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How to Generate Passive Income With Digital Products
Why Passive Income Is So Appealing
The idea of passive income is really alluring because you’re not often trading time for money. Or in other words, you are not performing a service in which you can only bill your client for those working hours.
Real estate is a great way to generate passive income, especially if you own low-maintenance rental properties or you pay a property manager. Selling digital products that can easily be replicated online (think a digital print shop, templates, courses, etc.) are even greater because the overhead is much less significant.
But is creating passive income really that simple?
Short answer: No. It’s not as simple as many people in the online business world make it out to be. We will get to that in just a bit (keep reading!)
However, digital products are super amazing because you can create something one time and sell it multiple times, which I like because it’s a greater return for hopefully less effort. (Again, stay with me!)
What I want to cover in this post today is why it’s important to offer digital products PLUS some tools that you may need to get started. If you are a digital creator, if you’re an educator, or even a service provider, this post (and video if you choose to watch) will give you an idea of some digital products that you might incorporate into your business.
The Benefits of Digital Products
Digital products come in all shapes and sizes. They could be things like Swipe Copy, (which is essentially text that you can take and adapt), Graphic Templates, or Digital Tools such as ClickUp templates, spreadsheets, or even custom fonts, licensed creative content, etc. There are hundreds of thousands of creators who sell their products on Etsy, Creative Market, Envato Marketplace, and Adobe Stock.
One of my favorite digital products includes courses and masterclasses. These are an amazing way to educate dozens if not thousands of people at a time and guess what?! You only have to deliver the training one time and record it. Boom!
Bottom Line: A digital product is something that you can create one time and resell it.
By the way, if you’re looking for some help with email marketing, video creation, defining your client, or honing in your messaging, I’ve got a handful of resources in my Shop!
Specifically, check out my Client Discovery Workbook ($27) or the Customizable Email Welcome Sequence ($97). If you’re needing help with messaging and video creation, I have a Classes + Courses, all of which include lifetime access and access to future updates.
How to Start Generating Passive Income
First Up: Tools You May Need
The tool or point of sale (POS) system will vary greatly depending on the product you’re creating. For the purposes of this section, I’m going to focus on selling digital courses.
Once you have your course content created, you’ll need to host it on a platform preferably with a built in POS. All of my courses are hosted on Thinkific, however Teachable, Kajabi, Kartra, and Mighty Networks are other popular options. Note that the monthly cost and features vary from platform to platform.
One of the reasons I chose Thinkific is because it offers a variety of plans, which I can upgrade or downgrade depending on whether a course is running or not. Students can easily access trainings in my Attraction Marketing Accelerator or video course and the platform even allows you to host live trainings as well.
Not in a place to invest $50-$200/month for course hosting? Here’s a workaround: You might upload your course content to Vimeo and send students a private link. Another option is to house content on Google Drive or Dropbox.
Keep in mind that you will not be able to monitor their progress, easily notify students of updates, or process payment with these tools. (Read on!)
How to Process Payment Outside of A Course Hosting Platform
One of the resources and tools that I use in my business is called Thrivecart. Thrivecart is a checkout software that allows you to create a digital cart where you could add up cells and down cells and you have almost a little mini sales page for your digital product.
For instance, I have digital products that I sell like my Welcome Sequence and my Dream Client Workbook in Thrivecart, and rather than creating a separate sales page, I can list what’s included in the product and add images and text all on this checkout page. Clients can then put in their credit card info or pay through PayPal, then once processed, they’re redirected to your product via digital download or redirect link.
The Truth About Passive Income
The Benefits
In many ways, having a passive income source creates an opportunity for you to no longer trade time for money. You put in the same amount of time or effort to create a digital product whether you have 10 or 10,000 sales.
In this way, you reduce the amount of “production time” which frees you up for other opportunities or business ventures, ultimately making way for multiple revenue streams.
For instance, I have an agency where we have done-for-you services. I also have my coaching programs, and then I have digital products that add just a small stream of revenue so that I can make a sale, a quick buck while I’m sleeping, which is fun for me! I have two little kids. My time is limited, like all of ours.
The Burdens
The downside of passive income through digital products is while your production time is cut down significantly, your sales and marketing require much more effort. You have to constantly drive traffic to your offer – either organically or through paid advertising and fancy sales funnels.
I am not an ads expert or a super technical funnel builder but here’s what I do know!
In order to truly have a passive offer, you will need to invest in an automated funnel ($) that uses specific targeting ads and retargeting ads. You’ll need a high-converting opt-in, likely a tripwire, potentially an order bump, all leading to your offer. Oh and all of the emails in between… I’m overwhelmed just typing that out!
The good news? There are lots of specialists out there that can help you build an evergreen, automated funnel. The not so good news is that it may cost $15k+ in addition to monthly ad spend ($2k+ depending on your goals).
Let’s set aside paid ads and talk about the organic side of things.
To have a strong organic marketing strategy, you need to consistently show up on your platform of choice (be it email, Instagram, YouTube, Pinterest, etc.) Consistent quality content tells the algorithm to show your stuff to more people, which boosts your visibility, and hopefully increases your Know, Like and Trust factor.
Once you gain your audience’s trust, you’ll strategically (but in a nice way not a sleazy way) position your offer in front of them with solid messaging and then move people down the funnel into a sale.
My biggest piece of advice: Live launch/sell your offer at least twice before you invest in an evergreen funnel.
This allows you to test your offer, get feedback, improve it, and also test your marketing content! Find out what worked, what didn’t, and then you may be ready to invest in the right team to put your offer on autopilot.
Your Next Steps
If you don’t already have a digital product, start thinking about one that you could create. Maybe you already have a really successful free resource or lead magnet that you can build upon and turn into a paid offer. Perhaps you’re a photographer that could sell a preset for your clients, or maybe you teach a free class that you can clean up and sell for $27.
I want you to start thinking about those items that you could turn into passive income because you never know what will hit well. And don’t hesitate to ask your audience and do a bit of research before you go to the effort of creating a product.
Make Sure You Read This Section
Whew! That was a LOT! There is so much to be said about digital offers and passive income that it is impossible to include everything in a blog post, but please know that the best place to begin is to come up with an idea and take action right away. It may not be a home run from the get-go, but doing so will give you the momentum to create the next thing and the next!
I am always happy to answer any questions you have. Just shoot me an email or connect with me on Instagram. Also, if you’re looking for somebody to help you strategize what your organic or your paid marketing funnel would look like, I am here to help you and be partners and guide you in that way.
Lastly, be sure to head to my website to grab these free resources. And head to The Shop if you’re interested in our courses, classes, tools + templates!
Hope this was helpful!
XO, Liz