In previous articles, we’ve looked at what is passive income, some general passive income strategies, and how to find your niche. In this article, we’re going to look at 12 proven passive income ideas that you can use yourself, in whatever niche you choose.
These ideas are not either/or options, you could use several of these ideas together in one business. You should leverage your audience and visitors to generate as many income streams as possible.
If you provide real value, and people are very satisfied, they will naturally want to buy more things from you. Give them that opportunity!
1- Sell an eBook or other information product online
Creating an eBook and selling it as a downloadable PDF is a very simple method that anybody can use to build a passive income stream. You just have to create a book, or other resource, that is valuable to people in your niche.
This could be a tutorial, or how-to guide, a list of resources, a directory, some templates, ready-written letters, a collection of reviews or tips — anything that people would find useful enough to pay for.
You could even re-package a series of blog posts, and sell them as a book. This is quite a popular strategy, as people are prepared to pay for the convenience of having everything in one place to refer back to.
Maybe you already have some specialist knowledge or skills that other people would like to learn, or you’ve spent a lot of time finding things out that other people need to know.
If you haven’t, then if you find out what people need, you could learn it yourself and then produce an eBook about it. Or outsource it and get somebody else to write it for you.
A good way to find eBook ideas is to look at books in your niche on Amazon, and see what people are buying, and also what they are saying in the reviews. That will often give you an idea of the shortcomings in existing books.
Maybe there is something you can do better, or you can focus on a specific aspect that the reviewers highlight as being missing from the existing books.
An eBook doesn’t have to be a great big epic manuscript. Some of the most successful eBooks are little 10 to 20 page PDFs, in simple text format.
It’s all about the value of the information they contain, and they can sell for anything from a couple of dollars right up to a hundred dollars or more. Whatever you sell your eBook for, it’s all profit.
The most common price point is somewhere between $5 and $30. Obviously the more you sell them for, the fewer copies you have to sell in order to make your desired income.
You may find you sell more copies if you price your book cheaper, however the more expensive it is, the higher it’s perceived value will be so you may actually sell more copies at a higher price!
The only way to find out what works in your market, is to try it and see. And of course to look at what competing offerings there are. Your book might be more expensive but better, or it could be less comprehensive and cheaper — either position is valid.
You will need to setup a website, perhaps a blog about your niche, in order to sell your book, and you will also want to promote it on social media, and build a mailing list to sell your book and other products (getting traffic to your website, using social media, and building a mailing list are whole subjects on their own which will be covered separately).
The beauty of this passive income idea, is it is very passive. Once you’ve written the book and setup your website or other sales channel, it looks after itself. It’s also very scalable — you can just produce more books.
A typical eBook might take 3 or 4 days to produce, could you do one per month?
Your book might only earn a few hundred dollars per month, but what if you have 10 of them… or 20. eBooks often continue to sell years after they were originally written, with little or no ongoing work.
To handle the sales process, delivery, and payment, you can either sign up with a service like Gumroad, or implement it all on your own website. The Gumroad route is probably much easier, and they also handle all the EU VAT for you, which is a major headache for publishers from all countries selling eBooks in the EU.
Alternatively, rather than produce your own books or information products, you can sell other people’s.
This has the advantage of not having to produce the book or product yourself, and you can promote products that are already proven sellers. You promote the product in exactly the way that you would if it was your own, but you send them to the vendor’s sales page (probably via an affiliate link, as below), rather than your own sales page.
2 – Start a blog with affiliate links
The strategy here is to create content that will attract and engage your audience, and then send them to other sites that will pay you a commission if they buy something. There are a number of ways of doing this.
One is to create a review site for the products you are promoting, so people will read your review, and if interested go off and buy the product. This is a fairly transparent ploy, and to be honest it’s been done to death in recent years. Nevertheless, if you can find a niche that hasn’t been over-exploited in this way, it can still be a winning strategy.
Perhaps a better way, rather than just producing a site full of reviews on products you’re promoting, is to produce a site full of useful and helpful content, that happens to include affiliate links in context.
You could, for example, have a site all about windsurfing that contains useful tips, techniques, tutorials, and interesting articles, and include some affiliate links where appropriate. You could have links to books about windsurfing on Amazon, links to windsurfing gear for sale on Amazon and eBay, links to courses, boards, sails etc, but make these links relevant and in context.
So you’re giving useful, helpful information, and mentioning by the way, ‘this product happens to be really good for X and if you’re looking for Y, then this one is better’.
This type of advice-led promotion is far more useful to your audience than just promoting products for the sake of it. You’re adding real value through personal recommendation so your audience will appreciate it more. They are also far more likely to buy when they get there.
