It’s 10am and you slowly open your eyes after a glorious 9-hour sleep.
After a yawn and a quick stretch you prepare a hot cup of joe and sit down (no pants—hey, you didn’t choose the pants-optional lifestyle, it chose you) on your couch with laptop in hand.
But you’re not about to start your workday.
Nope—work is for suckers. You’re all about the passive income and the only item on today’s to-do list is to open up a browser and find out how many more Benjamins have taken up residence in your bank account.
Sounds amazing, right?
Well, it would be, if it told the whole story.
See, passive-income-earning-you had a LOT of work to do to get to that care-free morning on the couch.
But it is possible.
So, let’s talk about the various forms of online passive income that can get you as close to the pants-optional lifestyle as possible.
But, before diving straight in, let’s get clear on what passive income is and is not.
What Passive Is
In the simplest terms, if you’re earning passive income it means that you’re no longer trading time for money.
You do all the work up front and then set up a system that allows you to earn money without your real-time presence. Even while you’re sleeping.
Before you get too excited, let’s also get clear on what passive income is not.
What Passive Income Is Not
Passive Income is Not Easy
Setting up a passive income-generating system usually requires immense effort, alongside self-discipline, consistency, patience, resiliency and the mental toughness to keep going when shit gets really hard—which it will.
Passive Income is Not Fast
It usually takes a substantial amount of time to set up and fine-tune any passive income stream and you may have to work for months before seeing any financial return on your efforts.
Passive Income is not 100% Passive
While you may eventually arrive at the set-it-and-forget-it stage, there’s nothing passive about the work you’ll need to do upfront to get there. And growing that stream, once it’s actually generating revenue, requires further efforts still.
Have I turned you off yet?
I hope not, because passive income is possible and there are several ways to get there.
The Top 5 Online Passive Income Business Models
These are the top 5 online methods I’ve seen used to successfully escape the time-for-money income-earning model.
Advertising
What is it? Companies pay you money to advertise on your website. This can be through:
- Google Adsense: after joining, ads will be placed on your website and you’ll be paid every time a visitor to your site clicks on one of the ads.
- Banner ads: a company pays you directly to place their ad on your site.
- Sponsored post: a company pays you to write an article about their product.
- Paid review: a company pays you to write an honest review of their product.
How do I get started? All you’ll need is a website—and a HELL of a lot of traffic. As in, several hundred thousand page views per month, kind of traffic. It can be done, but it’ll take a lot of time and effort to build your audience.
What’ll it cost me? $6 a month web-hosting is your only up-front cost.
How much can I make? While there are people out there earning hundreds, or even thousands, of dollars a month with the advertising model, without that crazy traffic, advertising is probably the least effective way to generate any decent income.
How passive is it, really? If you’ve already got a popular website or blog then this is by far the most passive way to earn income on this list. But if you’re starting from scratch, the juice probably ain’t worth the squeeze.
Affiliate Marketing
What is it? You receive payment for promoting other people’s products or services to your audience. You can do this by either:
- Writing blog articles that include links to products or services offered through an affiliate program such as Amazon Affiliates, ClickBank or Linkshare. When a visitor to your site clicks on one of these links and makes a purchase you earn a small commision.
- Promoting products or services (usually digital products or online courses) offered by peers in a similar niche to the one you serve, either on your blog or to your email list.
How do I get started? You’ll need a website that caters to the same audience as the one you’d like to become an affiliate for—and again, the more traffic the better. If you’re starting from scratch, there will be many months—if not years—of hard work required to build your audience.
What’ll it cost me? $6 a month web-hosting. You’ll also want an email service provider so that you can build an email list that you can promote other people’s products or services to. You can start with a free plan and then expect to pay about $10+ a month after hitting 2,000 subscribers.
How much can I make? Hundreds or even thousands of dollars a month, depending on the popularity of your website or blog.
How passive is it, really? Pretty darn passive. Once your affiliate links are up you’re ready to start earning commissions each time a purchase is made after a customer clicks the link . If you’re promoting a product to your email list then you’ll be writing a few emails.
If your website or blog is already up and running and you’d like to get started with affiliate marketing, check out Pat Flynn’s Epic Guide to Affiliate Marketing. If you don’t have a website or a blog, check him out anyway; he’s awesome.
E-Commerce
What is it? The sale of physical products online.
