In an age where people are faced with steadily rising costs of living versus wages that lag, earning passive income sounds like a great deal. Certainly, setting aside some excess money into stocks, letting a room, or even renting your parking space is an easy way to bring in cash flow with little effort.
Unfortunately, not everyone has such assets lying around, waiting to be optimized. Try to rent space that you don’t own, and you’ll probably find that the property owner has contacted MS Webb & Co. to put up a concrete barrier. And you can’t sublet without the landlord’s permission.
Fortunately, there’s more than one way to get in on the passive income game. With a computer and an internet connection, you can make money in the virtual realm with minimal upfront investment. But is selling a digital product really that passive?
An overview of digital products
Digital products can come in various formats. There are online courses available as ebooks, presentations, and videos. For creatives, you can also try to sell or license resources, such as stock photos, footage, or audio, or vector art, icons, and fonts.
Selling digital products may not be passive income in the strictest sense. You usually don’t spend money to create a product, other than the minimal equipment and energy required. But you do have to input another kind of investment: sweat equity.
Digital products require expertise and are actually a form of leveraged income. On top of the creation process, you need to handle the distribution and marketing. That could mean setting up a website or promoting your work on social media. It’s an added dimension to the task that many people might not be prepared for.
On the other hand, selling a digital product is an inherently scalable business model. Once you’ve hurdled the initial requirements, you can sell one copy or a thousand without having to invest further effort.
A startup secret
Is selling a digital product worth the effort? The heart of the problem lies in the ‘make or break’ stage of creation and initial launch. After all, it’s here that most of your input will be required.
What if it fails to sell? Then you have to reconsider what to do. Maybe rethink your distribution strategy, change the format to be more engaging to your ideal audience, or add value to the content. In other words, more input before you get any ROI. And it takes you further away from the goal of passive income.
The secret to solving this problem is a tactic commonly used among startups. It’s called the minimum viable product, or MVP. The concept is simple. You don’t want to waste time developing a perfect product only to fall flat. You put forth something usable, reliable, and functional, with the minimum effort required. Gauge the response, and start working to improve it from there.
Failing fast and forward
MVP is a way to fail without having more input than necessary. You may not be happy with putting out what’s in your perception a half-baked product, but quality isn’t the only factor that determines if your work will sell.
The MVP strategy is a means of gathering information quickly. It tells you what works and what doesn’t, while at the same time offering the potential to recoup some costs and make the venture somewhat profitable.
Initial efforts to put out a digital product are rarely runaway successes. With that in mind, why not fail forward? Instead of leveraging all your effort upfront, distribute it and maximize its impact. Each iteration brings you closer to an ideal product that resonates and sells without needing more effort.