Affiliate Marketing attracts an awful lot of dross. There are a lot of people promoting spammy offers with low-quality content, blatantly trying to make a fast buck. And usually failing.
The low-quality, spammy approach is so prevalent, you may be tempted to think it’s normal, and consider doing similar things yourself. Don’t! You will only harm your reputation, and it probably wouldn’t work anyway.
My advice is to only ever promote things you have personal experience of, and don’t promote anything that you wouldn’t be happy to recommend to your best friend. Never promote anything just to make an affiliate commission, think of helping people first, and getting a commission in return, rather than the other way around.
You can find affiliate offers by joining affiliate networks such as TradeDoubler, Commission Junction, LinkShare, Affiliate Window etc, or by looking for an ‘Affiliate Program’ section on a merchant’s website (often buried in the footer).
Or you can become an affiliate for websites like Amazon or eBay, who sell products in virtually every category under the sun. They also have the advantage of paying you whatever the customer buys, even if it’s not the product you were promoting! This can increase your commissions considerably, especially around holiday times when people tend to buy lots of things at once.
It’s worth mentioning affiliate marketing for digital products (downloads, eBooks, courses) as these can pay very high commissions, sometimes well over 50%. The reason for this is there is no cost of goods — a digital product is usually 100% margin, so many publishers will pay their affiliates very high commissions in order to get more sales.
A big source of these products, and a massive source of revenue for many affiliates is ClickBank. Clickbank has high-paying digital products available for virtually every niche, and a lot of people make an awful lot of money from ClickBank and similar site JVZoo.
Beware though, there are a lot of low-quality, spammy offers on these sites so don’t get involved in anything that doesn’t meet your quality standards. Some merchants will give you a free copy of a digital product for review purposes (just ask), still others will require you to buy a copy yourself as proof of your commitment and to make sure you have used the product before you promote it.
3 – Make and sell an online course
If you have some skills or knowledge that would be useful to others, then making and selling an online course is a great way to build a passive income. You spend a few hours or days creating your course, which then sells for whatever you like, but typically for somewhere between $20 and $100.
You might need to update your course periodically, but there’s no reason why your course couldn’t provide an income for several years after you created it.
You can either self-host your course on your own website, which means you have to setup your own course delivery and payment system, or you could host it on a site like Udemy. Udemy is the world’s biggest online learning marketplace, with over 10 million students taking courses in everything from programming to yoga to photography.
The advantage of using a platform like Udemy, is not just that all the technical issues are taken care of for you, but also that it’s a marketplace where people go to look for courses like yours. You will get customers that you wouldn’t otherwise have got, simply by being on Udemy. And if your course is good, and does well, then Udemy will promote it for you.
Of course, you should still promote your course yourself on your website and other media, but being on a platform that has a ready made market will help you enormously.
Udemy have a free course that will teach you how to create your first course, and they have a list of hot course topics that they need more courses for. Even if you don’t already have the existing skills or knowledge to make a course right off the bat, there’s nothing to stop you finding a suitable topic, researching it and producing a course on it.
4 – Build an online drop shipping store
Online stores are an obvious way to make money, and platforms such as Shopify make it very easy indeed to setup and run a very high-quality ecommerce site.
You can now create an online store in a few hours, with all the order processing and payment systems built in. The sort of store that used to cost tens of thousands to build, can now be created on Shopify and hosted for a few dollars per month.
But an online store isn’t very passive. Once you’ve made a sale, you then have to pack and ship the goods, and you have to do that in real time as soon as they order, to keep your customers happy. This may disturb your mojito time, and doesn’t really fit with our passive ideals.
That’s where drop shipping comes in. A drop shipper is a manufacturer or distributor who will take your order and ship it directly to your customer on your behalf, thus relieving you of that task. All you have to do is to pass the order to your supplier and they take care of the rest.
You will inevitably have to get involved in some customer service issues, and pre-sales enquiries, and possibly even returns and warranty issues, but these can be dealt with online, or even outsourced to a VA (virtual assistant). You are probably better off doing everything yourself at first, so that you get a good understanding of your customers, and learn your business, but in time most of it can be outsourced to make the income more passive.
The advantages of drop shipping are firstly you don’t have to invest in inventory or stock — you don’t buy anything until you have already sold it. Secondly, you can sell anything you like, as long as you can find a supplier who will drop ship (just Google keyword +”drop shipping” to find suppliers). Two key success factors in drop shipping, are choosing high-value products with a healthy profit on each sale, and finding suppliers who have an MAP (minimum advertised price) policy which preserves your margins.
