Introduction
Running an online business is like being the ringmaster in a circus. There’s always so much to do, and a small window of opportunity to get it all done. No one can work 24 hours a day, 7 days a week, 365 days per year.
No one, that is, except automated software that can help you grow your business even when you are asleep, sick, or on vacation.
But first, you have to set up a passive income system.
Why add passive income?
In addition to the above advantage of being able to earn money around the clock, there are several other key advantages to setting up a passive income stream.
Cash flow
With a passive income system, money will always be coming in. One stream of income might not add up to much, but if you set up more than one passive income stream, it can become a river of revenue.
Security and stability in your business
The Internet is constantly changing. What might work one minute could be overtaken by something new in an instant. There are new social networks, tools, and Google algorithms that can change your cash flow in an instant.
Passive income will usually just keep ticking over in the background. Take a peek at it and change it a little as needed every so often and it will keep on earning for you steadily in a relatively hands-free way after the initial set up.
More money
The most obvious advantage is more money on top of your main marketing efforts. For example, if you have a website or blog and are selling a product or service, that will be your main source of income. But passive income can give you even more without you having to push hard all the time. You set up the system and it starts to tick over. Then it is a question of what you can do with the money.
You could enjoy a vacation, buy a new car, and so on. Smart marketers re-invest at least part of their profits by running more ads, getting more things for the business, and so on. Or you could just save it for a rainy day. In most businesses, there will be slow periods. Passive income can help you get by until the next big rush.
In this guide, we will discuss 9 methods for generating passive income. Use one, or all, and see what a difference each can make to your bottom line. Let’s start with publishing content.
Publish a Book
Content is the foundation of any successful website or blog. Nothing happens on the Internet without content. Via search engines like Google, the words on your pages connect you with people looking for the kind of information you have to offer. People can’t do business with you if they don’t know you exist. You will never make any sales if you don’t have traffic to your site.
Search engines deliver free traffic, which can help maximize the profits in your business. Social media can help drive free traffic, as well.
Then there is paid traffic, that is, traffic you get through ads. But you need to make money in the first place in order to be able to re-invest it in your business.
If you’re like most site owners and bloggers, and have been in business for a while, you’ve probably created a large amount of content on topics that would be of interest to your target audience, that is, your niche. But why give it all away for free? And don’t you have a lot more to offer to help your prospective customers?
If you’ve answered yes to those two questions, you need to start publishing your content in book form.
Why a book?
A book is a product people respect, in most cases. The author has been able to create a useful and informative work that will help others that also demonstrates his/her expertise. Just think what your name on a book could do for your reputation and authority in your niche.
You can use an ebook, or a printed book, as a marketing tool, gift or basis for other profitable products. It can help you build your subscriber list and position yourself as someone others would like to work with. And, of course, there are the profits.
How to get started
The easiest way to write and publish a book is right at your fingertips. If you’ve already got great content, organize it into chapters. Add an introduction, and a conclusion. Create a table of contents of the titles of the chapters.
Add a couple of images as needed to illustrate the content and make the book look more attractive. You should take the photos yourself, or create the charts, diagrams and so on from scratch so you don’t have to worry about violating anyone’s copyright.
Then you need a cover. Either design one yourself using an image you’ve created, or hire a freelancer at fiverr.com and give them ideas and the text of your cover.
An author biography is also useful. It establishes your credentials in writing the book and gives a clear reason why people should read the book and pay attention to you.
Last but not least, you will need marketing copy for the book, which is commonly referred to as the blurb. On a paper book, you would see this on the back cover, or the fly leaf of a hardcover book with a paper cover. This tells the audience what your books is about, and hopefully makes them excited to read it.
You can put all of this material into one Word file. And you can create a book out of it almost instantly by using the Amazon Kindle system.
Amazon Kindle
Amazon Kindle is your best choice because it leverages the power of a $1+ trillion business, which is a marketing phenomenon. Amazon isn’t just a shopping site, it is a search engine as well, with people looking for millions of products, and usually also looking for a great price.
