Starting an online business selling digital products can be a rewarding endeavor if you have a skill or expertise that others find valuable.
As an online entrepreneur for over five years, I have developed and sold various digital products, including online courses, ebooks, video tutorials, templates, and more.
The key to success is identifying a need in the market, developing a high-quality product to meet that need, and implementing an effective launch and sales strategy to get your product in front of potential customers.
In this article, I will share the exact process I have used to create and sell profitable digital products.
Whether you are an expert in a particular field, have a hobby or passion you want to monetize, or simply want to build an additional income stream, selling digital products online is an accessible business model with significant potential.
With hard work and persistence, you can build a successful online business and achieve financial freedom.
The rewards of entrepreneurship await those willing to take action.
Let’s get started!
What Are Digital Products and Why Sell Them?
Digital products are intangible goods that can be downloaded or accessed electronically.
They include ebooks, online courses, design assets, software, and more.
As an online entrepreneur, creating and selling digital products is an attractive business model for several reasons:
Low Startup Costs
Digital products are inexpensive to produce and distribute since there are no physical materials or shipping fees involved.
This means higher profit margins and a faster path to revenue.
Scalability
Once created, digital products can be sold to an unlimited number of customers with little additional effort or cost.
Your reach is limited only by your marketing abilities.
This scalability allows for exponential growth and leverage.
Recurring Revenue
Some digital products like online courses or membership sites provide recurring revenue through monthly subscriptions or payments.
This provides more stability and predictability to your cash flow.
Flexibility and Convenience
As a seller, digital products provide flexibility and convenience.
You can operate from anywhere and adapt offerings easily based on customer feedback.
For customers, digital products can be accessed instantly from anywhere.
Evergreen Potential
With regular updates and marketing, digital products have the potential to generate sales for years to come with little additional work.
They are a source of passive income that can continue to earn money long after the initial launch.
Creating and selling digital products is an attractive business model, but it does require work and dedication.
With low costs, scalability, recurring revenue, flexibility, and evergreen potential, digital products can be very profitable if you put in the effort to design valuable offerings and market them to your audience.
But that effort is worthwhile, as digital products provide the opportunity to build a thriving online business and achieve financial freedom.
Choosing the Right Digital Product to Create
As an online entrepreneur, choosing the right digital product to create and sell is one of the most important decisions you will make.
The options are endless, from ebooks and online courses to software, design assets, and more.
However, some types of products tend to be more profitable and scalable than others.
Ebooks and Online Courses
Ebooks and online video courses are popular choices for digital products.
They are easy to create, require minimal ongoing maintenance, and can generate passive income over time.
The key is choosing a topic you know well that also has a large target audience.
Do some research to determine areas of interest and potential demand.
Software and Mobile Apps
If you have technical skills, creating software, mobile apps, plugins, or other tools that solve a problem for customers can be highly lucrative.
However, these products typically require more time and money to develop and maintain.
You need to consider ongoing hosting, software updates, and customer support.
The upside is that these digital products often command a higher price point.
Membership Sites
Membership sites that provide subscribers with ongoing value in the form of content, community, tools, or other benefits are another option.
The key to success here is to identify a specific niche and build a site that meets the needs of your target members.
While membership sites do require consistent effort to keep members engaged, they can generate recurring monthly income.
The possibilities for creating profitable digital products are endless.
Evaluate your skills and interests, do thorough market research, and choose a product that balances profit potential with the level of effort required.
With the right combination of value, quality, and smart marketing, you can build a successful business selling digital goods and services online.
Steps for Creating Your Digital Product
To create and sell a profitable digital product, follow these key steps:
Identify Your Audience and Their Needs
The first step is determining who will buy your product and what problems you can solve for them.
Conduct market research to identify potential target customers, their key demographics, interests, and pain points.
Look for gaps in the market that your product could fill.
Focus on creating something that provides real value to your intended audience.
