If you’ve ever had the term “drop servicing,” then you might have asked yourself what it’s all about.
How does it work, and how is the drop servicing business model, how does it work and how you can start such a business? Well, you are in the right place.
Here, we are going to outline a guideline about how you can start a drop servicing business, and you’ll get to find out whether this type of business model is better than dropshipping. Read on.
What Is Drop Servicing?
This type of business model is also known as service arbitrage. Drop servicing business is whereby you find clients that need a service, but they don’t know that you are hiring or outsourcing the services that they requested you to do for them.
When you compare it in the physical world, it can be said to be the same as sub-contracting.
For instance, some contractors may show you the blueprint of the house you want, talk to you about the cost of the project, as well as the timelines.
What you need to know is that these kinds of contractors may not have their own architects or even carpenters.
That means that they subcontract the work, although they are still legally responsible in case anything happens.
In the online digital world, you can find various clients who need either graphic art of blog content, and once they make orders from you, you can place the order to someone that you know is an expert in that line of work.
Usually, these are freelancers who you can find in freelance market websites.
What you need to ensure first is that you are well aware of the seller’s or freelancer’s price.
The reason being, it will help you mark-up on that price and help you make a reasonable profit.
The difference between what you charge the client and the amount the freelancer is asking for is your profit.
What You Can Drop Service
The good news is that you can drop service nearly everything. However, you should avoid drop servicing something that you don’t fully understand because you might end up in losses and mess up your drop servicing business.
We highly recommend you avoid selling PBN or SEO services if you don’t have any clue about them.
Although you don’t need to be an expert about a service, you need to make sure that you at least have an idea of how it works.
Good examples of things that you can offer clients in your drop servicing business are selling blog posts and then hiring writers to handle the work for you.
This is an easy thing to do since you don’t need to be an editor to know high-quality content and one that is not.
Examples of services you can sell include:
- Guest posts
- Ad copywriting
- Video editing
- Graphic arts
- Blog posts
The list of services is endless, but you should make sure you understand how the service you are selling works. You also need to study and find out the service that is in high demand.
The drawdown is that you won’t find useful resources to help you with useful data since this is still a new concept. Therefore, your best option is to check on Google trends.
Difference Between Dropshipping and Drop Servicing Business
Drop servicing business and drop shipping work almost the same, but they are also a bit different. Dropshipping business involves physical products as well as logistics, while drop servicing does not.
It is quite easier to compare drop servicing to dropshipping, and the profits intended are way bigger when you compare to what you can make from dropshipping.
Dropshipping allows you to sell physical products to customers without having any inventory.
With dropshipping, a customer purchases an item from your store at the retail price, and then you forward the order to a supplier that you pay at the wholesale price.
Once the supplier processes your order after receiving your payment, they then ship the product to your customer directly under the name of your business name or brand.
Therefore, with the dropshipping business model, your profit highly depends on how much you retail the product and the amount you pay the supplier.
The huge disadvantage of dropshipping is the high competition on the market. Since it is effortless to start a dropshipping business, competition tends to be quite high because there are no barriers to entry.
- Start-up costs are low
- Fulfillment costs are low
- High competition
- Unusual issues with logistics
- Profit margin is low
Drop servicing business, on the other hand, has less competition compared to dropshipping, and it provides you with an opportunity to make more money since you can sell a high ticket service.
Unlike dropshipping, where you are required to sell hundreds of products to make a good profit per month.
Drop service also gives you more quality control compared to inferior dropshipping products. With drop servicing business, you can review every job done by your freelancer to check whether it is of high-quality before you accept it.
Doing that will make your clients see that you provide high-quality services, and this can be good for referrals.
- Start-up costs are also low
- High ticket sales
- Recurring income
- You don’t need any skills to start
- Freelancers may delay the work or fail you due to so many orders
How to Get Started
When you want to start a drop servicing business, the first thing that you need is a list of services and service providers to serve your clients better. As mentioned earlier, you need first to know what is in demand and then offer your services on that.
1. For example, if you decide to start a writing service, you need to find a writer that can meet your standards.
This is one of the most critical steps because you will have to spend some money in order to test the quality of work from several writers.
Once you get a good writer that you feel meets your high standards, you will now have a provider.
2. The next step is to create a platform where you will be offering your services. An ideal platform for a drop servicing business is a website.
Although you can use social media for marketing your services and reaching out to potential customers, it can be quite difficult for customers to trust you if you don’t have any website.