In particular, people look for books, and search using keywords. Just think of the benefits of your book appearing on the largest bookstore in the world.
The Kindle interface is easy to use. Provide title, author and your marketing blurb. Upload the Word file for the body of the book, and the cover file for the cover. It should be a .jpg file sized 900 pixels wide by 1200 high.
Once you have entered all your marketing material and uploaded your file, you can set the price.
How much can you earn?
This will at least in part be determined by the length of the book, which helps determine price. The beauty of an ebook is it can be any length. It can be 5,000 words, or 50,000. In general, the lower the page count, the lower the price.
Amazon has 2 payment tiers. The lower tier starts with 99 cents and goes up to $2.98. The second tier starts at $2.99, up to $9.99 as a realistic price for an ebook.
With the lower tier, you only get 35% of the revenue, about 33 cents per book. With the higher tier, you get 70% minus a small delivery charge.
For example, a book priced at $2.99 might have a royalty table that looked like this:
Rate Delivery Royalty
35% $0.00 $1.05
70% $0.30 $1.88
The royalty payments might not seem very high, but if you achieve bestseller status in your niche, or on Amazon as a whole, you can sell books all day, every day, without having to worry about customer service issues, which they take care of.
Note that Amazon will also sell your book in (currently) 12 other countries, including the UK, Canada and Australia, opening up your book to a small but global market.
The delivery charges explained
The more images you have in your book, the greater the delivery charge, but it also depends on the size of the images, such as 2 megabytes in total, as with the example above. If your book is image-heavy, or a comic or manga title, Amazon will set a minimum price so you both make money.
The paperback option
Also note that you can use the same digital file for paperback books. These are print on demand books that customers can buy online and get fulfilled through Amazon’s paper publishing division, CreateSpace.
Some people love paper books. In other cases, such as with a how-to book, it might make more sense to be able to follow along on paper.
Making more money
Amazon will market your books and also give you the chance to put your book in their KDP Select program, in which you can promote your book on the site.
In the book, include the URL of your site and any other pages you would like to drive traffic to. Once they get to your site, they can look around to see all you have to offer, and hopefully buy even more from you.
One ebook can be a good moneymaker. A library of ebooks can add to your monthly income considerably.
Kindle Unlimited and Kindle Owners’ Lending Library
These are 2 more streams of income for your digital books that are completely passive. Kindle Unlimited offers readers millions of books to read for one low monthly price, currently $9.99. Kindle Owners’ Lending Library allows owners to loan out their book to a friend once.
In both cases, you get half a penny per page. The more books you publish, the more pages you have, the greater the potential passive income.
Other links
If you’re an affiliate marketer, you can add links in order to increase your income. More about affiliate marketing below. If you have other products, or other books related to the topic of a particular ebook, also provide links to buy.
Hints and tips for success
Use a completely stripped-down Word file with no bold, italics or bullets. Use an asterisk or a plus sign as a bullet instead. This is because the Kindle system will convert the file into HTML (HyperText Markup Language) and the conversion is not always perfect.
Put a paragraph break manually in between each paragraph. Don’t use extra spacing in page layout because it will not render in HTML. Select All in Word, toggle to single space, then go to Page Layout and set everything to zero.
Put a page break in between chapters to make it easier to read.
Study a few paper books to look at how the front of the book is laid out. Model your book on them, especially if you plan to make the book into a paperback, as well.
Publishing a book will add to your authority and prestige, so more people in your niche will want to do business with you. Building a great site or blog can also help you bring in passive income. Let’s look at one profitable method next.
Sell Advertising on Your Blog
Ads on your blog will mean monthly income upfront for only a few minutes of work. If someone who is not a direct competitor loves your site, they might ask if they can put an ad on it.