Develop Your Product Idea
Come up with a concept for a digital product that will appeal to your target audience and address their needs.
It could be an ebook, online course, template bundle, video series, or something else.
Keep your idea focused and make sure you have enough knowledge or expertise to create a quality product.
Create an Outline and Content
Develop a detailed outline for your product that includes all the information and materials you want to cover.
Then write rough drafts of all content, including written content, videos, graphics, and any other media.
Get feedback from others to improve it.
Ensure all content is accurate, helpful, and aligned with your product promise.
Build and Test Your Product
Use your outline and draft content to create your actual digital product.
This may include recording videos, designing graphics, formatting written content, and assembling all the pieces.
Test your product to identify any issues, get user feedback, and make necessary changes before launch.
Market and Sell Your Product
Now you’re ready to start selling! Set up a sales page on your website to market your new digital product.
Offer valuable free resources or discounts to help drive sales upon launch.
Promote your product through social media, email marketing, affiliate partnerships, and search engine optimization.
Provide great customer support and consider creating future related products.
With the right mindset and execution, you can build a digital product business that provides both financial success as well as the opportunity to positively impact many people’s lives.
The key is starting with your audience, creating something valuable, and persisting through challenges that arise.
If you do that, you’ll have a winning product that sells.
Building Your Digital Sales Funnel
Building an effective digital sales funnel is key to converting readers into paying customers.
As an online business owner selling digital products, I have developed a four-step process for constructing a sales funnel that generates revenue.
Choosing a Niche Market
The first step is selecting a niche market to target.
I research potential audiences and identify underserved needs.
Some factors I consider are the audience’s interests, problems they want to solve, and products or services they currently buy.
I aim for a niche that is specific enough to be meaningful, but broad enough to have growth potential.
Creating High-Value Content
Next, I develop content that provides value to my target audience for free.
This includes blog posts, videos, photos, infographics, and social media posts.
The content addresses common questions, solutions to problems, tips, and other useful information for the niche market.
My goal is to establish expertise and build trust.
Offering a Low-Cost Digital Product
Once I have an engaged audience, I create an initial digital product to sell at a low price point, such as an ebook, online course, or video training.
This allows me to generate revenue from a small percentage of my total audience.
I continue providing free content to nurture my email list in preparation for higher-priced product launches.
Upselling to High-Ticket Offers
With a proven sales funnel and email list, I develop premium digital products and services to upsell my customers.
These include high-ticket online courses, coaching programs, virtual summits, and masterminds.
Upselling to loyal customers who already trust me is an efficient way to boost profits from my business.
Using this four-step framework, I have built a successful online business selling digital products.
The key is providing value, building trust, starting small, and upselling once you have a solid customer base.
With consistent effort, this sales funnel model can generate a lucrative income stream.
Platforms for Selling Digital Products
As an entrepreneur selling digital products online, you have several options for platforms to host your products.
I have found the following to be effective channels for reaching customers and facilitating sales:
Website
Building your own website is ideal for showcasing your products and brand.
You have full control over the design and content, and you keep all profits from sales.
However, driving traffic to a new site requires substantial effort and marketing.
I recommend starting with a simple landing page to capture email addresses, then building out the site as your list grows.
Email Newsletter
An email newsletter is a great way to stay in touch with customers, promote new products, and generate sales.
In my experience, the majority of digital product sales come from email marketing.
Newsletters do require consistently creating content to share, but the time investment can be worth it.
Start building your list as early as possible to have an audience ready when you launch.
Marketplaces
Large marketplaces like Gumroad, ClickBank, and E-Junkie provide ready-made audiences and handling the transaction details.
However, their fees typically range from 25-50% of each sale.
Marketplaces can be a good option when you’re first starting out or have a new product to test.
Once you build up your own audience, focus on driving customers to your website or email list to keep a larger portion of profits.
Social Media
While social media platforms themselves typically don’t allow selling products directly, you can use sites like Facebook, Instagram, and Pinterest to raise brand awareness and promote your digital products.