Generally there are two ways to make passive income in the e-comm space:
- Drop shipping: you either sell other people’s products in your online store, or you use a print on demand (POD) platform such as Redbubble to sell your own custom designs on items such as t-shirts or mugs. In both cases the the supplier ships directly to the customer so that you never have to deal with any inventory.
- Fulfilment by Amazon (FBA): you send your products to Amazon and they fulfil the order when it’s placed by a customer.
How do I get started? Both drop shipping and FBA will require you to source products to sell. If you’re drop shipping you’ll need an online store; most people use the Shopify platform. When an order is placed on your site you’ll relay the order to your supplier who will then fulfil the order.
For FBA you’ll have your products sent directly to one of Amazon’s warehouses. When an order is placed via Amazon, they will fulfil the order.
What’ll it cost me? If you’re drop shipping, all you need is a basic e-commerce website, or you can join Shopify for $29 a month. You can sell your own designs on a POD platform like Redbubble for free.
If you go the FBA route you’re probably looking at about $2,500 to get started, according to Amazon research tool JungleScout. This cost includes product samples, inventory, promotional giveaways, UPC codes and a modest advertising budget.
Earning Potential Great earning potential here, but a steep learning curve paired with high competition can make getting started a lot more challenging than some of the other models. Drop shipping is the easiest and cheapest way to get started.
How passive is it, really? Your main job after getting your store up and running will be that of Customer Service Rep., which could take up anywhere from a few hours per week to a few hours a day, depending on the size and success of your store.
While FBA removes customer service from the equation you can still expect to spend anywhere from 5-20+ hours per week on your e-comm business, depending on how many products you sell.
If you’re interested in exploring an e-commerce business model, I highly recommend Steve Chou’s site MyWifeQuitHerJob.com. This article, specifically, offers a great deep-dive comparison into 8 different e-commerce business models
Digital Products
What is it? You create a digital product, such as an e-book or an online course, in an area of your expertise, then sell that product to either your own audience, through your own website and email list, or to someone else’s audience through their website and email list.
How do I get started? At the bare minimum end of the scale you could create a simple e-book over the course of a few days and then partner up with a few affiliates who would promote your book to their audience.
At the more laborious end of the scale, you’ll need your own website with a decent sized audience, an email list and a few months of hard work to create an online course.
What’ll it cost me? Nothing, if you can create an e-book yourself and then leverage someone else’s audience.
$6 a month web-hosting, $0-$10+ a month for an email service provider and $40-$100+ per month for an online course platform such as Teachable.
How much can I make? Hundreds, thousands, or even tens of thousands a month, if you create a quality product that solves a problem for your audience. As an example, my mentor and favourite online marketing expert, Amy Porterfield, has created a multi-million dollar business selling her online courses.
How passive is it, really? E-book sales are pretty passive, but a course that you launch multiple times a year could require a lot of ongoing work.
Self-Publishing
What is it? You self-publish books in either e-book or paperback format on a platform such as Amazon KDP (Kindle Direct Publishing) and earn a royalty each time a copy of your book is sold.
How do I get started? You can write your own book or outsource the job to a writer on a freelancing platform such as Upwork. Once you have a completed book you upload the files to KDP and your book is then made available for sale on Amazon.
What’ll it cost me? Nothing, if you create your own book.
$10-$500 per book, depending on the type of book, if you outsource the work.
How much can I make? Hundreds to tens of thousands a month. I personally used this business model to generate over $100,000 in profit in just 14 months.
How passive is it, really? Some types of books require a regular promotional regimen, while others fall more into the set-it-and-forget-it category.
I generally spend a few hours per week on my publishing business, but when my daughter was born last year I decided not to work for a single minute for the first 6-months and still generated $10,000-$20,000 a month!
So, there you have it!
If passive income is something you’re serious about generating, it’s time to get thinking about which model makes the most sense for you.
And if you’re itching for a more thorough, deep, DEEP dive into passive income, I recommend checking out this monster guide from Nick Loper at Side Hustle Nation, where he covers the 23 ways that he personally generates passive income, plus 47 other ways that actually work. It’s a seriously impressive compilation that’s got my wheels spinning!
In the meantime, let me know in the comments below if you have any experience with any of the above online passive income business models, or which one you’re the most interested in pursuing.
FREE GUIDE: 3 Steps to Publishing Your First Low-Content Book in Less Than a Day
MORE LOW-CONTENT PUBLISHING TIPS: https://www.rachelharrisonsund.com/
Looking forward to cleaning up my Redbubble and Amazon accounts and finding out ways to get more traffic. Great insights! Love this!