They might wish for a banner ad across the top or a box ad on the side. In general, they will expect their ad to be “above the fold,” that is, visible without the site visitor having to scroll down to see it.
Once you upload the ad, it should keep driving traffic to them over and over again. Use an open new window command so your visitors don’t disappear off to their site forever. Add target=”_blank” to the end of your link code.
Get your ad from them, or their ad copy
Most businesses will have their own banners ready to go. It just a question of size and where it will go on the site, such as a top banner versus a side ad.
If they don’t have this marketing creative, work with them and a freelancer at fiverr.com to come up with the right banner for their business and your site.
Pricing your ads
One standard formula is one penny per visitor per month. Be prepared to show them your traffic log for how many unique visitors you get to the site. If you have a high traffic site, this can start to all add up. The top of the page banner might command more money, such as 2 cents. The more popular your site, the more you can charge. Set the terms as well, such as a three-month contract, payable in advance. You get the money upfront and don’t have to spend a lot of time tweaking your site.
Best practices
Create an advertiser’s rate card with your fees so you can email it quickly to anyone who asks.
Consider accepting text ads in your email marketing platform. Price according to the number of subscribers on your list. Offer package deals for both types of ads at a reasonable but higher price than ads at the website alone.
If you are a podcaster, offer sponsorship deals, with 15 or 30 second spots for the advertiser. Price based on your number of listeners. Selling ads will help you make the most of all your content.
Affiliate Income
Working as an affiliate can be a valuable stream of passive income if you set it up correctly and are prepared to work on it a little bit every week.
Affiliates work on commission, earning money by selling other people’s products. If you’ve ever heard of Avon or Tupperware, you will be familiar with the concept of selling products people need and want in exchange for a share of the profits. These sales go on in the real world, between real people, face-to-face in most cases, and are commonly referred to as direct sales.
Affiliate marketing is similar, but it takes place in the online world. Sales are made through your specially coded link. Every time someone buys through your link, the sale registers at the site or affiliate marketplace you are working with, and you earn commission. Some affiliate programs pay monthly, while others pay according to a threshold, that is, when you reach a certain payment point, such as $25 in commissions.
You can become an affiliate through top sites like Amazon and eBay, or access dozens of niche-related products through affiliate marketplaces such as:
- ClickBank
- JVZoo
- Commission Junction
- Rakuten Marketing (formerly LinkShare)
- ShareaSale
How much money can be earned?
This depends on the price points of the products you choose and how much effort you put into affiliate marketing. This will include:
- searching for products
- creating your link
- publishing your link at your site
- writing and publishing content related to the product, such as an article about these types of products in general, comparisons and reviews
The last activity will take time, but you will do it once, add your link, and it will passively keep earning for you over and over again. Since you need new content for your blog anyway on a regular basis, product reviews and so on will keep your site fresh and interesting, which will keep your visitors and subscribers coming back for more.
The key to making money as an affiliate is choosing the right affiliate programs for your website. Here are some tips:
Become an affiliate of a company that you buy from all the time
Amazon’s Associates program would be a good option if you shop there regularly. The commissions may not be as large as at other sites, but since it is such a popular site, you will usually be able to make more sales.
Choose affiliate programs that have products or services you’re familiar with
You need to feel comfortable representing them and be able to discuss them intelligently in your reviews and buyers’ guides. Don’t promote any old rubbish. Your content will be putting your reputation on the line as a niche expert.
Choose affiliate programs with a good reputation and name brand
The affiliate marketplaces can give you access to top brands if you pass their criteria for a good site. In some cases, they might not want you to have external ads such as in method #2 above.
In other cases, they might look at your volume of traffic. Only top sites can sell Apple products, for example, but you may grow to be one of those top sites, and the commissions can be impressive. Choosing top brands also means less chance of reviewing and recommending rubbish.
