keep it a secret while others will tell clients that they have a team.
Dropshipping and drop-service differ
Dropshipping and drop service have a lot in common. Both strategies require partnering with another person or company to fulfill client orders. However, there are some fundamental differences.
Dropshipping allows you to sell physical products and not have to manage your inventory. Your suppliers will store, pack and ship the products directly to you.
Drop service, on the contrary, is the selling of services such as copywriting, graphic design and social media management. These services are not provided by you, but instead hired freelancers. The work is then sent out to your clients.
Dropshipping is different from drop servicing in that it involves selling goods and drop servicing deals with providing services.
Another distinction is the level of competition in the market. Drop servicing is still a new business model. This means that the market isn’t as saturated. However, it’s still possible to find top-quality freelancers for a reasonable price.
What are the best ways to discontinue service?
You can dropship many products as well as a variety of services.
There are many options:
- SEO (search engine optimization).
- Link building
- Guest posting
- Copywriting for Ads
- Video creation
- Video editing
- Content creation
- Graphic design (like creating a logo)
- Management of social media
- Virtual assistant services
- Testing by users
- Writing a resume
- Nurturing or lead generation
It’s better to offer a service that you are familiar with. You might lose your ability to manage the service if it’s something you don’t understand.
While I don’t think you have to be an expert on the service, you should at least know how it works.
How to start a drop-service business
Are you unsure how to start your drop-service business? We can help.
1. Choose your niche
First, what service is your business built on? There are many options. Your imagination is the limit in many cases.
Ask yourself these questions if there isn’t an immediate niche for drop services that interests you.
- Do you have any suggestions?
- If not, what idea do you think is the most interesting or feasible?
- What ideas are the easiest to build and implement?
- What ideas are in greatest demand?
- What ideas could bring me the largest profit margins for my company?
There are many paths that you can choose when it comes to choosing a niche. Use your most important values as a foundation.
2. Your service provider team can be trained and found
Although this may seem an easy task, it is important to carefully select your team. After all, they’re the lifeblood of drop-service businesses.
Make a checklist to help you evaluate and interview candidates for your drop service team.
How familiar are they with the service that you want to offer? Ask for examples.
What training is required before they are able to operate according to your standards and expectations?
- They will be trustworthy and complete their work on-time?
- Is it easy to communicate with them?
- Are they in a different region? This could be a problem for projects?
- You might also try looking on freelancing marketplaces like Fiverr and 99designs.
- After you have narrowed down the top candidates, assign them a project to test their abilities.
3. Create your brand and make it come to life
Now it’s time for you to start building your company. Your online presence is the key to attracting clients online.
Websites are the most important, but you should also consider managing social media profiles.
There are many website builders available, including Squarespace, Wix and WordPress. Many offer a free trial, so you can get started building your website before making a financial commitment.
These elements should be included on your website as well as other marketing materials.
Your brand’s tone and personality will be captured in a custom logo
Background about your brand. Why you do what do and why you are the best choice
A description of your services, and the benefits they offer clients (you have the option to list prices or keep that section for sales calls).
List your prices and select an ecommerce-friendly web builder that accepts online payments.
4. Marketing can help you attract customers
Marketing is an essential aspect of any business. It’s not worth having a great website or brand if no one sees it.
There are many options available to you when it comes building your company’s image, landing new clients and maintaining existing clients. Here are some:
Referral marketing. This is one of the most cost-effective and efficient marketing strategies. Refer customers to your referral program.
Content marketing. Multimedia content is a great way to build brand awareness.
Social media marketing. What is your target audience on social networks? Find out what platforms they use and create a content plan that will engage them.
5. Get your first sale… keep going!
There is no greater feeling than your first sale. It might come easy or it may take a lot of effort. It doesn’t matter how things turn out, the key to success is to remain focused and not give up.
You’ll discover things you shouldn’t and should do as you interact with more potential clients.
Listen carefully to the words of these clients and leads. Is your price too high? Is there a crucial detail that everyone expects? Is your competitor a strong competitor that you can keep up with?
Is drop servicing legal?
Drop servicing is legal. It’s a good idea, however, to verify which services are allowed in the state you intend to start your business. You may have to obtain certifications or restrictions on the services you provide.
Before you start a drop-service business, it’s a good idea that you do some research on your tax obligations. To stay in compliance with the government, you may need to file certain tax returns each year.
For your drop-service company to stay in business:
To ensure that your clients know the capabilities of the services they will receive, you can draft terms and conditions
When it comes to “contractor” services, make sure you are aware of the tax and VAT rules
Make sure you have the right insurance so that you are protected against things such as personal indemnity
Is drop servicing profitable?
Drop-serving can be very lucrative if you offer the right services, such as those that are often required. Many website owners require blogging as a monthly service. However, the pricing strategy you use to charge for your services will affect your actual profit.
You should aim to charge at least two-to four times what you pay freelancers. If you charge a contractor $5, the end user will be charged $10-20. You also have the option to pay for marketing costs associated with attracting new customers.
To determine an average price range, you can look into the prices of similar services offered by other companies. You may be able charge more depending on your reputation.
What is the cost of starting a drop-service business?
It will depend on how you approach the business. The cost to start a drop-service business can vary. It is usually affordable because of the nature and cost of the business. These are some of the typical costs:
Your website’s price. Each month, you will be charged a monthly fee for your domain name, hosting provider, domain, and other digital running expenses.
Costs of a freelancer. Your freelancers’ charges for completing a task.
Marketing fees. Advertising your services via email, content production and SEO.
Other running costs for business. Examples include the cost of renting a spare bedroom at your home to be used as an office, or printing and stationary equipment.
Drop servicing can be difficult, but it is rewarding!
Drop servicing can make you millionaires overnight, according to some gurus. Although this may not be true, it is true that if you work hard and plan strategically, and are willing to grow your business, there will be huge opportunities for profit.