Drop Servicing Guide: What It Is, Plus Business Ideas and Niches
Drop servicing is a business model where an agency sells particular services to clients and works with freelancers and other contractors to produce the work.
This service can generate high profit margins and typically has low startup costs and expenses.
Overall, you’re in charge of the sale and customer experience — while the talent you hire is responsible for delivering the required service.
Are you interested in starting a drop servicing business? Join us in this ultimate guide as we explain what drop servicing is, how it works, and what its benefits are.
We also cover some interesting business ideas and niches you can explore to help build a profitable business.
What is drop servicing?
Drop servicing is a business model where you sell digital services to clients and outsource the work to freelancers, agencies, or contractors rather than doing it yourself.
Starting a drop service business means dealing with services rather than physical products.
As a drop service business owner, you’ll profit from what remains after paying the service provider.
Let’s say you start a website development drop service. You’ll meet with the customer to identify their needs and hire developers to build the website.
When the developers complete the project, you’ll make sure it meets the customer’s requirements, pay the contractors as agreed, and deliver the final product to the client.
In other words, you act as the intermediary between clients and service providers.
How does drop servicing work?
Drop servicing differs from a drop shipping business because it’s mainly service-oriented. With drop servicing, you don’t need a retail or online store to process physical products.
Let’s look at how the drop service business model typically works:
- Identify a digital service. You first identify the digital service you’re willing to provide. From content production to software development, the list of drop service ideas you can start is vast.
- Find freelancers to work with you. Once you’ve identified your target service, start looking for freelancers who will collaborate with you to provide the service. Among the top places you can find freelancers are Upwork and Fiverr.
- Find customers. The next step is to market your digital service and find customers. You can use a variety of promotional tactics, including social media marketing.
- Set prices and receive payment. Remember to set prices for your services. You don’t want to put a high price tag that will scare away clients or go too low where you make no profit. Most drop-service businesses receive payment upfront, allowing them to hire freelancers and get started with the work.
- Collaborate with the service provider or contractor. At this stage, you’ll communicate the client’s requirements to the service provider doing the project. Once the service provider completes the work, you’ll review it and ensure it’s high quality before delivering it to the customer. You’ll also pay the contractor for the service rendered.
- Engage in customer service. After sending the final work to the client, get overall sentiment from them and provide feedback to the service provider. If the customer asks for revisions, work with the service provider to address the client’s concerns. Make sure your service provider contract lists the number of changes covered to avoid misunderstandings.
Benefits of drop servicing
From high profit margins to low startup costs and expenses, we cover the numerous benefits you can experience as a drop service business owner.
High profit margin
A drop service business model can help you make money online and achieve high profit margins. This is because you’ll have limited expenses, and you only need a few people to run a drop service startup.
As a result, you can earn a profit after paying freelancers and other normal expenses.
Low startup costs and expenses
Unlike traditional business models, drop servicing has low startup costs and expenses.
For instance, you don’t have to account for the contractors’ pay in your startup budget. You can subtract this amount from what the client pays while the business is in progress.
The few areas where you’ll have some direct expenses involve setting up your drop service website and purchasing a domain and online storage from a hosting provider.
Other business-related costs you may encounter include advertising, branding, and legal fees.
No specific skills needed
With drop servicing, you don’t have to possess specific skills, knowledge, or experience in the service you intend to offer.
For instance, If you’re looking to start a content production service, the drop servicing model will not require you to become a pro writer. Similarly, you would not need coding skills to run a software development drop service.
As a drop service business owner, you’ll work with freelancers and independent contractors who will do the heavy lifting for you.
You can deliver quality work to your clients even if you’re a newbie in a particular field.
However, having good customer service skills is a plus. Interpersonal skills can help you handle clients better and cultivate long-term relationships.
Remote work on your own schedule
Starting a drop service business comes with a lot of flexibility. You can have flexible hours and work from anywhere with an internet connection.
You can also scale the business up or down depending on your schedule.