Choose high-quality items that have a good commission rate
The standard commissions are anywhere from 50% to 100%. How is 100% possible? Because the seller is trying to motivate affiliates, and because they are clearly not planning to make money from that item, but rather, from other, more expensive items they plan to sell.
Hints and tips:
Pay attention to what your niche buys, and tap into products that meet those needs.
Go for consumables, that is, items people need to buy over and over again, such as golf balls and tees if you are working in the golfing niche.
Choose affiliate programs that offer marketing tools and resources so you can make more sales. These tools might include:
- Banners
- Links
- Free articles, which you can re-write to make them your own and publish at your site
- Advice on how to become a super affiliate
There will usually be some sort of resource section or page for affiliates. You should be assigned an affiliate manager, and can ask them if you need help.
Don’t choose an affiliate program with a high threshold. There’s nothing more frustrating than working hard but not getting any cash flow.
Make a spreadsheet of all the products and your links, for easy copying and pasting.
Consider creating an online store of your own and fill it with the best products you are affiliated with.
Create an Online Store
It’s easy to create an online store these days, thanks to the technology available. If you use the program WordPress for your blogging, all you have to do is create a new directory such as /store at your site, and upload the plugin Woocommerce to create a gorgeous-looking store in minutes. This is ideal if you wish to sell products of your own.
You can also create a store with affiliate links if you wish, which is a good idea if you are just starting out as a small business owner online and don’t have a lot of products of your own to sell.
If you wish to sell more complicated items than books or affiliate products, you might wish to set up a store with an online aggregator.
Online aggregators explained
An online aggregator is a site that permits a large number of people to each create their own store of digital and/or physical products. When a shopper comes to the site, they can enter a keyword to locate items they are interested in.
The aggregator will usually take a percentage of what you sell. Some aggregators also charge a monthly fee, so you will need to be sure you are making at least that amount back in profits in each month in order to make using an aggregator worthwhile.
The advantages of an aggregator
An aggregator is a quick and easy way to create a professional-looking store if you’re not great at coding or are not using WordPress for your site. The main advantage is you are with all the other stores at the aggregator, so you have more chance of being discovered by customers, versus trying to drive traffic to your own site.
The disadvantages of an aggregator
There can be a steep learning curve, and some aggregator interfaces and functionality are quite clunky. Some may not permit affiliate sales. Others may have issues with digital sales.
Top aggregators
Big Commerce, Shopify and Gumroad are three of the more popular aggregators. Some people find Big Commerce clunky, in which case, Shopify has a feature for those who want to transfer over their stores relatively seamlessly instead of starting from scratch.
Gumroad is the best for handling digital products, such as ebooks, multimedia courses, music and more. It does not have a monthly fee like the others, just a small commission on each sale (currently 3%).
What you need to start:
- An image of each product you wish to sell, or a cover image for a digital product, such as a course
- A description of each product
- Your PayPal account details, so you can get paid
- A link to your fulfillment service if you sell physical goods
Hints and tips
Create a folder with marketing details and the content for every digital product you sell. Treat them like the valuable assets they are.
Use the social media promotion buttons to promote your products to your followers.
Drive traffic to your store regularly.
Make the most of your digital assets, audio, video, written work, to create useful niche-related projects.
Use your spreadsheet with all your affiliate links, and any marketing materials you have been given.
Create an App
An app, or application, is a mini-program on a Smartphone that adds functionality or some sort of game or utility to the phone that people in your niche will hopefully love and start using. If you’ve ever played a game on your phone via an app, there are two ways to monetize it, either through ads, or through linking to the related products you are trying to sell.
iPhone versus Android
There are millions of iPhone apps because they have been around the longest, and it can be a long, drawn out process to get your app into the Apple iTunes store. Android users have far fewer options at the Google Play store, where it is easier to list your items.
Do your research
Go to iTunes and search for the most popular apps in your niche. Then see if they have an Android version. If not, think about creating something similar.