A great place to start is an online t-shirt store. It’s a proven business model which works very well, which can make you a useful side income, and maybe in time a full-time business. Read this article to learn exactly how to create your own online t-shirt store. You can be up and running quicker than you think!
5 – Buy an existing website and improve it
This is not so much a passive income strategy in itself, it’s more of an alternative way of implementing one. There are thousands of ready-made websites and blogs for sale, with existing content, traffic, and even proven income streams.
Often these are for sale because people have lost interest, run out of time, or have moved on to something different.
Some of the sites may have been neglected for a while and need bringing up to date, or abandoned part way through and need finishing. Others may be up to date and ready to go, and some have been created specifically to be sold.
Buying an existing site can save you months of work, especially if it already has traffic, so this can be very worthwhile. You can find websites for sale from a few dollars, right up to hundreds of thousands, depending upon their traffic and earnings.
It is probably the quickest way to start an online business — you can literally start earning within a few hours of buying your site.
In fact the whole process from not to having one, to finding a site, buying it, and earning from it, can take as little as 48 hours.
You will of course need some seed money to buy the site, but this need not be a huge amount — maybe just one or two hundred dollars. Sites with higher earning potential will naturally be more expensive, but you can choose a site to suit whatever budget you have available.
The real goal though, is to buy a site that is not realising its potential at the moment, and therefore buy it for less than it’s really worth.
In order to do this though, you need to know how to appraise the value of a site, and how to increase the earnings once you’ve bought it.
You also need to know the correct way to carry out due diligence to make sure you’re not buying a dud!
The biggest site for buying existing websites is flippa.com.
6 – Sell photographs online
If you have some ability with a camera, you can turn it into a passive income source. You can upload your photographs to websites such as Shutterstock and iStockphoto which provide you with a platform to sell them. You earn either a percentage, or a flat fee for each photo that is sold.
These sites have thousands of people visiting them every day, specifically looking for photographs to buy. Your best chances of success are to specialise in a particular area, which could be a particular location, or a topic such as sailing, business, food, investment, training. As always do your research carefully, and try to identify gaps in what is currently available.
You don’t have to be the best photographer in the world, just be able to produce good quality, competent photographs of in-demand subjects. These photographs are bought by publishers, editors, writers, bloggers, and other people looking to illustrate an idea, article, or advert.
The huge growth of social media has increased demand for stock photography massively, particularly for photos with space for people to add text around the image. This is often overlooked by photographers, so if your image allows space for a caption or heading within the image, your photo may get picked over others for that reason.
If you build a good portfolio of photographs, they can generate sales for years to come. You could combine it with your passion, say by taking photographs of your travels or hobby, and selling them so you’re truly getting paid for doing something that you love.
7 – Fulfilled by Amazon
Fulfilled by Amazon is a service from Amazon that makes it possible to make a passive income by selling physical products. You simply source your products and ship them to Amazon, and they sell and deliver them for you. All you have to do is to get your stock to Amazon, and then they take care of everything else, including payment and any customer service or returns issues.
Amazon is of course much more than just a fulfilment service, it’s one of the biggest online marketplaces in the world with thousands of visitors every hour. If you can get your products featured by Amazon, or listed at the top of searches for your category, then you can guarantee your product is going to be seen by thousands of hungry buyers. There are specific tactics for achieving this, which are covered in the many online courses and articles on Fulfilled By Amazon.
Choosing the right product is obviously key. It needs to be a product that sells in sufficient quantity, with a good margin (the difference between cost price and selling price), and where you can differentiate yourself in some way from the competition.
One method that is quite popular is to create your own brand and repackage other people’s products as your own, under your own brand. This is known as white labelling.
A white label product is a product manufactured by one company and then packaged and sold by other companies under their own brand names. It appears to be a unique product, you can set your own price, and differentiate it from competitors, perhaps by targeting a specific need or application.
Because manufacturing in China is so cheap, it’s often possible to find a white-label product in China that you can import and sell for a substantial profit. There is a whole industry that has sprung up around this, and websites like Alibaba specialise in helping you to find suppliers in China.
Some of the most mundane products can actually produce quite enormous revenues, simply because of the volume of sales possible on Amazon. You could, for example, earn as much as $100,000 a year selling a meat thermometer — I know somebody who does!
The disadvantage of FBA is you have to buy your stock up front before you sell it, and if you’re going to white-label, then you will often have quite big minimum order quantities to make it worthwhile. However, profit margins are usually big enough to support this — you won’t have to sell all your stock to get your original investment back, and once you’ve done that, all the rest is pure profit.
