Drop servicing is the practice of selling outsourced digital services to clients for a greater price. A drop service business accepts orders from customers and outsources the tasks to professional freelancers. The business owner earns by charging higher than the freelancer rate.
Drop servicing is not exactly a new business model. Andrew Ethan Zeng, CEO and founder of AEZ Media CEO, says drop servicing “is essentially service arbitrage.” He continues, “You are outsourcing these activities to someone else while managing the profits in between the client.” Top Freelancer.com freelancer Matt Starky says drop servicing is “one of the most sought-after fields” on the platform. Drop servicing also often gets compared to dropshipping but instead of selling products from third-party providers, drop service businesses are selling services.
Drop service providers can earn $1,000 to $5,00 per month while some top-earners make up to $900 per order. In this step-by-step feature, we discuss the steps you need to start your own drop servicing business. We also point you to paid and free drop servicing courses you may want to consider. Plus we look at the common disadvantages that make the business model difficult for some. Towards the end, we also tell you about an alternative online business that’s easier to scale and brings you passive income in no time.
Step-By-Step Guide to Succeeding in Drop Servicing
Step 1: Choose which digital services to offer.
Choosing which digital services to offer is your first step in establishing your drop servicing business. When choosing your services, do your research and find answers for the following questions: Is the market demand high? Is it saturated? How much can you potentially earn? There are literally hundreds of options out there but some of the top drop servicing jobs today include:
Animated explainer videos Copywriting Digital marketing Graphic design Search engine optimization
Social media management Transcription Video editing Web design
You can even decide on which specific niche to target in order to market your online business better. For example, you could design graphics for podcasters in the financial niche, offer social media marketing to hot tub retailers, or handle copywriting tasks for startup businesses.
The choice is completely up to you and the amazing thing is that you don't need to know how to actually do these things. You will be outsourcing the work to freelance professionals who do this line of job everyday.
Step 2: Decide on a specific niche to target.
You can even decide on which specific niche to target in order to market your online business better. For example, you could design graphics for podcasters in the financial niche, offer social media marketing to hot tub retailers, or handle copywriting tasks for startup businesses.
The choice is completely up to you and the amazing thing is that you don't need to know how to actually do these things. Again, you will be outsourcing the work to freelance professionals who do this line of job everyday.
Step 3: Find reliable service providers.
Finding reliable service providers is a crucial step for building your drop service business. You want to work with freelance professionals who can consistently deliver quality work on time.
You can find competent service providers online by checking out platforms such as Fiverr, Freelancer, PeoplePerHour, Upwork, and OnlineJobsPH. When using these sites, be sure to read reviews and look at the amount of projects they’ve completed in the past as these are usually a good indicator of how the professional performs.
As an example, top-rated Fiverr seller Usman M creates 2D animated explainer videos for $120 (30-second video with 80 words) to $270 (90-second video with 240 words). So far, the Fiverr’s Choice animator has over 3,900 reviews, which signifies that most past clients are happy with his service.
Alternatively, you can hire a service provider on a per hour basis. Here are some sample rates for freelance professionals according to Upwork:
- App designers: $20 to $40 per hour
- Blog writers: $15 to $35 per hour
- Data entry specialists: $10 to $20 per hour
- Game developers: $15 to $35 per hour
- Illustrators: $15 to $30 per hour
- Transcriptionists: $12 to $22 per hour
In any case, you want to build relationships with multiple freelancers so you can tap them again for future orders.
Step 4: Build your brand and start marketing your drop service business.
Building your brand and marketing your drop service business will lead you to your first paying clients. A good start would be to have a custom business logo so people can distinguish you from the competition. Next, creating your own website will help you establish a professional online presence. You can use free website builders such as Google Sites, Wix, Weebly, and WordPress. Take inspiration (but do not entirely copy) other sites that are already doing well in your niche.
Some essential features your drop service website needs to have are the following:
An effective homepage showing the services you offer. Clear messaging of WHY a potential customer should choose you over the competition. Secure payment processing (so you can get paid) Email newsletter (so you can send them offers about your services) SEO (so your website shows up when prospects search for your offered services)
Of course, you also want to have your own social media profiles. You want people to find your business when they search Facebook, Instagram, X, and other platforms. With social media, you can tap both free and paid options to reach more of your target market. For example, posting content regularly and joining community groups are among the top free ways to market your business on social media. You may also invest in Facebook Ads, Instagram Ads, Google Ads, and other paid advertising strategies to boost your presence further.
Step 5: Start accepting and fulfilling drop servicing orders.
Accepting and fulfilling drop servicing orders will get your business running. How timely you handle this process will largely determine your success in the industry.
On YouTube, May Ng shares how she fulfills video editing orders for her drop servicing business. According to her, it all begins by receiving files and payment from clients. She then immediately contacts her freelancers to ask if they can accept work and can meet the deadline. After confirming their availability, she forwards them the files and explains the job requirements. Once the work is done, May reviews the files before forwarding the finished output via WeTransfer. Finally, she also pays her freelancers and requests feedback or reviews from her customers.
In a SEMRush report, we read that repeat customers tend to spend “67% more than new customers,” so it’s always a good idea to satisfy your clients and deliver quality results. That way, they will keep you in mind next time they need the same service. Of course, you also need to constantly think of ways you can improve your service and evaluate the performance of your freelancers. Doing so will increase your chances of succeeding in the drop servicing industry.
Is Drop Servicing Still Profitable in 2024?
Yes, drop servicing is still profitable in 2024 since business owners make money from hiring freelancers and then selling digital services at higher costs to clients. Drop service business owners may earn from $1,000 to $5,000 per month while established providers may make 6 to 7 figures on a monthly basis.
