If you’ve ever been interested in making money online and dipping into virtual entrepreneurship, you’ve probably heard of digital products. Unlike physical products, digital products can be easy to create, maintain, and sell – and offer a ton of advantages for creating a business. We’ll get into these below.
The sky is the limit with digital products. But it’s easy to get overwhelmed. You’ve probably been bombarded with stories about people and their 6 figure side-hustle selling printables. While these stories are AMAZING and exciting, there are also people struggling to get traction. There are people creating great digital products that don’t sell.
Maybe you’ve experienced that.
In this post, we’re going to give you some real, proven strategies for how to make money selling digital products. We’ll give you some of the products that offer the best margins, and we’ll give you some examples of entrepreneurs who are killing it with their digital products.
If you want more support in building your online course and community, come join OUR Mighty Community for free and meet other new and established community owners! We’d love to meet you. Join for free!
In this article...
What are digital products?
Digital products are virtual assets, items, or experiences that are sold and distributed online. They don’t require physical manufacturing, and instead are developed either directly by programming or else through using existing software and adding your own intellectual property.
Ok, was that a bit dense?
Let’s try some examples. Netflix creates a sort of digital product when you buy a subscription and watch The Office. They don’t need to burn DVDs and mail them to your house. They add the show onto their platform and you pay the fees to watch it. That’s an example from a big company, but there are tons of smaller digital products being created all the time. We’ll give more examples below.
5 advantages of digital products
- Low overhead to build: Unlike a physical product, where you need to think about manufacturing, virtual products are often cheaper to produce and sell. For example, if you sell a physical book, you’d need to think about printing, binding, and shipping. With an ebook, you don’t.
- Scalable: In many cases, digital products are much more scalable than physical ones. If you create and sell an online course, it doesn’t make much of a difference if 50 or 5,000 people buy it. This isn’t the case with an in-person course, you’d probably run out of chairs!
- Easy to build: Early digital products were time-consuming and often required a lot of custom development. But we’re living in an age of white-label and premade platforms that offer you a ton of ready-made options for building products – you only need to bring your ideas and creativity.
- No shipping: Digital products don’t require shipping. Fulfillment is done online.
- Easy discounts: If you offer a discount on physical products, there’s a chance you’re cutting into your bottom line – your profits. When you offer a discount on a digital product, you’re usually just going to sell more of something that won’t cost you any extra to make anyways.
Examples of digital products
- Online Courses
- Virtual Events
- Website Themes
- Music & Movies
How to make money selling digital products
There are WAAYY too many people who are building digital products and not making money. Sometimes the digital product space can feel a bit like the gold rush – the people who make the most are the ones who sell the shovels.
The truth is, influencers telling you how to make money online can sometimes be more interested in selling their digital product TO YOU than helping you sell yours.
So with this guide, we want to give you a realistic roadmap for how to make money selling digital products. These are the steps that have worked for lots of our Mighty Hosts, many of which have built thriving businesses!
Step 1: Figure out your ideal user
One of the first – and most important steps – to creating a digital product is to figure out who it's for.
Resist the urge to try to throw together a product that is aimed at everybody. The old saying is, "there's riches in niches." And it's still true.
The more specific you can be about who your product is for, the more likely you will be to sell it.
One of the processes we like to think about for selling courses and memberships is coming up with what we call an Ideal Member.
To find your ideal student, user, customer, or member, you can ask a couple of questions:
- Who are the people who most need what you have?
- What does your digital product do for them?
- What are the struggles, pains, questions, or dreams you can help them with?
- What type of people are they? (demographics)
- How much are they willing to pay for a solution?
One of the best ways to find your Ideal Member is to go out and interview some people who might be a fit for your digital product. Talk to 15-20 people and find out the answers to the questions above.
We have a full training on finding your Ideal Member in our Mighty Community if you’re building a community or course.
Step 2: Identify the type of product they need
Once you know who your digital product is for, you're in a way better place to figure out what type of product to build. Look at the needs that they have. Your product should help them meet these needs in a way that fits their life.
For example, if you are creating a product aimed at busy parents, you probably shouldn't choose something that requires them to tune in to virtual training for a full week. It might be better to have an asynchronous course that they can take in their limited spare time.
It's also important to think about the transformation you’re offering – which a lot of digital products do. If you are trying to teach somebody how to live a more active lifestyle, a 20-minute webinar probably isn't what you need. Building a membership community, on the other hand, will probably be just the ticket, giving your members long-term value, help, and accountability.
Step 3: Figure out your own creative style
The product you're creating should also fit your own style. What are you good at doing? What are your particular gifts?
If you're a gifted speaker, a webinar might be best. If you are a gifted coach, maybe you should be working one-on-one with people. If you're great at coding, maybe you should build an app.
Identify your unique skills and abilities to help people solve the problem, and choose something that fits what you're good at.
Step 4: Choose a profitable business model
Ok, so here’s the trick to make money selling digital products.
You need to choose a profitable business model. There’s no one model that works, but thinking through some things at the outset will increase your chances of making money.
- Price what it's worth: Pricing can always be a bit scary, especially for a first-time entrepreneur. Most first-timers are tempted to charge too little. The problem with this comes in two parts. First, the lower you charge for your product, the more you’ll need to sell to make it profitable. Second, what we’ve learned from communities and courses is that, when you don’t charge enough, people won’t stick it out. It’s easy to forget about a course you paid $12 for. You need people to have skin in the game, so ironically, by charging more you’re making it more likely your members will succeed.