The secret is to investigate your market and research your product very carefully, find a good supplier and strike a good deal, and then learn how to promote your product within Amazon. There is a lot to learn, and it’s probably worth buying one of the online courses to get a head start and increase your chances of success. If you can make it work, you can do very well indeed with an FBA business.
8 – Create a membership site
Membership sites are often touted as the ultimate passive income model. A membership site is where you charge a monthly fee for membership which gives people access to exclusive content or services. They offer the promise of a recurring monthly income which increases as you add more members, and if you extrapolate even steady growth the numbers can look very appealing.
If you charge say $40 per month for access, and you add just 20 members per month, then after a year that’s $9,600 per month. However, it doesn’t usually work like that.
Most membership sites give access to training materials and resources, which can be very valuable for a few months. After a few months though, most people will have completed all the training and read all the resources, and so are unlikely to keep subscribing for years to come.
Research shows that the average membership of a site like this is only around three months, so you have to cope with attrition, or loss of subscribers. However, if you can continue adding members quicker than you lose them, or if you can construct a lasting benefit to keep people subscribing, you can still achieve an increasing monthly income.
It’s all about creating something of value that is worth the monthly subscription for as long as possible, and continuing to promote it to gain new subscribers. Often this consists of training materials and other resources that can be created in advance, but to retain subscribers you will have to provide fresh content, or services such as weekly coaching calls, webinars, forums, goal setting, accountability partnerships, mentoring or email support. This makes it not quite so passive, but you can perhaps structure this in a way that suits you.
A good way to create enduring value is to create a community within the membership, either within your website or in something like a Facebook private group. If people receive value from the community, this too will keep them subscribing, although be warned it is not easy to create communities and especially in the early days you are going to have to do a lot of work yourself.
A membership site, whilst it can be very lucrative, is perhaps one of the least passive of the ideas covered here, as it does require a lot of maintenance. However, very few passive income ideas are completely passive, and if you can structure it in a way that suits your desired lifestyle, then it can still be a winner.
9 – Build a Tee Shirt / Merchandise store
You must have seen all the adverts on Facebook for tee shirts with a catchy slogan referencing your name, hobby, or university. Although this has been done a lot over the past couple of years, there is still plenty of room in the market. People will always buy tee shirts, hoodies and other merchandise, particularly if it speaks to an interest or passion of theirs.
The business is very simple. Starting a new tee shirt brand is very inexpensive and quick. Once you’ve come up with some ideas for designs, you can be up and running in just a few hours. You just create an online store in Shopify and connect it to a tee shirt printer/dropshipper through one of their built-in integrations.
Startup costs are very low indeed — almost nothing. A top-flight online store will cost you $29 per month from Shopify (there is a 14 day free trial to get you started for free), and you don’t need to buy any stock. The drop shipper handles that, and doesn’t print your shirts until you’ve sold them.
Upload your designs, set your pricing, and the dropshipper will print your designs on demand and ship them straight to your customers.
Produce some designs which will appeal to people with particular interests (eg the college they attended, their football team, hobby, name etc) and target these people with Facebook ads and other media. If you don’t have the design skills yourself, then you can outsource this on Fiverr or UpWork.
Be creative and come up with something people like, and they will buy it. It’s then just a question of making sure that your profit on sales exceeds your advertising costs, and you’re making money.
The thing to do is to start with very small scale advertising and see what works. You can start advertising on Facebook for as little as $1 per day, and as this is a dropshipping business, you don’t actually buy your tee shirts until you’ve sold them. You’re therefore not risking money on designs that might not sell.
Once you find a design and an advert that works well, you simply scale it up and sell more. Ones that are not profitable, you simply drop (unless you can improve them and make them profitable). It’s all about starting small, testing, and then running with your winners.
And of course you don’t have to rely solely on paid advertising, you can also promote your designs for free on social media, forums, blogs, newsletters etc.
Shopify have produced a very comprehensive, step by step guide on exactly how to do it: How To Start An Online T-Shirt Business – the Ultimate Guide. I highly recommend you read, learn and inwardly digest this guide and you will be an expert before you even start.
This business is fairly passive once you have created your designs and setup your ad campaigns. However, designs (and adverts) have a shelf life, so you will have to come up with new designs and adverts to keep the business growing.
10 – Write a Kindle book
There have been some massive success stories with Kindle books. Because of the size of the Amazon marketplace, and the sheer volumes it is capable of delivering if you get it right, Kindle books can be extremely profitable. And once you’ve written the book, and established some rankings within Amazon, the book will continue to sell on its own, maybe for years to come.
Writing a book isn’t difficult, and you can always get people to edit it or even write the whole thing for you. There are some issues with formatting a book for Kindle, depending on what platform and software you use (eg Mac or PC), but these are easily overcome.
