Digital products can’t be held, tasted, or touched, but everyone consumes them—from music to videos, ebooks to online courses, and more.
Due to their popularity and ease of distribution, many entrepreneurs build entire businesses around these intangible goods or launch digital product lines to complement the physical products or services they offer.
What makes them especially appealing, however, is that digital products can be created once and sold repeatedly to different customers without having to replenish your inventory, making them ideal for creatives, artists, educators, and freelancers looking for new income streams that require less effort to maintain.
What are digital products?
A digital product is an intangible asset or piece of media that can be sold and distributed repeatedly online without the need to replenish inventory. These products often come in the form of downloadable or streamable files, such as MP3s, PDFs, videos, plug-ins, and templates.
Digital products have many advantages that make them uniquely attractive to sell:
- Low overhead costs: You don’t have to hold inventory or incur any shipping costs.
- Extremely high-profit margins: There’s no recurring cost of goods, so you retain the majority of your sales in profits.
- Potential to automate: Orders can be delivered instantly, letting you be relatively hands-off with fulfillment.
- Flexible products: You can offer products for free to build your email list, monthly paid subscriptions for access to exclusive digital content, or licenses to use your digital products. You have a lot of options as to how you incorporate digital products into your business.
Learn More: 10 Pricing Strategies to Use for Your Online Store
But digital products also come with specific challenges you’ll need to watch out for:
- You’re competing with free content: With digital goods, consumers can probably find free alternatives to what you’re selling. You’ll have to think carefully about the niche you target and product descriptions, offer premium value with your products and know how to build your brand in order to compete.
- Susceptible to piracy/theft: You need to take precautions and reduce these risks by employing the right tools to protect your products.
- Some restrictions on how you sell: For example, you must sell physical products through the Facebook and Instagram sales channel, according to their commerce policy.
Most of these challenges can be overcome, however, if you employ the right tools when designing your digital product business.
Learn more: Trending Products to Sell in 2020
5 apps for selling digital products
If you’re building a digital product store or are looking for ways to add digital products to your existing store, there are a number of tools you’ll want to consider depending on your needs:
- Digital Downloads: This free app by Shopify offers a simple way to sell digital products in your store. Upon purchase, customers can download their file immediately and receive a link in their email.
- Sendowl: For more complex digital product businesses, Sendowl comes with a variety of features and useful automation, like expiring links and auto-generated license keys, to power your products.
- Single: If you’re a musician selling music, Single was made with you in mind. Not only does it bridge the gap between physical and digital music sales, but it also lets you easily include clips on your product page for customers to sample.
- FetchApp: FetchApp is another digital download delivery app that offers fewer features than Sendowl, but has a free plan available (5MB of storage) and gives you the ability to attach multiple files to a single product.
- Sky Pilot: This app is ideal for building a membership program, letting you sell files or exclusive video streams to customers. Customers can then access all of their previously purchased files through their own customer accounts.
Beyond these digital product delivery systems, there are other Shopify apps to power and protect your digital goods, such as:
- Charge Rabbit: This app lets you implement recurring billing, which is necessary to sell your digital products as part of a subscription. You can integrate it with Sky Pilot, mentioned above, to enable subscriptions for exclusive digital streams or downloads.
- Photolock: If you want extra protection for visual products like stock photos, this app offers most of the security measures you may need, from watermarks to source code protection.
- Disable Right-Click: When your content is your product, this app helps you protect it from theft. You can lock images and text so they can’t be saved or copied without your permission.
Depending on your needs, these apps and more can be used together to help you incorporate digital products into your Shopify store and execute any of the digital product ideas below.
Note: When creating digital products in Shopify, be sure to uncheck “This is a physical product”.
Digital products you can sell online
1. Sell educational products like ebooks or courses
If you consider yourself an expert on a particular topic, digital products are a great way to package that information and sell it to others looking to learn.
If there’s an abundance of free blog posts or tutorials on YouTube about what you’d like to teach, you can compete by delivering content that promises not education but transformation. In other words, don’t sell the product—sell the customer’s own potential after buying your product.
You can leverage an existing reputation as an expert to garner attention for your products, or if you’re starting from scratch, you can create and give away free content to generate interest and leads for your paid digital products.
2. Sell licenses to use your digital assets
From stock photos to video footage to music and sound effects, there’s a global ecosystem of licensable digital assets uploaded by creatives for other creatives to use in their work.
By offering licenses to individuals and businesses, you can charge for the use of your photos, videos, music, software, and more in your own store and through online marketplaces, such as stock photo sites. In exchange for exposure, some of these marketplaces can take up to 50% in commissions for every sale, however. If you want to build your own destination for digital assets, you can use Sendowl to power this type of business with unique auto-generated license keys.
When coming up with assets to create, it helps to work backward from the needs of your intended audience. Start by thinking about what kind of assets they’d want to use in order to create products that are actually in demand (and thus easier to sell).
Also, be sure to protect your digital products with watermarks and other security measures, especially if you’re selling photos.
3. Sell a membership for access to exclusive digital products
Instead of selling individual digital products, you can bundle them together and lock them behind a paid subscription to generate recurring revenue.
This approach is ideal if you plan to maintain a growing library of premium content and nurture a community of passionate members. In some cases, paid digital subscriptions can even create an opportunity to directly monetize your existing content marketing efforts.
Since this content is behind a gate that only paying subscribers can access through their customer account, you can also host exclusive content that can be streamed rather than downloaded.
4. Sell digital templates and tools
Digital products can also come in the form of intangible tools that equip professionals to do tasks that either fall outside of their skillset or take up a lot of time. You can sell digital solutions to the common pain points and needs of a specific audience.
Some examples include:
- Product mockup files for entrepreneurs
- Resume templates for job-seekers
- Software for businesses
- Adobe After Effects plugins for video editors
- Icons, fonts, or UX Kits for web designers
If you already have a freelance business, it might be worth considering how you can turn your skills and services into digital products to create passive streams of revenue.
5. Sell your music or art as digital products
If you’re a musician or an artist, chances are you’ve explored ways you can monetize your talents or the audience you’re building. While t-shirts or prints are always an option, there are also plenty of possibilities in digital downloads.
A musician can sell ringtones of their best songs alongside their merch. Or a cartoonist could turn their art into purchasable phone wallpapers. Since you don’t have to hold any inventory, you can experiment with different formats to see what your audience wants without much risk.
6. Sell your services through digital products
Services tend to pair well with digital products because services are essentially their opposite—with services, your "inventory" is limited to the number of working hours you can accommodate.
Plus, customers often receive digital products as part of their "purchase" with many services. A designer will deliver logos. A personal trainer might deliver a workout plan. Leaning into this, you can position certain services as packages containing valuable digital products.
For example, you could offer a consultation for a fee, along with a personalized report or Excel spreadsheet, and then upsell your customers on your other services or products. Or you could offer a free downloadable product to generate leads for your email list, a tactic that many online businesses employ today.
If there are common tasks you complete as part of your service business that are easy for you but valuable to your customer, you can consider productizing them to create revenue streams that require less of your time and effort to maintain.
Get creative with your own digital products
Without the need to hold inventory or the overhead associated with selling physical products, businesses based on digital products can be launched and tested with little risk.
There are countless ways you can create your own digital products and incorporate them into your business. With a little ingenuity and upfront investment of time, you can serve up irresistible value that can more than pay for itself over time.