The drop servicing business model is as old as the first realtor: people are willing to pay a nice price portion for someone skilled to find them their dream home. 

So what can we learn from real estate brokers? 

Focus on the service aspect: serve your clients the best and the ROI will be manifold.   

Meaning of Drop Servicing Business Model

The drop servicing business model is setting up a business of providing high-value services to clients while supplying them from competitive-pricing providers, such as freelancers, small businesses, and agencies. 

Instead of products, you sell services. Drop servicing is profitable because it enables charging high-profit margins, which may go up as high as 70%. 

Drop servicing is also known as drop-shipping services, white labeling, outsourcing, or service arbitrage.

Drop-shipping Services

Similar to drop-shipping products from a store that you don’t own, drop-shipping services are delivering services from third-party providers to your clients. 

You should not confuse the meaning of drop-shipping services with a drop-shipping service company. Drop-shipping service companies deal with the logistics aspect of selling from third-party online stores. 

Drop-shipping services include rebranding, repackaging, quality-checking, expert scrutiny, project management, or in other ways adding value to the basic provided service so that your client gets an awesome deal at a great price they are willing to pay. 

White Labeling Services

White labeling is selling branded products or services manufactured or executed by a third party. The brand company adds extra value with the brand name and the unique marketing strategy that targets specific audience needs. 

The advantage of white labeling is that service (or product) providers can focus on developing proficiency, authority, and mastery at a certain skill, process, or business area.  A project with multiple white label service providers gets maximum quality impossible to pull off just by hiring one company. 

Service Arbitraging

Arbitraging services is buying services at a lower price from one market to sell them at a higher price in another market. Companies that arbitrage services mediate between service providers and clients — they are service mediators. 

Price variations of the same service in different countries are one example of service arbitraging. However, viewing the advantage of the service arbitraging as a drop servicing business model only in terms of geographical limitations is a big mistake. For example, for many countries, solving the tech skills gap is only possible by expanding beyond local borders.  

Outsourcing

Outsourcing is subcontracting services to a specialized provider. The main difference between outsourcing and drop servicing is the beneficiary. 

In outsourcing, the beneficiary is often the company doing outsourcing itself to gain departmental easing or proficiency. IT managed services and facility management are two typical examples. 

In the drop servicing business model, third-party clients are beneficiaries of the third-party service enhanced by the drop servicing company.

You should not compromise quality for the sake of a lower price. Learn how to establish quality control systems for your team of freelancers:

Benefits of Drop Servicing with Freelancers

The “service” aspect of the drop servicing business model should not be underestimated.  Clients are happy to pay more if someone skilled ensures they don’t waste hours trying to find exactly what they were looking for, especially when it comes to complex projects. 

1. Access to expertise

Having the knowledge or knowing how to get the knowledge in a certain niche is sellable. So, you can base your drop servicing business under the consulting cap or brand it as a tech project with unique and disruptive value.

2. Service personalization

Building teams with freelancers who are adroit in specific skills lets you build a brand that produces perfection, at a much greater quality, in less time.

3. Reducing complexity

When a client has a large project with multiple unrelated tasks, your service help comes at a cost to connect the dots and bring a team together at the best value. 

4. Managing price differences

Since you have access to a pool of variable freelance providers with various service prices, you know how to pull the maximum out of the price difference and win more projects than usual.

5. Solving bottlenecks

It is here where the money drains for clients. Unable to find out what eats their budgets, they overpay for particular bottleneck solutions. Drop servicing is the sewage cleaner for such bottlenecks because you can analyze and identify exactly where the money goes and offer better solutions.  

6. Relatively new market

Freelancing is not new but digital marketplaces are growing at a super-fast pace and you have access to create drop servicing teams for clients to enhance their digital presence and revenues in unprecedented ways.  

7. Scalability

Drop servicing is a volatile market, so you have better success prospects to learn as you go. Acting as the mediator between clients and freelancers, you can listen to what clients say and what freelancers provide to come up with solutions that change with changing project requirements. 

Interested in venturing into the drop servicing business model? 

Rebrand your company, restructure your team, and start reaping the benefits of servicing your clients with our virtual team solutions – click below for free access!

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