Dylan Sigley of the Drop Servicing Blueprint says animated explainer videos usually cost $100 to produce and you can sell them to end users for up to $1,000. As a result, drop service providers can earn a profit of $900 from each order. “The best part is we don't pay for the services until after we get paid,” he also adds.
Can You Do Drop Servicing Without a Website?
Yes, you can do drop servicing without a website because there are multiple platforms you can use for this business model. For example, you can use social media sites (Facebook, Instagram, LinkedIn, and Twitter) to promote your brand and accommodate customers. You may also post your services on freelance marketplaces (Fiverr, Freelancer, and Upwork), online marketplaces (Amazon, eBay, and Etsy), or business directories (Google My Business and Yelp) to gain traction from your potential client base.
However, having your own drop servicing website also has its advantages. A business website makes you look professional and gives you greater credibility. According to a 2023 Forbes report, “71% of businesses have a website” while “a staggering 93% of global traffic comes from Google.” A website helps your business achieve greater online visibility than, say, a Facebook page or a Fiverr profile.
Are There Courses About Drop Servicing?
Yes, there are courses about drop servicing. Interested learners can find paid and free drop service courses online to learn about the business model. On Udemy, The Ultimate Guide to Starting a Drop Servicing Business by Drop Servicing System is a course with a 4.6-star rating out of 126 reviews. The $11.99 drop servicing course includes 11 hours of on-demand video, 3 articles, 32 downloadable resources, and a certificate of competition.
How to Start a Successful Drop Servicing Business by Bryan Guerra is another top-rated Udemy course with 4 stars out of 108 ratings. The $12.99 course includes 4.5 hours on-demand video, 1 article, 3 downloadable resources, and a certificate of completion.
On YouTube, Drop Servicing For Beginners (The Complete Guide For 2024) Tom Zalatoris is free for anyone to watch. According to Tom, the 1-hr, 6-min course explains “all of the main aspects of this side hustle” and that it’s ideal for both beginners and advanced level drop servicers. “This money making method works in all countries worldwide,” he also adds.
Matt Starky, who is one of the top freelancers on Freelancer.com, also has a short 12-minute video that gives an overview about the drop servicing model. Matt says drop servicing can be “an excellent career path for those venturing into the world of freelance.”
What Are The Risks of Drop Servicing?
1. Your business is dependent on the work of your freelancers.
As a drop service entrepreneur, you are essentially a middleman reselling the work of your freelancers. For the most part, you “really have no idea what you're going to get until it’s done, so there will be a decent amount of lag time,” writes Reddit user ebookroundup.
Customers will form your opinion about your company based on the quality of your output. So you definitely need to be consistent with double checking your suppliers’ works to ensure that their deliverables are always up to standard and are sent on time.
2. Booking and managing freelancers can be difficult.
Top performers are often in high demand, so availability can be a common issue. Booking and managing them can be hard, especially since they’re freelancers and take up gigs from different clients all the time. You cannot rely on them as you could with a full-time employee. As such, it’s important to work with multiple freelancers so you can have several options if some freelancers are not available when you need their services.
3. Finding clients is not always easy.
Finding clients can be initially challenging, especially if you’re new in the industry and don’t have a solid track record yet. You will need to be creative in your marketing efforts to attract attention from paying customers.
On Quora, Darius Gaynor shares that he uses Linkedin and Facebook groups to find clients. He also finds information about prospective customers on Google and then contacts them via cold emails or cold calls.
4. Some consider drop servicing to be unethical.
6-figure freelance copywriter Carrie French criticized the business model in a YouTube video. According to her, drop servicing is “destroying the trust in the freelance economy” because of the lack of transparency and talent recognition.
“Essentially, you're hiring cheap, you're pricing high, you're automating everything, and all you do is just skim off the top,” she says in her blog. “This passive model only works if it's secretive… and that inevitably leads to exploitation.”
In the comment section, Carrie also writes, “There’s clearly a line between ethical agency outsourcing and deceptive misrepresentation through drop servicing.”
Why Local Lead Generation is a Better Business Model Than Drop Servicing
While drop servicing is a potentially lucrative business, it also has certain disadvantages that can make it difficult for some entrepreneurs. In the long run, you are a middleman selling freelancer services to customers for a higher price. Your business heavily depends on third-party providers and so satisfying long-term clients can be tricky if you’re constantly changing freelancers. Plus, some customers directly hire freelance professionals who charge affordable costs. This can cut you off the equation, so you’ll have to work hard to find new additional clients.
In comparison, local lead generation is an ethical service you provide small business owners. This starts with you creating a keyword–centric business website (tree service, limo rental, HVAC, etc) in a city. You then work towards building that site’s ranking so that it appears on top search engine results and starts attracting organic traffic. With that, you can offer the website for rent to interested entrepreneurs who need a constant stream of leads for their businesses.
Unlike drop servicing, competition is also not as intense with lead gen. Besides, you aren’t technically competing with a global network of freelancers and agencies. Instead, you are targeting city–specific keywords, meaning you’re only going against 10 to 15 similar businesses in the area. Outranking them shouldn’t be hard as you implement proven SEO techniques, plus you won’t have to do much work anymore once your site reaches the top results.
Lead generation is also more scalable because it allows you to go into 10 or even 100 different niches in a single city, depending on your capacity. You may also use the same strategy and cover multiple cities to further boost your profits. When done right, each site can bring you a monthly earning of $500 to $3,000. Having multiple rank and rent sites - like I do - can easily lead up to a passive income of $52,000 per month. Each month, money is delivered to my account because of websites I built 6 years ago. Getting paid over and over again reminds me of the immense value I bring to my satisfied clients.