- Keep your overhead low: It's easy to get caught up in the coolest marketing tools, nifty customizations, fancy cameras, or the highest-end builders. But if you can keep your costs low at first, you’ll increase profitability. You can always spend on more tech goodies as you grow.
- Recurring revenue: While it's not always possible, if you can create a product that brings you recurring revenue you are well on your way to a profitable business model. We've discovered this with communities. When you have a member join, and pay the membership fee, they will keep paying month after month until they leave. This is very different from a product that people buy once and never again and can make for a really profitable business model!
- Pre-sell: When you tell people you’re building a digital product, a lot of them will say, ”That’s a great idea!” But that doesn’t mean they’ll fork over the cash to pay for it. One great way to make sure your digital course will be profitable is to pre-sell it. If people are willing to pay upfront, you know you’ve got the revenue locked in!
Step 5: Choose your tech
There’s always going to be some tech involved in building and delivering a digital product. We won’t get into all the many choices and details here, but we’ll link to some other articles below to give you some ideas.
And if you want to try our awesome community, course, and events platform, check it out!
Step 6: Build & launch your digital product
The next step is to build your product on the platform of your choice!
7 digital products that will make you money
Online communities are pretty much the perfect digital product. They check all the boxes for a great business model.
If you want an example of an amazing community business, you should check out Ashley Fox’s story. Ashley left her “dream job” on Wall Street and decided to devote her life to helping the other 99% build wealth. The result – The Wealth Builder’s Community – brings people together to find financial freedom.
There are some great advantages to a community-based business. First of all, you don't need to do a ton of work upfront to start a community. No sinking a month into building something only to find out that it doesn't sell. You can just invite your first members and get started.
Secondly, it's a recurring revenue model. Of course, there will be some membership churn over time. That's normal. But if you do the background work we talked about above, a lot of people will stay and love your community for a long time. That means your income will snowball.
And by the way, people love communities. They fit our natural human desire to connect and belong, and they're way less personal than a product you download and have to do on your own. This is also why communities are a must-have add-on for great courses and events too.
If you want to see a community in action, come join our Mighty Community! It's free!
When we think about digital products, a lot of us think about courses. And it’s totally natural – because the internet opened up a lot of opportunities for course creators.
The old faithful of internet courses was the asynchronous course, that you create in advance and people watch on their own time. There are some great advantages to pre-recorded courses, including the fact that they work well for learners who need the time to pause and replay AND that students can watch them at their leisure.
But we’re also seeing a huge and growing desire for cohort-based, synchronous courses – where people come together and learn live, getting feedback from an instructor and having the chance to meet fellow students.
Whichever way you choose to go (and let’s be honest, you could do both!), courses aren’t going anywhere.
One example of a course-based business we love (that has community along with it) is Leigh Metcalf’s awesome sewing-based business: Topstich Makers. Leigh ran a bricks-and-mortar business in Atlanta before the pandemic hit, but decided to take them online. She mixes both live and pre-recorded courses to help people discover the joy of sewing.
Since we're talking about a cohort course, let's talk about its cousin: the live event. A live virtual event brings people together to learn, get excited and inspired, and make new friends.
If you are looking and how to make money selling digital products, consider hosting live events.
Tara McMullin has built an awesome business around live events for entrepreneurs in her What Works Network. She was a pioneer in the virtual events business, working hard to recreate all the best parts of a live event in a virtual space like hallway moments and lunch networking. She’s experimented with different formats (giving people something different than just a talking head on a screen).
The What Works Network is a great example of how virtual events can be packaged as a sustainable digital-product business.
Ebooks have been around since the early days of the internet. But they're still awesome. With an ebook, you can create an amazing digital product that people can explore on their own time. You could use a platform like Amazon KDP to sell it, or find one of the many other ebook software options out there to host and deliver it.
There's a lot of competition, so you'll need to create an ebook that is exciting to read but also offers a ton of value. But a great ebook, especially if it's optimized for search on a platform like Amazon, can bring in revenue month after month. So if you love to write, or you know a right or you could work with, why not try your hand at it?
If you know how to code, or are willing to find someone who can, building software can be a really lucrative digital product. After all, software has made some people very wealthy. Consider Tobias Lütke, who built his own e-commerce software so that he could sell snowboards. That software is known as Shopify today, and it’s a $13 billion company.
While you need to know what you're doing to create software or an app, the potential upside can be huge.
Last but not least, an app is a digital product that people love. And you don’t need to be a developer to create one. There are a ton of great options to create your own white-label app that you can sell and charge for.
With Mighty Pro, we build beautiful, custom apps for brands and creators. We’ve seen some awesome things happen with these apps. How about Drew Binsky, who traveled to 197 countries in the world and racked up a huge following on social. He decided to launch a travel app to help young travelers master the digital nomad life.
Another cool example is Adriene Mischler, who built an awesome app to bring more value to the 10+ million followers of her YouTube channel: Yoga with Adriene. The app brings more Yoga teaching to members and lets them meet friends and grow their practice.
Ready to start?
Okay, this list is obviously far from exhaustive. But hopefully it gets you started with some of the best digital products out there.
And if you are thinking about courses, community, and/or events, come build with us! We built an awesome, all-in-one platform that will give you everything you need to create an online business that generates a ton of revenue for you. And when you're ready to upgrade to your own apps, we've got you covered.
Ready to launch a digital product?