There’s big money to be made from selling digital products.
Pat Flynn, of the popular Smart Passive Income blog, is just one example of this.
Up until December 2017, Pat shared monthly income reports, from his mostly digital product business, on his blog. On the slowest month in 2017, Pat made $102,915.99 in revenue, over 50% of which was pure net profit ($52,455.22). For the year, he made $1,511,121.97, or 69.5% of his gross income, in net profit.
Those kinds of profit margins are virtually unheard of in retail businesses, particularly small ones, where margins are closer to 10%.
Even more fascinatingly, 50% isn’t even the highest you can get with digital products! Nathan Barry, the founder of email marketing software ConvertKit, told Smashing Magazine that back in 2012, he made an 85% profit margin from his business, with only 5% of his expenses per sale being fixed costs.
Crazy, right? Here’s another. Blogger Natalie Bacon tripled her annual income in under one year (from $45,000 in 2017 to $165,000 in 2018) by creating six digital products: three ebooks and three online courses. From her 2018 revenues, she only spent $36,000 (under 25%) on expenses.
The message is clear. Selling digital products online can be extremely lucrative and, with lower production costs and little-to-no overheads, profits are a lot higher than those made from selling physical products.
So if you’re looking for a great way to make money this year, getting into the business of digital products sounds like a solid bet.
Before you jump in, however, there are few key takeaways from these success stories that are worth noting and emulating. Let’s take a look at these in a bit more detail.
1. Don’t reinvent the wheel.
It’s tempting to start the digital product creation journey thinking you can build everything from scratch instead of spending on convenience tools, but you shouldn’t.
The process of developing great online courses, ebooks and the like is hard enough without thinking about the mechanics behind it all. Leading online selling platforms and email marketing software providers have done all the work for you. They spend years building and perfecting a core system that works, so you don’t have to.
Plus, your margins will be great either way, so go ahead and invest in the proper tools in the beginning so that you can reap the rewards later.
2. Go where your audience gathers.
Unless you already have an epic mailing list from a previous venture, you’ll need to build an audience for your digital product business. Luckily, there are already platforms online dedicated to nurturing niche audiences and introducing them to quality digital products like yours.
If you’re in the business of creating graphic and web design products, for example, you’ll want to be on Envato or Creative Market. If you’re developing software, a listing on Product Hunt can give you a huge boost. And of course, if you’re going the ebook route, Amazon gets over 2 billion visits per month.
Sure, the competition is fierce on these platforms. However, the likelihood of your product being found and purchased is much greater here than if you were limited to your own little corner on the web only.
3. Spend a bit on advertising
Another great way to capture that initial audience is to advertise online. Standard social media promotion and blogging are great for community building (which you should absolutely do), but if you want to drive traffic and fast, putting a few dollars behind your marketing efforts is the best way to go.
The great thing about social media advertising on platforms like Facebook, Instagram and Twitter is the ability to select niche audiences. You can narrow your focus geographically, demographically or by interest, to ensure that your ad is being viewed only by the people most likely to be interested in your products.
You can also start with a few dollars to test out the waters, so it’s risking very little loss for a huge potential gain.
4. Build your own audience for the future
Most successful digital product businesses never limit themselves to just one product. In fact, all the success stories mentioned at the beginning of this article have developed multiple products over the years, and they all credit their email list as a huge contributor to the growth and success of their businesses.
Marketplaces, and other large audience platforms mentioned above, are great for driving traffic initially, but nothing will beat your email marketing when it comes to nurturing and converting prospects.
This is the one thing you should not put off. The moment you start thinking about your brand is the moment you should start capturing emails. Even if someone doesn’t buy from you right away, you never know what potential they have down the road.
5. Showcase your social proof
Finally, and this is a big one, remember to share testimonials and get referrals from others. The best ways to sell products is to show potential buyers that others like them have bought and enjoyed the product before.
Whenever people buy your products, ask them for genuine feedback, testimonials and reviews, and share this content on your sales pages. You should also ask them to recommend your product and business to their friends and followers who might be interested. Finally, offering a referral or affiliate fee for them sending qualified buyers your way can also help you get some well-needed traction.
Of course, having a great, active social media presence also works as social proof. Showing that people like you online and interact with your business regularly sends the message you are trustworthy, which is a huge factor people consider in supporting small businesses. So don’t be afraid to be an active part of the communities that you want to support you.
Wrapping it up
Following these basic guidelines will give you a solid start on building your own profitable digital product venture.
It may take some time to get to Pat Flynn levels of success, but with successful people like him sharing all their top secrets, you can rest assured that your own success won’t be too far off.
Besides, with the limited investment required and the potential for high profit margins, you’ll get to profit in very little time, so you really have nothing to lose.