Build an engaged following by posting valuable content, then occasionally promote your paid products with an enticing freebie or discount for your email list subscribers.
Social media marketing does require a consistent time commitment to be effective.
In summary, a combination of your own website, email newsletter, marketplaces, and social media is an excellent multi-channel strategy for successfully creating and selling digital products online.
With patience and persistence, you can build up an audience, generate sales, and create a sustainable business.
Pricing Your Digital Product for Profit
As the creator of a digital product, determining the right price for your offering is crucial to building a profitable business.
There are several factors to consider when pricing your digital product:
Perceived value
The price you set should match the perceived value of your product to customers.
If it’s viewed as a high-value, premium offering that solves an urgent problem or need, you can likely charge a higher price.
For a product with more basic utility or entertainment value, a lower price point may be more appropriate.
Evaluate how your target audience currently spends to solve the problem your product addresses or for similar products/services.
This can help determine an acceptable price range.
Competition
Review what competitors charge for comparable products.
Their pricing can indicate the range that customers expect and are willing to pay.
You don’t necessarily have to match the lowest or highest competitor price.
Find a price that positions your product as a good value for the benefits and features provided.
If there are no direct competitors, look at alternative solutions customers could use and their associated costs.
Your price should be competitive with the total cost of the next best option.
Cost to produce
The price you set must exceed your costs to produce, market and sell your digital product to generate a profit.
Calculate how much time and money you’ve invested in creating the product.
Factor in ongoing costs like hosting fees, customer service, and advertising.
Make sure your price covers these costs and leaves room for a reasonable profit margin, at a minimum 30-50% of the retail price.
Testing
Once you determine an initial price, test different price points to find the optimal one.
You can run A/B tests presenting the product page with different prices to groups of visitors.
See how conversion rates and sales are impacted at each level.
Be prepared to adjust based on the results.
An ideal price is one that maximizes both unit sales and overall revenue.
With the right combination of perceived value, competitive and cost-based pricing, and testing, you’ll find the sweet spot and be well on your way to building a profitable digital product business.
Marketing Your Digital Product Effectively
As the creator of a digital product, effectively marketing your offering is key to achieving profitability and success.
There are several strategies I have employed to market digital products:
Build an email list
One of the most effective ways to market a digital product is through email marketing.
I started building an email list of interested subscribers as early in the process as possible.
When the product launched, I could immediately reach out to those on the list to inform them of the release and offer a discount for signing up early.
Email subscribers tend to be highly engaged, so promoting to them leads to a good number of sales.
Create a sales page
A dedicated sales page describing the product in detail is essential.
This page should highlight the key features and benefits of your digital offering, with visuals and examples.
Share details about what is included, the problem it solves, and who will benefit from it.
The sales page is your chance to sell the value and convince visitors why they need your product.
I optimized my sales page for search engines and made sure the content was compelling.
Run promotions and discounts
To generate buzz around a new product release, I offer launch specials and discounts for the first customers.
Limited-time coupon codes and bundle deals entice people to buy right away before the price goes up.
Discounts of 25-50% off the regular price are common for digital launches.
I also occasionally run sales, promotions and bundle offers for existing customers to spur repeat purchases and word-of-mouth referrals.
Build relationships with influencers
Developing mutually beneficial relationships with influencers in your industry or niche can lead to increased visibility and sales.
I identified influencers with an audience likely to be interested in my product and reached out to see if they would be open to a review, mention or affiliate partnership.
Having influencers promote your digital product to their followers is an easy way to tap into new potential customers.
I was sure to provide free access to my product in exchange for an honest review.
Use social media advertising
Social media platforms like Facebook and Instagram offer paid advertising options to help promote your digital product to new audiences.
I tested different ad types and audiences to find the most cost-effective approach, then optimized the best-performing ads.
Even a small ad budget can go a long way toward increasing sales when the right people see your message.
