Working from home is quickly becoming the norm and with the freedom that comes with not being confined to an office environment, some of you are dipping your toes into the world of online business and digital products. You may be looking at the various websites on offer, and wondering which ones are the best purchases.

Not only do you have to figure out which websites are good or bad, but you also have to figure out which TYPES of businesses are worth looking at.

There are a ton of different businesses to try your hand at, but if I were to put my money on the best space to invest your time, I would choose digital products any day. Digital products are now a trillion-dollar market and growing as new ideas and niches are discovered.

The real beauty of selling digital products is that you can create something once and it can be sold over and over again. You just need a great product to start with.

The real beauty of selling digital products is that you can create something once and it can be sold over and over again. Click To Tweet

What Exactly Are Digital Products?

A digital product is a product that doesn’t have any physical form that you sell online. You can’t hold an eBook in your hand, but that next bestseller swirling around in your head could be your ticket to financial freedom.

Digital products can range from products you use every day like podcasts and software to very niche products like 3D printer design files.

Often, the first thing that comes to mind when thinking about digital products is educational content. Courses are the powerhouse of digital products right now, but video tutorials, training manuals, and other learning aids also fit into this category. You can teach others how to knit, repair a car or habla Español; or help them completely transform their lives with a new way of thinking.

This also gives you a good opportunity to add digital products to an existing website, which is something we’ve done a few times at Onfolio. Read a case study we made about it here

Another big type of digital product to consider is tools such as stock photography, presets and filters, fonts, spreadsheets, templates, plugins, and software. Anything that makes someone’s life easier can easily be packaged up and sold as a digital product.

Entertainment is a more creative category and can encompass things like music, eBooks, podcasts, audiobooks, and digital art. Think you’re the next Stephen Spielberg? Put out a short film. Got a funny bone? Publish your latest stand-up routine.

Basically, if you’ve got any knowledge or expertise to share, you can turn that into a digital product. Here’s a quick look into three of the most popular types of digital products.

Online Courses

Courses can easily be considered the most profitable digital product category for the sole reason that you can fetch a higher price point for them. They are also one of the most time consuming to create and hardest to sell because of that high price point.

An online course can take many forms and you can get creative with the delivery to suit your audience and teaching style but the most common courses can be found as a video or series of videos with or without accompanying written content.

Price-wise, while you can certainly find courses out there for less than $20, most online marketers who know what they’re doing start at a minimum of $99. Premium courses with detailed tutorial videos, practical activities, and a library of supporting content can get into the thousands.

eBooks

If you’ve always fancied yourself a writer, there’s never been a better time to consider self-publishing and getting your stuff out there. eBooks can take many forms including fiction, non-fiction, recipe books, graphic novels, and even magazines.

You can make it available through your own website or via an online marketplace such as Amazon. There’s a lot that goes into forming a solid pricing strategy for ebooks but recent data shows most bestselling eBooks are priced from $3 to $7.

Software and Apps

If you’re a computer whiz, creating the next big app or piece of software could be in your future. Even if your strengths don’t go as far as coding the next Angry Birds or Instagram, you can consider solutions in a framework that you’re already comfortable with. Know WordPress inside and out? There’s a huge market for themes, plugins, and other customizations. 

Web-based applications such as Dropbox, MailChimp, and Asana are another avenue to consider with the added advantage of being able to charge a recurring fee for access instead of a once-off charge.

What Makes Digital Products So Great?

You could quite literally write an eBook in Google Docs, save it as a PDF, post about it on your social media, collect money with Venmo or Paypal, and email them the book. No special software, tools, or big upfront costs needed.

I’m not recommending that you go this route, just simply demonstrating how ridiculously easy it can be to produce and sell a digital product. The barrier to entry is so low, that the only thing you’re limited by is your imagination. In fact, when we’re first testing a digital product with an existing site, we like to validate the idea by doing something simple like this first. 

The barrier to entry for digital products is so low, that the only thing you’re limited by is your imagination. Click To Tweet

Prove to yourself that people are interested in paying for the topic, then go to the effort of making something higher quality.