Building the app
There are several free app building sites. Some have a higher paid tier. The upper tier will usually include more features and often allow you to turn off ads, but the prices can run as high as $100 per month, so if you choose that option, you need to make sure your app pays for itself one way or the other. This would be through downloads and product sales for a free app, or purchases of a (really useful and popular) app.
Top free sites include:
AppyPie – this tends to be the most highly rated of the free app builder sites
Planning the app
There are a few questions to consider when planning an app:
What do your followers need most?
How will you make money from the app-sales of products, advertising in the app by you?
What content would be useful to include in the app?
For example, if you have a series of cookbooks, start with a few recipes and add a couple of new ones each month.
What would be so useful or fun for your target audience that they will use the app over and over again? See the recipe book example above.
Hints and tips
Be sure you have access to an Android Smartphone, and an iOs phone so you can test your app and work out all the bugs before launching.
Get friends and family to test the app and give you feedback before you do a full launch.
Once you have created it and are ready for a full launch, market the app as you would any other product you have created.
Create an Online Course
This is similar to creating your own ebook. Use content you have already created, or re-purpose it, into an online course.
There are several popular sites where you can offer your course and get students who will be willing to pay. These are basically course aggregators, with your course discoverable if aspiring students type in keywords related to your topic.
The courses do not need to be university level and you do not need a degree to teach, but you do have to be able to lay out your material in a clear manner that is easy to follow. Multimedia courses with audio, video, and teacher interaction will command a higher price.
Popular sites where you can offer your courses include:
Udemy – This is the #1 site, but this also means there will be more competition.
Skill Success – This site is for people who want to learn hands-on skills. Video is the main delivery option.
OfCourse – This is a similar site which teaches skills and offers accreditation in some cases, so it helps if you have a recognized qualification and real expertise.
Ulearning – This is a less serious site with courses on a wide range of topics with a variety of price points. Think life-enhancing rather than academic.
Khan Academy – The courses here are free, but it is a good way to get your name out as an expert in your niche provided you offer quality content.
Lynda – For one low monthly fee, people can take the courses they want. You get a revenue share. Think of it as the Netflix of educational videos and content.
WordPress Plugins
If you are already using WordPress for your blog, upload another copy into a new directory titled courses and choose one of the plugins that will turn your site into an educational site where you can create courses and get paid for them. You can also use this to organize a free or paid membership site, another excellent method of earning passive income.
Learn from your competitors
Research to see what is already out there in relation to your niche. If you have time, you might even take one of the highest-rated courses to see what students are praising and how high the bar is in terms of price and content.
Hints and Tips
Be organized. Create a folder for each course and create a folder for each section of the course.
Create handouts based on the content, such as worksheets, checklists and so on.
Create quizzes for fun, or to see how well they understand the material.
Think of beginners in your niche. What do they need to know in order to accomplish the task you set or to make the most of your niche?
Re-purpose your content to make the course multimedia. Use your blog posts as a script for a video, PowerPoint deck, audio file and more.
Create a detailed and exciting-sounding description of your course with the kind of keywords students would search for.
YouTube Video Content
YouTube is the most popular video sharing site in the world, and a search engine in its own right. It is the ideal place to market your products and services. Do video reviews and add links to affiliate products, as well.
Around 75% of people who go to YouTube are searching for how-to content, so if you have written an ebook or launched courses and information products, create a quick video or webinar and link to an item it makes sense to sell in this context.
Another opportunity is to earn ad revenue. Note that you will only be eligible for ad income once you have 1,000 followers. Once you do, Google will show niche-related ads wherever you allow on your video, before, during and after.
Hints and tips
Use keywords in your titles and descriptions.
Create end cards when you promote your video in order to encourage people to view similar content of yours.
Apply to YouTube for permission to get a custom link to your site and link all of your videos to your site on screen.
Put your captions, if any, above any banner ad YouTube will lay over your content. Be sure they are in a contrasting color to the video so people will be able to read them.
Promote your best videos as you would any other product.