Managing Customer Payments and Deliveries
As an online business owner selling digital products, managing customer payments and deliveries is a crucial part of operations.
There are a few options to consider for accepting payments and delivering products to customers:
Payment Processing
To accept payments from customers, you’ll need to set up a payment processor like PayPal, Stripe or Square.
These services allow you to accept major credit and debit cards as well as bank transfers for a small transaction fee.
You’ll need to create an account, link a bank account to deposit funds and incorporate the payment links or payment processing API into your website or email invoices.
For lower fees, you may want to consider a payment gateway like Square or PayPal Payments Pro that syncs directly with your website.
This allows customers to pay instantly without leaving your site.
Transaction fees typically range from 2.9% + $0.30 per transaction for major cards.
Digital Delivery
With digital products, delivery is simple since customers can access their purchase immediately after payment.
You’ll need to have a secure method for providing downloads, license keys, login credentials or streaming access.
Using a service like SendOwl, you can automate secure product delivery through their digital delivery platform.
Customers receive an email with a link to access their purchase on your website.
Their platform also provides licensing and DRM if needed.
If you prefer to handle deliveries yourself, be sure to send download links or access credentials to customers in a secure, encrypted email and provide the information on your website in their account area or order confirmation page.
Double check that all links are working properly and customers can access their products with the provided information.
By choosing a reliable payment processor, digital delivery method and consistently providing great customer service, you’ll build a smooth purchasing and delivery experience for your customers.
Satisfied customers will come back again and help grow your business through word-of-mouth promotion.
Focusing on the customer experience is key to success.
FAQ: Answering Common Questions on Digital Products
As an expert in creating and selling digital products, I frequently receive questions from those looking to break into this business model.
Here are some of the most common questions I encounter and my answers to help set you on the right path.
How do I come up with ideas for digital products?
There are several ways to generate ideas for digital products.
Conduct surveys to find problems your target audience needs solved.
Tap into your own skills, knowledge, and expertise.
Look for gaps in the current product offerings in your niche.
Study the latest trends and see if there are any opportunities to create an in-demand product.
What types of digital products can I create?
Some popular options include:
Online courses: Teach people a new skill through pre-recorded or live video lessons.
Ebooks: Share your knowledge and expertise in a written format.
Ebooks on business, marketing, self-help, and personal development topics tend to sell well.
Membership sites: Provide ongoing value to members through a monthly or annual subscription model.
This could include access to tools, resources, a community, and new content.
Apps: If you have technical skills, you can build useful apps, tools, plugins, or other software to sell.
Video tutorials: Create video-based lessons, tutorials, or trainings and sell access to the video content.
How do I price my digital products?
Pricing is an art and a science.
You need to consider factors like your costs, competitors’ prices, and your target customers’ willingness to pay.
For most digital products, a good range is $20 to $200.
You can offer tiered pricing for different product packages or levels of access.
Don’t underprice your products, but also make sure they are affordable for your audience.
It is easier to lower prices over time than to increase them.
How do I market and sell my digital products?
Some of the top strategies for marketing digital products include: building an email list, creating a sales page, using social media, optimizing for search engines, guest blogging, and affiliate partnerships.
You need a system to drive traffic to your offers and convert visitors into paying customers.
Focus on providing value, building trust, and crafting persuasive marketing messages to promote your digital products.
With consistency and persistence, you can build a successful business.
Conclusion
After investing time and effort to build a digital product, don’t leave money on the table by failing to effectively market and sell your creation.
With some strategic planning and execution, you can establish multiple revenue streams and tap into the vast potential of the online marketplace.
By optimizing your sales funnels, diversifying your distribution channels, and providing high-quality customer service, your digital products can generate an ongoing source of income and help achieve your financial goals.
While the process requires patience and persistence, creating and selling your own digital products is a rewarding endeavor that allows you to turn your knowledge and skills into a profitable business.
With the right mindset and approach, you have the power to build something that can endure and continue providing value for years to come.