In terms of logistics, once you’ve established an automated system of getting your products out, there’s very little you’ll need to do to manage each transaction. You also technically have unlimited stock so as long as your product stays relevant and in-demand, it can be sold endlessly without having to worry about running out of stock.

Speaking of logistics, another huge plus for digital products is a wider customer base. If I physically sell cute Etsy-esque tote bags, I’m limited by traditional barriers such as where I can practically ship to and how much that’ll cost, not to mention the nightmare of customs restrictions in different countries.

With a digital product, the location and distance of my customers become irrelevant and I can now technically sell to the 4.5 million people worldwide who have access to the internet.

But my absolute favorite thing about digital products is once you create one successful digital product, you can move on to your next. They’re infinitely scalable and you’re not limited by how many products you make and sell.

How Do Digital Products Compare?

People often get stuck on the idea that your online business needs to provide some sort of physical product. While that business model can also be successful, digital products are, in my opinion, so much more manageable and almost the definition of passive income.

eCommerce in general has many forms but when it comes to selling physical products online, Dropshipping is a popular business model where you’ll find swathes of self-described entrepreneurs in digital nomad hubs around the world trying to get their share of the prize.

Dropshipping is an order fulfillment model that doesn’t require you to keep products in stock. Instead, your online store sells a product, passes on the order to a third-party supplier and they then ship the order to the customer. With this model, you’re not liable for carrying and maintaining inventory but you’re at the mercy of your supplier and need to act as the middleman between the customer and the supplier.

By comparison, when selling digital products, there’s no inventory to keep or ship and you get to manage the process from ordering to delivery. It can be mostly hands-off once you’ve established an effective delivery method.

Not that I want you to think that selling digital products is all pros and no cons. Besides the fact that you will need to invest significant time in building your product, competition and copycats are two of the biggest disadvantages. 

Once your product is out there for anyone to purchase and consume, you run the risk of someone copying your great idea and making their own version. More competition can mean that premium prices need to be reconsidered or you’ll need to rework your product to keep it fresh and unique.

What Success Looks Like

While there are many examples of success stories out there, one of my favorites is the couple who now make $600,000 per year selling digital products. Pixie Faire is one of the largest marketplaces for doll clothing patterns (who knew that was a thing?) and they are currently generating an average revenue of $50,000 a month. 

After creating clothes for her daughter’s dolls and getting repeated requests from other moms and daughters, the founder behind Pixie Faire saw a unique need that wasn’t being filled. She decided to use her special skill set as a seamstress and designer to offer first dolls clothes by request and later sewing patterns so customers could make their own.

They started as an eBay store in 2008 before taking their downloadable PDFs to their WordPress website and finally landing in Shopify. The business has scaled as demand grew and they now feature other designers and publish online training courses on design, pattern-making, sewing, and how to run your own craft business.

You can see that there’s no real limit to the types of digital products that can do well. The important thing to keep in mind is that the best products are the ones that truly solve a problem. A common theme I’ve seen with digital products that do well, is they started as something the creator used themselves and it was so useful they made it available to the public.

The best products are the ones that truly solve a problem. Click To Tweet

Summary

The real beauty of selling digital products for your online business is that you can create something once and leave it to be purchased over and over again. You just need a great product, an efficient way to sell and deliver it, and a solid way to market the product. Definitely one of the most uncomplicated business models out there.

Honestly, the two biggest parts of developing a successful digital product are finding that gap in the market and investing the time needed to create the best option for your customers. Whether as a side hustle or your full-time income, your digital product has the potential to build your passive income, once you’ve invested the time and energy into creating it first.
For some digital product inspiration, check out our latest list of websites, apps, and businesses in a variety of niches.

Dom Wells

Dom Wells

Dom Wells is the founder of Onfolio.co. He's been actively building, buying, and selling websites since 2012, and has learned from many a mistake over the years. Through Onfolio, he works with other investors to find, buy, and then operate content sites, without the mistakes.