A website tends to prove your professionalism and also strengthens your brand name.
You can consider platforms like Shopify to help you build and host your site. Shopify is an e-commerce tool that enables you to build a store.
Shopify offers you a store, marketing tools, payment processing system, email subscription, and social media integration.
Although Shopify was created for physical products since dropshippers mainly use it, you can easily replace the product pages with the services that you are offering.
You can easily type the details of the services, price, as well as other variants.
The good thing is that every Shopify store has a built-in “Add to Cart” button, which enables your customers to order from their devices directly.
3. The last step, when starting a drop servicing business, is making sure you have a marketing strategy.
This is usually the hard part because it involves a lot, and you need to make sure your strategy is solid to propel your business to greater heights once you are fully established.
Where to Find Drop Services
Some of the best places where you can drop service is a marketplace for freelancers.
These are places where freelancers post their profiles for clients to see and hire them. The other option is to post a job, and freelancers get to bid on it.
Here are some marketplace examples:
- People Per Hour
- Hubstaff Talent
There are two approaches you can take. The first one is that before hiring someone for their test, make sure to take time and review their profile, years of experience, feedback rating, and how much they charge.
Once you review several freelancers, you can create a list of the ones that are suitable and then pick three of them that stand out.
From there, you can order a service from these three and then see the one that performs best.
The other thing to check is how much the marketplace charges the freelancers since that can greatly impact their pricing of services.
For example, Fiverr charges 20 percent of the cost from the freelancer. That means if the freelancer charges $100 for the service, the amount he will get is $80.
How Much it Costs to Start a Drop Servicing Business
So, how much does it cost to start a drop servicing business? This is a question that most people ask.
Unfortunately, there is no straight answer to this. The reason being, it depends on how you want to start.
You can choose to start for free, or you can take a step in creating a website and showing that you are a professional.
Although it is great for beginners to start this business for free, the drawdown is that the profit can be quite low and might take a lot of time before you get the first order.
When you choose to take the other option of creating a website and giving it a professional look, it might cost you $3 to $5 per month.
You will also need to drive traffic to the website, and you might want to set up Google ads, which can cost you $10 per day.
Once the orders start rolling in for your services, you can choose to increase marketing budget and scale your business to reach more potential customers, get more orders, and scale the business to greater heights.
We highly recommend going with the second option of building a professional website and start marketing your business.
How to Get Using Google Maps for Free
Over the years, Google maps have proven to be quite effective in terms of acquiring clients.
If you want to get more clients for free using Google maps, you first need to search for the Facebook Pixel Chrome Extension and then install it on your chrome browser.
Once you install it, it will notify you every time you visit a site that has Facebook pixel already installed, and that means they are running Facebook ads to get traffic.
When you click on the Facebook pixel, you will get a notification. The goal is to look for small business websites that aren’t running Facebook ads for their business.
When you find such a business, you can reach out to them and tell them about the importance of running Facebook ads and show them that you can offer them that service.
Finding these small business websites is where Google maps greatly helps you.
What you need to do is go over to Google maps and search for any business, your preferred city, as well as the state.
Open as many websites as possible and look for the ones without any pixel installed.
You can then reach out to them through their website contact page and tell them the services that you offer.
Advantages and Disadvantages of Drop Servicing Business
Drop servicing business has both advantages and disadvantages, which is very important for you to know. Check them out below.
- Drop servicing is very easy and doesn’t require any skills to start.
- Drop servicing is also less risky compared to dropshipping since you won’t have any worries about returns or refunds.
- Drop servicing business also doesn’t require a lot of money to start. You can start at a very minimum budget.
- Freelancers may deliver work late, and this can be caused by high demand. To tackle this issue, you can try and add two days to the delivery time of the freelancer.
- Customer satisfaction can be a huge issue. Since you are outsourcing the work, you need to make sure your client gets top-quality work from the freelancer.
The Bottom Line
Starting a drop servicing business is quite easy if you know the niche you want to get into well.
Avoid offering services on things you don’t have any clue about because that can negatively affect your business.
Overall, this is an excellent business to start and it doesn’t involve so many costs on your end.
Are you ready to start your drop servicing business? The best platform that will skyrocket your drop servicing website is Kartra.
I build my drop servicing websites on Kartra, which is the best software for drop servicing so far. It’s like the Shopify but for drop servicing.
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