Service Arbitrage: Jump Ball Isn’t A Strategy

Forget everything you’ve seen on Mad Men. Your job, as the operator of a service arbitrage or drop servicing business, is simple: distill chaos into order.

Actually you want to go one step further: you want to put client chaos on a leash and force it into a standard repeatable process, run by an experienced team. You are building a machine, focused on a very specific purpose, serving a target client. Once that machine exists, you will focus your attention on that target client where you will deliver a specific service. Anything outside that narrow space should be ignored.

Stop thinking about projects, start thinking about process. Repeatable processes.

Why?

Because jump ball isn’t a strategy.

Sure, we can all scramble after business. Hustle to meet whatever a client wants today. Race around finding people to shop the work to, paying whatever rate is offered. But anyone can do that (and bid against us). We’re not going to walk away with much profit.

We must focus. There are massive advantages to be gained by becoming the best player in a small niche market. Imagine our advantages when we repeatedly sell the same thing:

  • Finding Clients – Since we’re always pitch the same deal, we level up faster
  • Client Service – We know where things can go wrong and how to prevent errors
  • Lower Cost Talent – We’ve got the volume to get a better deal from freelancers
  • Efficient Processes – We’ve built standard specs that reduce work time & errors
  • Pricing – Since we always sell the same deal, we know how to get a better price
  • Related Services – We know related services that we can easily include in a deal
  • Automation – We’ve built an environment where we can start automating work

In other words, we are positioned to earn a lot more from a project than someone scurrying around playing jump ball.

So How Do We Make This Happen?

You can work this from one of two ways:

  • Land your first client as a freelancer and test outsourcing the work
  • Shop for available services and think about how to pitch them to a buyer

Either way it is time to go shopping on Fiverr. Go ahead and set up a business account using the banner below; the search box will show you a list of freelancers in your area.

Pick a few and reach out to them for test projects. I recommend buying at least once or twice from a freelancer for small projects before using them for a large client project.

Think about how you can bundle the services these freelancers into a solid service offering. Here are a couple of good ideas:

  • Guest Posting Services
  • Bulk Content Writing
  • Keyword Analytics & Canned SEO Reports
  • Content distribution on social media, upload sites, or similar platforms
  • List Building Research, Generic Data Scraping
  • Creating more or less standard documents like a resume
  • Basic advertising campaign management

Don’t be afraid to zero in on specific target customers as well, especially if you have the expertise to add value or credibility to the offering. Have you worked in a specific trade or industry? Played or coached a particular sport? Taught a subject? You’ll have special appeal to clients who want to know their project is managed by an expert in the field.

Here’s a real life example of this idea in action. I started doing freelance writing this past year as a side hustle. I’d describe my abilities as a writer as “entry level”. While I’ve got a respectable college degree, I’ve never worked in journalism or been tutored in the finer points of style. Absent other relevant qualifications, the market clearing price for writers such as myself on Upwork is between $30 and $50 per blog article.

What sets me apart from my peers is I’ve got over a decade of experience in a specific industry and strong background in finance and technology. This allows me to charge five times more than a typical content writer for assignments in that industry.

So let’s look at how we can scale this up with a little bit of outsourcing & creativity.

To make this real, we’ll use the actual numbers on my last writing project, an Upwork fixed price gig at $250 for a 1500 word article. I netted $200 for about three hours of work. Unlike a traditional client, I didn’t need to invest unpaid time in pitching (sent my standard letter) or chasing payment (client pre-funded a milestone). So I made $66 per hour. I’m expecting this to turn into a repeat assignment, as I’ve seen with similar clients.

So how can we use outsourcing and a little strategy to improve upon this?

Remember that my value add is my industry expertise – not my wonderful writing. I can draft up a list of key points and hand this article off to a generalist writer, who can probably do a better job of drafting it. I’ll do final edits and polish a few areas. From experience, my total time on the article will be an hour and we can get a great writer for $75. Doing the math, this boosts my effective rate to $175 per hour ($250 – $75).

But we can do better than this….

Pick The Right Clients

The biggest problem with this business model? We’re jumping through hoops to make a few hundred bucks per client. I’d like to get paid more than that. So how do we make that happen?