The most important thing is researching your book before you write it, to ensure you produce the right book — a book that is going to sell.
Once you’ve produced your book, there are specific ways of marketing it within Amazon, and promoting it, so that it gains some traction in the Amazon marketplace. This process is crucial to the success of your Kindle book so I strongly recommend you either take one of the online courses, or read everything you can get you hands on about publishing and especially marketing Kindle books.
If you can get Amazon to feature or recommend your book, and place it higher in the listings, this will boost your sales enormously. A common way of doing this is to run a free promotion where people can get the book for free for a limited period, which helps it get noticed and can increase sales once it comes off promotion (also I can tell you it feels pretty good when your book gets to number one best selling book in it’s category, even if it does fall again when it’s no longer free!).
Most successful Kindle authors will tell you it’s important to have several Kindle books, as people will buy one and often then buy the others. This will multiply your sales.
Earnings potential is quite significant. If you have a few books you can sell a few thousand copies per month, typically at around $3 or so. A monthly income of $10,000 is quite achievable, and once you have written the books, this income is completely passive.
If you want to develop a passive income from Kindle books there is a bit to learn. It’s not too hard to do, and there is a step-by-step system that is proven to work, but you do need to learn all this stuff before you get started otherwise you’ll waste hours and your books won’t sell as well.
Rather than trying to figure it all out yourself by trial and error, or buy an expensive mentorship, the best thing to do is to take take one of the Kindle Publishing courses on Udemy. These are very good value, and will get you up and running as quickly as possible for a very modest cost.
11 – Build a content website and monetise it with advertising
If you can generate traffic to your website, you can earn money by carrying advertising. People will pay you in order to be able to reach your visitors. You can either sell advertising yourself, making deals with individual advertisers and placing the ads yourself, or use something like Google AdSense to put adverts on your site automatically.
With AdSense, you earn money every time somebody clicks on an advert on your site. You just have to put a little piece of code in the appropriate places on your website, and AdSense will automatically place ads in those spaces.
Whichever method you use, for advertising to work as an income source, you must have traffic. And quite a lot of it.
However if you can create a website that attracts a lot of visitors, then Google AdSense is about as trouble free as you can get when it comes to earning a passive income.
Google do have very strict quality guidelines for the AdSense program, and there are certain things you must, and must not do (like clicking on your own ads for example — that’s an instant ban!). But provided you stick to the rules, you should have no problems.
AdSense will work out which ads perform best on your pages, and show them automatically to optimise your earnings. The amount you earn for each click depends upon the content of your page, which determines which adverts are shown.
Advertisers are prepared to pay more for a click in lucrative high value markets, than they are in low-value markets like iPhone cases. Your earnings per click will vary from a few cents, right up to several dollars per click, depending upon the market.
Earnings potential can be big, as long as you have huge traffic. Earnings of over $100,000 per year are not uncommon on big blogs, travel sites, city guides, and other resources.
The most I have ever earned personally with AdSense is a little over £5,000 in a single month, although to put this in perspective earnings from other income sources on that site were over £50,000. AdSense is not the most lucrative way to monetise your site. You will probably earn far more by carrying affiliate offers, or your own products, but it is possibly the easiest.
Advertising is also a useful way of monetising your site, when there is no other means available, eg no affiliate offers, or relevant products for sale. It’s also useful when you don’t want to get involved with selling or promoting things yourself, you can just concentrate on producing your content, and maintain your editorial independence.
12 – Monetise YouTube videos
As I’m sure you know, there are lots of people making huge sums on YouTube. It is now the second biggest search engine in the world with over a billion users — almost a third of all people on the Internet. Every day, people watch hundreds of millions of hours of video on YouTube, generating billions of views.
So it’s a massive market. But there are fewer people creating content on YouTube, than there are on the web, so it can be easier to get seen.
The strategy is simply to create some videos, optimise them so that they appear in search results and get lots of views, and then monetise them with adverts. Adverts appear before your video (pre-roll), and during. You get paid for impressions and clicks, and it’s all done automatically within YouTube, using AdSense ads.
It’s very simple in principle, and your videos don’t necessarily have to be anything fancy. You can shoot them on a mobile phone, or record screencasts of presentations or tutorials from your computer, and edit them, all using free software.
As with everything, it’s all about choosing your niche and creating content that people find useful, valuable, or entertaining. There are specific techniques you can use to get your videos seen more often, and ranked in the search results. It’s probably worth taking one of the many online courses available to learn how to do this properly. YouTube have their own course to teach you How to Make Money with YouTube.
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