Even though you’ll have a flexible schedule, being available to customers is important for continued business. So, check in regularly to ensure clients are satisfied.
The drop service business model is low hassle.
You only deal with digital services delivered to clients through the internet. As a result, you won’t experience the pressure of packaging and shipping physical items.
As a drop service business owner, you’ll mainly manage the communication between clients and service providers.
You can simplify this process by adopting task and project management software.
7 ideas for a drop service business
From search engine optimization (SEO) to website design, there are many drop service business ideas that you can start and make a profit.
However, we suggest doing thorough research to find popular search queries, which you can use to determine the business niche that is most attractive to you. A platform like Google Trends can help.
We dive into some of the best drop service business ideas to get you started.
Copywriting involves producing articles or content for promotion and marketing purposes.
With many companies and brands looking to promote their products, copywriting has emerged as a highly attractive field.
When you start a copywriting drop service business, you can find and hire copywriting experts on Upwork.
As more businesses shift to an online environment, the demand for web design and development services is high.
Companies need high-quality and responsive websites to connect with their clients.
You can take advantage of this opportunity by launching your own web design business and hiring qualified web designers from Upwork.
Social media management
With the growing popularity of social media platforms like Facebook, Twitter, Instagram, LinkedIn, and Tiktok, companies are increasingly looking for social media managers to help oversee their interactions with the public.
Work with experienced social media managers on Upwork and make money by investing in social media management as a drop service.
Graphic design is a broad field and involves producing visual content to communicate specific messages to an audience.
It includes publication and typography design, infographics, advertisement design, logo design, package design, game design, user interface (UI) design, and more.
Due to the breadth of graphic design, you can find numerous clients needing design services.
Consider starting your graphic design drop service by partnering with graphic design experts on Upwork.
Search engine optimization (SEO)
Search engine optimization is a technique for improving a website’s visibility.
Good SEO can allow a website to rank higher in the search results and receive more clicks, which is why many businesses are investing in search engine optimization.
Start an SEO drop service business by collaborating with SEO experts on Upwork.
Video creation and editing
Video editing and creation is also a wide field, meaning you can find clients with different needs, such as creating animations, short videos, and video ads.
Launch a video creation and editing drop service and make a profit by teaming up with top video editors on Upwork.
Lead generation involves searching for people interested in a particular product or service and gradually converting them into paying customers.
This service is essential because it promotes brand awareness, boosts revenue, and allows companies to collect valuable data they can use for decision-making.
Drop service businesses for lead generation are in high demand. Launch yours and attract clients using the services of lead generation specialists on Upwork.
How to set up a drop service business
Are you interested in starting a drop service but don’t know where to begin? We provide the basic steps you should follow.
1. Choose a service
The first step in starting a drop service business is choosing a service or niche to focus on.
Drop service business ideas include lead generation, web design and development, social media management, search engine optimization, graphic design, and others.
Don’t try to do them all at once because you may quickly become overwhelmed. Instead, start small and focus your efforts on a particular service.
This can help you get a solid understanding of a niche—and increase your chances of success.
2. Create a website
Once you’ve selected your service or niche, create a website outlining your services. You can develop a simple site using WordPress or Shopify.
Wordpress has numerous plug-ins and themes to reduce your development time.
Make sure you include capabilities for billing and collecting payment on your website. Clients should be able to pay using PayPal, Mastercard, or any other popular payment gateway.
This phase might be challenging to navigate, especially if you lack website development skills.
But don’t worry — you can find and hire a freelance web designer from Upwork to help set up your website, including payment integration.
Learn how to plan and manage your drop service website.
3. Advertise your business
With the development of your website complete, the next step is to advertise the services you offer. This allows you to reach potential clients and encourage them to visit your website and try your services.
You can advertise your service through different mediums, including Facebook Ads and Google Ads.
Although you may have to pay for these advertisement services, the potential rewards can be worth the expense. Your message will likely reach many people, some of whom may try your services.
Investing in a referral program can also boost the growth of your business.