Our first move is obvious: stop wasting time with single gig clients and focus your attention on prospects with the potential for repeat purchases. Look for people who need to buy the service on a regular basis. This usually splits into one of four camps:

  • Business – “Done For You” Services
  • Business – “Custom Development”
  • SEO Agencies | Resellers

I split business clients by the level of service required, which has very little to do with the company and is a function of the buyer’s ego, personality, and general arrogance. The dividing line comes down to how much control a client wants over your process. This tends to fall into two camps.

My favorite, the “done for you” clients, will leave you alone unless you screw up, which give you room to tweak your process to cut costs and effort. You can swap writers, plan ahead, tweak processes, recycle concepts, and other things to cut corners on the work. The results can be epic: I was able to double my effective rate on one writing client by artfully simplifying her process. Since the deal was fixed price, I kept all of the benefits, netting $100 to $140 per hour for a flexible gig that I used to soak up any unsold time.

The other kind of business client can be profitable as well, where you’re dealing with some aspiring creative visionary who wants custom everything. This person requires intense handholding as a client and will expect you to continuously update the work. So you’re going to need to invest a fair amount of time in the relationship. It’s critical to ensure you’ve got variable pricing in place (per hour or per change) or you’re going to be scrambling around for free. The good news? You can usually charge them more.

SEO Agencies and other resellers where your product is the core of their business are an interesting bunch as clients. The bad news is they’re price driven buyers after the lowest rates. On the positive side, they buy regularly, don’t tend to play games with writers, and are sensitive enough to quality that they’ll pay a higher price for material that are “good enough” to past muster. This can create nice opportunities if you’ve got specialized expertise and they need it for a specific client. Avoid working with them on generic gigs since they’ll grind you in the ground on bidding and price competition…

Don’t forget to ask for the business, by the way. It’s normal for most clients to hire you as “a test” to deal with a specific problem. Complete the first job and ask for another. Look for ways to adjust your services to cater to that particular buyer’s preferences (outside of price; stand your ground on rates).

In summation, think about where you want to pitch your services and cater to the client’s specific interests. And price appropriately – fixed price if you think you can reduce costs over time, variable (hourly) if you’re expecting a lot of client drama.

And stop wasting time on single gig buyers!

Build Out Your UpSell Opportunities

You know what I like even better than a slate of ten articles that we’re going to earn $175 each for a total profit of $1750? Upselling that order to earn $300 per article by bolting a couple of additional high margin services into the package.

First, I’m going to ask how the client intends to post the article on their website, ideally spicing it up with graphics. Since many small business owners and corporate marketers are too busy to really learn WordPress, this is an easy area for us to add value. If we’re including an stock image or two in the package along with formatting, we can charge $50 to $100 for posting the content. This will take a virtual assistant less than an hour plus an additional charge for image licensing (from a vendor such as depositphotos). Your profit margin will be 60% – 80%.

Stock Images

Finally, what if we can provide the client with additional value by optimizing their content to rank on Google? The chart below is from a software package called CanIRank. You use it to optimize web content to rank higher on Google, so the web page attracts substantially more traffic. Given the client is already investing $250 in having you create an article, why not spend an extra $100 – $200 to ensure they’re going to get the most for their investment? It’s an easy upsell. And since a license for CanIRank costs $49 – $79 per month and it takes maybe 20 minutes of work by your virtual assistant (check Fiverr!) to complete this, this is yet another high margin service that you can roll into the package you offer to clients. (For more details on the software, check out the Canirank review here)

Software Compares Your Content To Top Ranked Pages To Show You The Gaps

Parting Thoughts

Is this easy? No, It requires actual work.

This is the same mindset that large companies use to build their business. It works. Understand your capabilities. Get close to the customer. Lock them in and upsell.

And along the way, keep working on reducing the cost of servicing your customers.

Our examples were focused around writing. The same thought process can be applied to almost any service sold to a business customer. You’re being hired to fix a problem.

As the math in this example demonstrates, the opportunity can be compelling.

Go ahead, search Fiverr using the box below to see what service are available.

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