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Drop servicing is a business model where a company or individual provides a service to a client by outsourcing the work to another company or freelancer. The company or individual acts as a middleman, charging the client a higher price for the service and paying the outsourced provider a lower rate. The difference between the two rates is the profit for the drop servicing company.
Drop servicing allows you to be the connecting bridge between freelancers and clients. Your focus remains on business logistics (marketing, communication, contracts, etc.) while your freelancers single-mindedly work their craft (copywriting, content writing, graphic design, etc.). Many find drop servicing a profitable win-win scenario–if they charge clients correctly and choose their freelancers wisely.
A drop service works much like subcontracting in the construction industry. You are a middleman.
You market services for sale, and once you have a client, find a skilled freelancer to complete the work. You then sell the completed project at a mark-up. Essentially, your job becomes finding clients, pairing the project with a freelancer, ensuring the freelancer meets a certain quality standard and delivering the final product.
To get started, you need to create an online platform to present your services to potential clients. We recommend using Shopify to build and host your website.
Shopify is an e-commerce service for opening online stores. You can list your service options and prices directly on your website.
You don’t need a bunch of capital to start a drop servicing business! Typically, all you need is one basic website, a domain name for a professional email, and a marketer mindset.
It is a viable and potentially highly profitable business venture. You are in charge of upselling your freelancer’s work and earning the price difference.
You have the potential to work with long-term clients and make money on a regular schedule.
Drop servicing has less competition compared to the dropshipping business.
By outsourcing the work to other people, you free up your time without lessening your profits.
If a service provider misses deadlines, you have to shoulder the workload (we recommend having back-up freelancers in case anything happens that prevents delivery)
Drop servicing requires strong organization, accountability, and time management skills, as you must enforce target dates.
You have to be an excellent communicator, remaining available for clarification and receptive to questioning.
You’ll need to double-check your freelancer’s work for quality control. It is ultimately your brand reputation on the line.
Drop servicing is a widely used legal business model. You’re probably more familiar with terms such as service arbitrage, subcontracting, reselling, broker, or even the relationship between an agent and performer.
There’s nothing illegal about reselling a digital product, just like any other product. You are providing a service by helping clients find the services they need, and freelancers find work, as well as handling all that service involves.
You can think of dropshipping like a physical version of a drop service, but they don’t sell services. They sell physical products, such as sweatshirts and laptop stickers. Like drop servicers, drop shippers often work with an entirely online business and don’t actually make anything themselves. They market and marked-up products outsourced to a manufacturer or factory. The finished products are shipped directly from the factory to the consumer.
Thanks to the invention of the internet, drop shippers don’t need to set up a factory, rent warehouses for merchandise, or be a part of the production process at all. Similarly, you don’t need to be an excellent copywriter or expert graphic designer to get into drop servicing. Drop servicers get paid by selling services to clients but let other people complete the work.
Drop servicing may prove more profitable than a dropshipping business as it isn’t reliant on physical product availability. Issues surrounding product quality, such as damaged eye makeup pans or defective lipsticks, are also unlikely to happen, as you can personally review the finalized project before sending it to the client. However, dropshipping is still lucrative and could be a good option for you, depending on what you intend to sell.
Drop servicing can do you really good if you know how you manage and market the business. You will act like an agency where you will offer diverse services or expertise to people who are seeking those specific services. This will help you build relationship skills with vendors, clients and freelancers.
Like every other business, drop servicing can be challenging, however it offers different benefits that can be achieved such as it is an easy set-up to start, you can work remotely form absolutely anywhere and at any time, and the profit margin is really good because you will be offering various services to clients online and then outsourcing the work by charging slightly more which will be your profit as the work gets done.
Drop servicing requires you to find proper and relevant talent that would guarantee work within the deadline. If you hire services of a freelancer and he or she has a busy schedule and does not meet the deadline that you gave to the client, then you might have to face consequences and satisfy the client and buy more time so you can get the job done without losing the client.
The best way to avoid such situations is to have more than one freelancer who can work within the given time frame. Moreover, you have to be careful before recruiting the freelancer either through the reviews, reference or checking them through a sample test to make sure that they fulfil your requirement and offer quality services and can easily meet the deadlines.
Drop servicing is like you are running an agency where you have to manage a group of professionals and take responsibility for their tasks to make sure that the requirement of the client is fulfilled seamlessly. This is the best business model for businesses who have knowledge proficiency and they can easily reach out to the customers and hire outsourced employees for different tasks and assignments to be completed in a given timeline.
The model of drop servicing is completely legit and there is nothing against the law about reselling services and making money with the price difference. Bear in mind that it is just like any other regular business model where you always buy for less and sell for higher rates. As long as the client is willing to pay what you asked and the other person is willing to work for the price offered then it is all good and legal to operate drop services.