Drop Servicing For Beginners (The Complete Guide by Dylan Sigley)
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What Is Drop Servicing?
Drop Servicing involves selling high-quality services to businesses.
It is similar to sub-contracting. You provide a service and outsource the labor required for that service to freelancers from countries with lower costs of living. Since you’re paying a low rate for a high-quality service, you’re able to achieve high-profit margins on your service sales.
By hiring cheap but skilled freelancers, you can fulfill a service to your customers’ satisfaction while also offering cheaper prices than your competitors. This gives your business a competitive advantage when it comes to marketing your service.
Drop Servicing vs. Dropshipping
Drop servicing is a spin on the popular internet business model “dropshipping”.
Dropshipping involves taking a customer’s order and shipping details and giving them to retailers or wholesalers that can fulfill that order and ship goods directly to the customer.
With Drop Servicing, you take a customer’s order for a service and fulfill the labor required for that service with the help of freelancers, which is sometimes referred to as ‘subcontracting’ and ‘outsourcing’.
To keep things simple:
Dropshipping: Selling a product (e.g smartwatches or clothes) manufactured and delivered by a third party for profit.
Drop Servicing: Selling a service (e.g writing, animation, design) produced and delivered by a third party for profit.
How Does Drop Servicing Work?
Drop Servicing involves outsourcing or subcontracting a service to freelancers who can fulfill the service. Your role is to find clients, or even better, have clients come to you, and focus on selling them the service at a price high enough that you make a significant profit from outsourcing the service.
For example, let’s say John is the founder of a health supplement affiliate website and he is looking for 15 x 1,000-word articles about vitamins, minerals, and other health-related herbs and supplements.
John wants to hire a content writing company, but he’s found that the prices are too high, with most people quoting $100 per 1,000 words.
Now, you come along and offer your article writing service for $50 per 1,000 words.
You hire a freelance writer to write the articles for $20 per 1,000 words, meaning you’re profiting $30 per article.
The total cost for John is $750; your outsourcing cost is $300. That makes your profit $450. This is a 60% profit margin, which is very high, and very lucrative if you scale this business model.
John is happy because he’s saving money, you’re happy because you’re making money, and the freelancers are happy because they’re making money.
These numbers are just estimates, and will, of course, vary based on the Drop Servicing business model you create. But this should give you a general overview of the basic principle behind Drop Servicing.
This Drop Servicing business model can be used for content writing, design, video animation, web development, lead generation, copy-writing; essentially any service that can be fulfilled over the internet.
There are five steps for building a Drop Servicing business.
Finding competitors and studying their business models.
Finding teams that can deliver the service(s) at a cheaper price than your competition.
Creating a compelling offer.
Building marketing channels to bring in new customers.
Automating the entire process to free your time and service more customers in the most efficient way possible.
How Much Does it Cost to Start Drop Servicing?
You don’t need any money to start a Drop Service business. But, as with every business, the more money and resources you have to deploy, the easier and quicker you’ll be able to grow a business.
That said, all you need is an email address.
As the founder, your role is to communicate between your clients and your team. Thankfully, email is free.
Some of the fundamental things you’ll need for your Drop Servicing business is are:
Website (WordPress): Themeforest, Thrive Architect – Thrive Themes, Divi – Elegant Themes
Domain and hosting: Namecheap, Bluehost
Custom email address: G Suite, Outlook
Business name: Namelix, Shopify Business Name Generator, Panabee