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Etsy Entrepreneur Part I: How to Make Passive Income on Etsy

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How to make passive income on Etsy. Have you ever dreamed of quitting your day job and starting your own business? Learn how you can stop working for the man and start making a living while you sleep | Wellnesting

When I first quit my job, I thought I was just going to be taking a couple months off from the corporate world to figure out my next move before finding a new desk job. After spending 7 years in the city, waking up at 4 am, commuting an hour each way (on a good day), and barely having enough time to eat dinner before it was bedtime all over again, I was ready for a more creative, flexible line of work. One that preferably came with less time at a desk, more telework opportunities, amazing pay, and lots of artsy fartsy projects to dive into – aka the white elephant of jobs.

Although I have always wanted to start my own business, I figured that the internet had become such a saturated market that the last place I could earn a real income would be on a site like Etsy. But with a near fanatical need to work and carry my own weight, I set up shop nonetheless to make a little extra money while I was looking for a new gig.

And to be perfectly honest, I haven’t really looked back since.

I’ve found that it’s not only possible to make money on Etsy, it’s possible to make money passively, freeing up your time so you can work on other things, or better yet, not have to work at all.

What Exactly is Passive Income?

Most small businesses, especially small Etsy businesses, earn non-passive income. These shops sell physical goods or services that require someone’s time (typically the owner’s) in order to make a sale and sustain the business. If the owner isn’t making products, keeping the shop stocked, or consulting with clients, they aren’t making money.

Passive income, on the other hand, is earned whether or not the owner is actively managing the shop or not. This type of business can be set up, fully stocked, and then left alone to earn income while the owner goes off and does other things. While it does take a large amount of time and effort to get the shop up and running, it takes very little, if any, time to maintain it.

I call this the set-it-and-forget-it model and it’s the easiest way to make money on the web.

How can I make passive income on Etsy?

Two words: digital products.

These are any products that can be delivered electronically rather than being packed and shipped to the buyer.

A couple years ago, Etsy introduced digital downloads to its online marketplace as a means of keeping up with changing technology and meeting the demand for information products. Once created, these e-products can be sold for as long as the shop remains open and there is enough demand for the product, requiring no additional effort on the part of the seller.

What are some of the products I can sell?

Anything you can make once and deliver to the customer digitally is fair game. But here are some ideas to get your inspiration flowing:

  • Patterns (sewing, crochet, knitting, embroidery)
  • Wedding or party invitations
  • Personalized stationery
  • Resumes, cover letters, and business cards
  • Calendars and planner pages
  • Ebooks
  • Party decorations
  • Iron-on tee shirt designs
  • Adobe Photoshop brushes, backgrounds, textures, and actions
  • Vector design elements for Adobe Illustrator

What you sell just depends on your medium of choice.

If you’re a photographer who loves Photoshop, you can create light action sets to sell to other photographers. Or if you love to knit, turn your simple infinity scarf design into a pattern so others can make it too.  If you like to draw, why not create some art prints you customers can print and frame themselves.

Use your hobby as a jumping off point for creating digital products that help other creatives do what you do.

What if I don’t have a ton of money for fancy design software?

If you’re not a designer or photographer and you can’t afford to buy the entire Adobe suite (or if you just don't know how to use it) there are a couple things you can do to get started anyway.

  1. If cost is the issue, look into getting Adobe Creative Suite online. Adobe finally realized that most of us can’t afford to buy their software, so now they’ve made it available on a monthly subscription basis. For $10 a month you can get Photoshop Creative Cloud which comes with all the same functionality as standard Photoshop but without the expensive price tag. And rather than getting a cheaper, watered down version of Photoshop, you’re just accessing the software via the cloud and avoiding all the hefty royalties and licensing fees that come with the full-up version.
  2. Create templates using Microsoft Word. This is how I started making my templates and it worked incredibly well. Not only is Word pretty inexpensive to buy if you don’t already have it (and to make it even cheaper, check eBay for used older versions that still include the authentication key), but it’s the software that most people use to edit their documents – thus making your templates easy to use and available to a wider audience.
  3. Use an online graphic design site like Canva or PicMonkey. Last but not least, you can turn to free online graphic design sites that it make it super easy to create simple digital files. These use a drag and drop interface to make it easy for non-designers to create pretty, professional looking documents that others would gladly pay for.
How to make passive income on Etsy. Have you ever dreamed of quitting your day job and starting your own business? Learn how you can stop working for the man and start making a living while you sleep | Wellnesting

How Much Money Can I Make Selling Digital Products?

Therein lies the beauty of passive income products. You can make as much money as you want. The only limit to your earnings is the number of shops you can open and the number of digital products you’re able to create.

Obviously, the more items you have in front of potential customers, the more sales you’ll make. Etsy’s rule of thumb is to have at least 40 items listed in your shop before you’ll see the sales start rolling in, but more is always better.

And as soon as you get one shop fully stocked and are seeing consistent sales, you can move on to a new shop or new product line to further expand your reach.

* * * * * 

So there you have it - the easy way to make money on Etsy. If you're still a little confused about how this whole thing works, don't worry. We'll be covering the ins and outs of creating and listing digital products in future posts.

And if you would like to check out my own shop, here's the link.

Next up: How to make professional looking templates using Microsoft Word.