Why Opening an Etsy Shop Selling Digital Files Can Be a Great Source of Passive Income

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An Etsy shop can be a great source of passive income if you take the time to do things right and put all of your energy and effort into it. Creating downloadable digital files is something pretty much anyone can do with a bit of practice and attention to detail.

I’ve had my Etsy store open for quite some time now, although I haven’t been able to dedicate as much time as I’d like to running the store. And let me tell you, if you’ve got useful, innovative products, you could stand to make a really decent part-time income without much effort once it’s up and running.

Granted, you’ll have to put in the bulk of the work in the beginning by creating the digital files. While many people opt for selling hand-made crafts, I took a slightly different approach.

Instead of crafts, I sell documents. I took a course on document design and media presentation (which by no means makes me an expert), but I took an immediate interest in document design once I picked up a few concepts in the class regarding things like “white space” and “contrast”.

Throughout my time in the course, I created several documents that weren’t half bad so I thought I’d try my hand at document design. I created a few resumes and a business plan, and later a Freelance Writer’s Business Kit (something I made up that has a few handy items for a freelance writer’s startup). I’ve also got an SEO checklist, social media profile optimization checklists, a daily productivity tracker, a to-do list, and more.

And once I create each document, I never have to create it again – and I can sell it over and over again without doing much (other than promoting my Etsy store).

So, if you’ve got basic design skills, you can do this too because I’m no designer and many people are self-taught.

So give it a go and see what happens.

Creating Your Own Etsy Shop

If you wanna give this a go for real, click here to get started creating your Etsy Shop.

1. Name Your Shop

But before you do, come up with a name for your Etsy shop related to the kind of digital files you’ll be creating. For example, the name of my shop is Ultimate Freelancer because I create documents that help other freelancers and aspiring writers manage and run their freelance business.

2. Do Some Market Research

Before you start creating your digital files, do some market research to determine what kind of products people are looking for right now. You don’t want to waste a bunch of time creating products that no one is going to buy. It also helps to figure out what kind of audience you’re targeting with your products and determine how much they’d be willing to pay for your products. Do what you can to differentiate yourself from your competitors. Take a look at what they’re selling and try to create better, more comprehensive products.

3. Start Creating Your Digital Files and Set Pricing

Then, start creating files using sites like Canva or a design program like Adobe InDesign or even Adobe Photoshop. Take a look at the most popular Etsy shops and see what they have in common that makes them so successful. Do they use fancy fonts? Luxury images? Do they all have more than 100 listings? Figure out what makes them so successful and try to emulate that without copying. Do your own thing.

To set your pricing, take a look at what similar products are selling for on Etsy. You don’t want to overprice your items and make it harder to get sales. Try to arrive at a price point that’s similar, but somewhat lower to other shops. But don’t sell yourself short. Creating digital files takes quite a bit of work and you should get paid fairly for what you create.

4. Come Up with a List of Ideas for New Files

Create a list of ideas so that you can keep consistently creating digital files that people simply download and print (if they want). I keep a list of ideas for documents I want to create that relate to my Etsy shop theme. You don’t have to keep with the theme, though, if you don’t want to. My sister creates documents for businesses, but she also has items that don’t exactly fall in line with her shop (such as baby shower printables).

If you really want to do something, you will find a way. If you don’t, you will find an excuse.

Jim Rohn

5. Get Inspired

You can also use Canva for ideas for the types of documents you want to create. If you’re going to be using Canva to create documents (like I did with my Content Marketing Plan Workbook), I’d suggest writing down the fonts you like once you’ve got an idea for what kind of style you’ll use for your Etsy Shop. Some of the most successful shops have a unified style that includes using the same fonts and colors.

6. Be Consistent

If you want to make real money with your Etsy shop selling digital files, you’ve got to be consistent and create products on a regular basis. You’ll see more success if you do this. My sister is a prime example. She creates products on a consistent basis and has close to 1,000 sales. Try to set aside a little bit of time each week to creating more digital files to fill out your shop.

7. Ask for Reviews

After each purchase, send a follow-up message to your buyers to ask them how they liked the product and if there’s anything you can do to improve it. If they liked it, kindly ask them to review your product when they have the time. You can even offer them a discount for their next purchase if they write a review of your product.

8. Offer Personalized Products

Once you get really good at creating digital files, you could offer personalized products for businesses. For example, you could create a listing offering to create a personalized business plan or business kit complete with your client’s logo and whatever other personal touches they might like to add. My sister just got her first client doing this. She created a workbook for the owner of a credit counseling company and sold it for $200! You can do the same.

9. Promote Your Shop

A lot of Etsy shop owners use Pinterest to promote their digital files. The best approach is to create a Pinterest blog graphic and link back to your site. If you have the funds, it can help to promote your Pin on Pinterest using paid ads. You’ll be able to reach more people that might be interested in buying your products.

10. (Re)Invest in Your Etsy Shop

Once you start making money with your Etsy shop, reinvest the money you earn to make your Etsy shop even better. For example, you could purchase design elements you need to truly make your products shine (especially if you don’t know how to create them yourself). There are all kinds of design elements you can purchase to make your products better, such as backgrounds, fonts, and images.