Drop servicing is a business where you sell other people's services.
That might sound crazy but it's actually been around forever. It can also be referred to as "service arbitrage", "sub-contracting", or an "agency" which are more common terms.
Recently, the term "drop servicing" is getting more popular in 2020:
What Is Drop Servicing?
Drop servicing is where you market services to potential clients and when they order from you, you pay a freelancer or third party to do the work for you.
All you have to do is the marketing and run the logistics of the business. You will find freelancers or an agency that will execute the services part.
This is what it looks like:
- Sell a service to someone
- Collect payment
- Hire a freelancer or agency
- They do the job for you
- Deliver it to the customer
As a drop service business owner, you are a middle man. You are connecting people who need a service with people who can deliver that service.
Examples Of Drop Servicing
You can drop service anything like logo designs, lead generation, social media management, blog posts, video editing, facebook ads, website design, translations, ANYTHING.
Here is an example of a website that sells podcast cover art:
You can sell podcast designs and when someone places an order, you hire an awesome designer to make the design.
I'm not sure if this company is a drop service business but the example works.
This is their pricing:
Their lowest package is $147. If you pay someone let's say $40 to create the design you have a very good margin. You also have enough for a marketing budget.
The beauty is you can find thousands of freelancers on the internet using Upwork, Fiverr, and many other platforms which makes this very easy to try.
Is Drop Servicing Profitable?
Yes and no. It can be very profitable or unprofitable depending on one thing... who is the entrepreneur that's running it?
As a business model, drop servicing can make a lot of money. But is the entrepreneur willing to put the time in, give value to the customers, and build a sustainable business? Or will they sell low quality services on Fiverr and try to make a quick buck?
Is Drop Servicing Legitimate?
Drop servicing is perfectly legal. In it's simplest definition, you are selling services to customers and delivering on your promises.
A lot of agencies are technically drop service businesses and it's been around forever.
Like with any business though, remember to look at taxes and the legalities of the country you live in.
Drop servicing is a business where you leverage other peoples skills and time.
This is basically what a lot of businesses do when they hire people to work for them.
It seems to be getting more popular as an online business and it makes sense why:
- You leverage other people's skills and time
- It's inexpensive to start
- It can have high margins
- It's never been easier to start thanks to platforms like Upwork, Fiverr and many others
If you're willing to work hard and deliver great results to clients, you can build a thriving and long term business with drop servicing.
Drop Servicing Resources
Want to keep learning? Here are some handpicked resources to continue learning about starting a drop service business:
How To Start A Drop Servicing Business
Great 20 minute video by Sean Anthony. Some of these thoughts helped my research for this article.