4. Find freelancers on Upwork to deliver services for a lower price
Regardless of the drop service you wish to start, you can find freelancers with the right skills on Upwork.
We provide a step-by-step guide on finding the correct freelancer for your drop service business:
- Set a budget. Freelancers on Upwork charge various prices for their services. It’s important to set a clear budget that lets them know the amount you’re willing to pay.
- Develop a job description. Once you have a budget, design a job description that outlines the role—including the desired skills and qualifications the applicant should have. Freelancers will use this job description to gauge their abilities and determine if they fit the job.
- Assess the freelancer. When you post a job on Upwork, you’ll receive proposals from freelancers willing to work on your project. Go through them and assess applicants’ skills and qualifications from their supporting documents as well as the fees they will charge. Create a shortlist and do a video interview to understand their abilities better.
- Hire the freelancer. If you find a freelancer who matches your requirements, initiate the communication process by sending the project details. Discuss the project with them to make sure they understand what’s required.
- Formalize your relationship. Remember to create and sign a contract. The document should outline each party’s obligations, deadlines, confidentiality and liability clauses, and payment terms.
Read more on how to hire freelancers from Upwork.
5. Price your services for clients
Setting a price for your services is vital when starting a drop service business. You really don’t want to price your services so high that you scare away potential clients; or adopt prices that are too low, making it challenging for you to realize profits.
For better pricing, look at the rates charged by your competitors and analyze the amount that different freelancers require for their services.
Look at some prices freelancers charge on Upwork:
- Illustrators: $15 to $30 per hour
- App designers: $20 to $40 per hour
- Game developers: $15 to $35 per hour
- Blog writers: $15 to $35 per hour
- Transcriptionists: $12 to $22 per hour
- Data entry specialists: $10 to $20 per hour
5 things to consider before starting a drop service business
To maximize your chances of success, perform detailed research on your drop service niche. Pay attention to legal issues and taxes, among other factors covered below.
Before launching a drop service business, have a clear business plan. This document is important because it helps articulate your vision, mission, and digital marketing strategies. It also enables you to test the operational and financial feasibility of the drop service idea.
Business plan experts on Upwork can help you develop a detailed plan that covers all aspects of your business.
Although drop servicing is a legal business, it doesn’t hurt to look further at the legal issues you might be exposed to.
Note that legal restrictions may vary from one state to another.
You should also consider how different terms and conditions and insurance policies affect your drop service business.
Consider consulting legal experts on Upwork to help you understand legal issues and how they can impact your drop service business.
When running a drop service business, research and identify your tax obligations. Pay attention to the tax rules for domestic and international freelancers.
You should also know the types of tax return documents contractors must submit.
Going through all this tax information can be overwhelming. That’s why hiring a tax expert from Upwork can be helpful.
As a drop service business owner, you’ll have some startup costs, including those charged by your hosting provider for a domain name and website, freelancer payment, and marketing fees.
You need to plan your budget well to meet all of these expenses. Start your planning today by getting budgeting services on Upwork.
Like any other business, you’ll face risks when engaging in drop servicing. Some issues you may experience include dissatisfied customers, incomplete or poor quality service, and violation of contracts.
To mitigate these issues, review the quality of work you receive from freelancers before passing it to the client.
You should also ensure service providers know what’s expected of them, information that is clearly outlined in the contract.
Using a reliable talent pool like on Upwork can help reduce some of these risks.
Find the best freelancers for your business on Upwork
With low startup costs and no special skills required, a drop service business can be a smart business venture. Furthermore, it has the potential to deliver large profit margins.
As a drop service owner, you can find and hire professionals on Upwork to help you provide services to your clients. Get started today!
Upwork does not provide legal advice, and each reader and company should take the time needed to adequately analyze the laws that apply to their business endeavor.
Each state’s laws are different, so be sure to consult a local attorney so they can explain your state’s rules and regulations to you before making a decision.
This article does not address all tax issues for freelancers, and you should not rely on it for legal advice. We strongly encourage readers to seek tax advice based on their particular circumstances from an independent tax advisor.