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.
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…
- Digital Product Creator
- $100,000 revenue in 4 months
Create and Sell an Online Course
Michelle Schroeder-Gardner created a profitable online course about affiliate marketing…
- Blogger and Online Course Creator
- $1.1 million online course revenue in 2.5 years
Sam Ovens has done well selling courses about consulting…
- Founder of Consulting.com
- $2.5 million consulting.com monthly revenue
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…
- Mobile Game Developer
- $5,000 monthly revenue
Build a Mobile App
Danny Connell has created several apps and earns a good chunk of income from them…
- App Developer and Coding Instructor
- $7,776 monthly revenue from apps
Build an Add-On or Plugin
Adrian Spiac’s small company has done well building and selling premium plugins for WordPress…
- Co-founder of Cozmoslabs
- $45,000+ monthly revenue from premium wordpress plugins
Create and Sell Music or Audio
Ant Chamberlain went from $0 to $20k/month creating and selling his beats online…
- Music Producer
- $20,000 monthly revenue selling beats
Create and Sell Photos or Videos
Steve Heap seems to be one of the few people earning decent money from this nowadays…
- $2,737 monthly revenue from stock photography
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.