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What is a digital product business?
With this kind of online business you’d be creating and offering a digital product, not a service. Think information products or self-hosted software.
You’d sell the product directly to the customer, usually for a one-time fee, or make money via ads, donations, that kind of thing.
Digital Products are one of 19 types of online business and considered a Level 4 online business, according to our framework.
Click here to see all 6 levels and 19 types of online business
6 Levels and 19 Types of Online Business
Level 1 = Novice
Okay for side income or beer money, but hard to earn a living.
Level 2 = Intermediate
Best for earning a living online when you’re starting out, but hard to scale.
Level 3 = Advanced
Easier to scale and higher income potential, but you usually need significant investment of time and/or money upfront.
Level 4 = Superior
Even more scalable and even higher income potential, but also more complex / difficult / expensive.
Level 5 = Distinguished
Most complex / difficult / expensive, but the rewards here can be massive.
Level X = Wildcard
These are the misfits. Many aren’t even considered businesses in the traditional sense, but they are all ways to make money online. You typically need a lot of time, money, or luck to succeed with anything here.
How can you make money online with digital products?
Here are the legit ways I’ve found to make money online with digital products…
Write and Sell an eBook
Yes, it’s still possible to make money online this way.
Daniel Vassallo is a good example, earning a bundle from an ebook and an online course in early 2020…
Daniel Vassallo
Create and Sell an Online Course
Michelle Schroeder-Gardner created a profitable online course about affiliate marketing…
Sam Ovens has done well selling courses about consulting…
Sam Ovens
Create a Mobile Game
Monetization options are limited here but Anders Lundbjörk proves that you can make a decent living as an independent game developer…
Anders Lundbjörk
Build a Mobile App
Danny Connell has created several apps and earns a good chunk of income from them…
Danny Connell
Build an Add-On or Plugin
Adrian Spiac’s small company has done well building and selling premium plugins for WordPress…
Adrian Spiac
Create and Sell Music or Audio
Ant Chamberlain went from $0 to $20k/month creating and selling his beats online…
Ant Chamberlain
Create and Sell Photos or Videos
Steve Heap seems to be one of the few people earning decent money from this nowadays…
Steve Heap
Pros and Cons of Digital Product Businesses
- No inventory issues; easy to scale.
- Strong passive income potential.
- Much easier than physical products, less overhead: no shipping or storage issues, easy returns, etc.
- No matter what you’re selling, there’s probably a marketplace you can use for distribution (eg. Amazon for ebooks, App Store for apps, Udemy for courses).
- Usually requires a complex set of skills.
- Marketing the product is often a challenge. How to stand out from the crowd?
- Piracy / illegal downloads.
- Lots of fake gurus and scams promising quick and easy success.
Is a digital product business a good way to earn a living online?
Yes, but I consider it a tough one to start with.
Creating a great digital product is a challenge in itself. Then you have to figure out sales and marketing. The people who seem to do well here usually have some solid marketing skills and/or an existing audience they can pitch to.
Digital Products Courses
Here are some courses you may want to consider…
🏆 Best Digital Products Courses 🏆
Digital Product Business Resources
- Gumroad University
A collection of free guides and case studies to help you create and sell digital products.
Written by Niall Doherty- Contributions from the FBB Community
Written by 
Contributions from the Published: August 27, 2020