Embed your videos in your site by clicking Share and copying and pasting the embed code into your webpage or blog post.
Create playlists within your channel. Consider them subniches and group similar content together. Then you can market the whole playlist, as well.
Become an Influencer / Paid Sponsor
Influencer marketing is becoming increasingly popular as a way to tap into niche audiences. If you have a large following on networks like Facebook and Twitter, or own a Facebook group, consider accepting content from other marketers who are not your direct competitors in exchange for a fee.
Base the fee on how many followers you have, such as 10,000, at a penny per follower, for example. Only accept high-quality, well-written content or product information that would reflect well on you as an expert in your niche.
Hints and tips
If you haven’t already customized your social network accounts fully with a background, logo and so on, do it now.
Start increasing your niche followers by promoting your account regularly.
Consider using Facebook and Twitter ads to promote your account in order to get even more followers.
Create a rate card for business versus non-profit content.
Publish high-quality content, including brief reviews, or links to longer reviews, regularly. Then it won’t look strange if you start to accept influencer content.
Partner with Other Content Producers
One quick way to create a product you can sell quickly is to team up with one or more people who work in your niche. It might be an ebook or a course. You can both then market the item and split the proceeds 50/50. This is commonly referred to as a joint venture partnership.
But if the idea of committing to an entire product makes you nervous, you could try various marketing joint ventures. The easiest is to mail a promotion to each other’s list. If you make any sales, they will become your customer, and vice versa. You split the money between you. If they have 2,000 people on their list, but you only have 1,000, mail 2 mailings for them.
You could do the same on social media, giving each other a post with a link to a product you wish to promote.
Guest blogging is another good way to tap into a captive audience of people related to your niche without spending a lot of money. Offer the best bloggers in your niche a free post. Include what is termed a resource box, a short biography of you and a link to a page at your site you have created specially in order to track the success of the promotion.
Hints and tips
Be sure the promotion you give for a mutual mailing really suits their audience.
Give high-quality articles for your guest blogging written specially for them, not rehashed old material.
If you are going to sell 50/50, create a joint venture partnership contract to determine legally who will be doing what and how each of you will get paid. Research this online and have your legal representative help you draft an agreement which will be a win for both parties.
Getting Started
Creating information products is one of the easiest ways to earn passive income in just a few simple steps.
- Research your niche – What do the people in your niche really need to know?
- Brainstorm a product based on their top need – Think of 5 to 10 fast facts, or copy and paste several blog posts and massage them into a product that makes sense.
- Give the product a great title – How-to titles are very popular.
- Creating a marketing plan – Where will you promote the product? Make a list of all the places your target audience regularly spends time.
- Set your goals – How much do you need to earn each month in order to pay all your site-related bills, or all bills if you want to be a full-time online marketer? Write down your ideal number, such as $144,000 per year, $12,000 per month, $400 per day. How will you earn that $400 daily? Passive income can help.
- Set your time budget. – How much time are you willing to spend on setting up and maintaining your passive income stream/s? An hour a day, 2 hours? All of Sunday? The sooner you start, the sooner you will start making money.
- How much of a budget do you have for promotion – Once you are making passive income, consider re-investing some of the profits by buying Facebook and Twitter ads, which are highly targeted and can connect you with people in your niche.
Conclusion
In this report, we’ve outlined 9 ways to set up passive income streams that are almost hands-free after the initial set up and promotion, so you can earn income even when you are away from your computer.
This additional income can give your business stability, and perhaps even growth if you re-invest it in ads, software and other items that you really need in order to expand your business.
Try one method, like create ebooks on Kindle, or all 9 methods. One thing is for sure, as soon as you start publishing books, you’ll be positioning yourself as an expert in your niche. Once that happens, selling courses, getting ad revenue, and being paid for influencer spots will become a lot easier and more profitable. Chances are people will even start to seek you out for joint venture deals.
To your success!
