Passive income is something that many business owners aspire to have. The idea of earning money whilst not doing any extra work is incredibly appealing. The term ‘passive’ suggests that you could be sitting on a beach and permanently not doing anything to generate that income.
But passive income isn’t entirely passive. It’s true that once you create the content, you might not have to do anything to recreate that content, but you do still have to market and promote it.
A book is a classic example. You can spend a year to write a book, but then once it’s written, you can sell it over and over again, with no extra work. However, it takes you a year before you make any money, and you still have to promote it - because people can only buy things if you promote them!
Passive income products are generally lower cost. Things like an ebook for £10 or a prerecorded workshop that you initially deliver live but then record and sell on afterwards.
Think about what you can sell, how much you can sell it for and who much work is involved in creating it. A course, for example, can take many hours of work to develop and market.
People aren’t going to buy from you cold on social media; they’re going to purchase from you through your email list. Generally, your list will convert at 1-2%. If you want to sell passive income products, you need to build a list before you sell - and it can take a year or more before your list is a suitable size.
It’s incredible how long it takes, especially if you’re doing it organically. You also need to factor in the time it will take you to engage with that list and keep your subscribers active and engaged with you.
There are so many passive products you can create. But it’s no good creating loads of different options if they don’t suit your business model. So know what you want to create. Are you looking to create a group program or offer a course? Do you want to launch with an open and close the cart period regularly, or are you thinking about using an evergreen model, where people come into your list and ultimately buy through your emails?
Not all passive income products are quick to create. There’s also a lot to factor in with the creation and marketing processes involved. It isn’t just about the product itself either. You may want to also run Facebook ads for it as well. How many people do you need to convert, to make that worth doing? It takes a lot of time to create the content and work out the promotions.
For example, my hour-long masterclasses sell for £27. I turn up to the class, have to produce all the content and create the promotions. You then have to make sure all the content works properly and it’s all functioning, especially if you’re doing all the tech yourself. It’s a lot of work for £27, and if you’re only going to get two people join each time, you know it’s not worth it. I’ve now added them to my sales funnel to buy the masterclass recordings as people join my list.
If you’re looking to sell something under £50, don’t build any of it until you’ve sold it. It sounds backwards, but what if you create it only to find no one buys it? So before you put in the work, look to produce only the first module or skeleton of your product. You then have something to get started and then flesh it out once you know it will sell.
If nobody buys, you’ve then only wasted some of your time and energy. So start with just one masterclass and see what happens. See how many people buy on your list and check you’re selling the things that people want to buy.
Because passive income is usually low priced, you need to think about how many you need to sell to make it worthwhile for you. But also, what is your longer-term goal? If you’re creating a course, you want to sell it again in 6, 12 and 24 months later. You don’t want to keep recreating new stuff; you want a good signature course that you come back to again and again.
You may find it better to focus on getting one big client rather than trying to sell lots of £27 things. Think about what’s the easiest way for you to make money. If you’re already working with one to one clients, it might be quicker and easier for you to just get more one-to-one clients at a higher rate, especially if you’re not yet fully booked. Or do you want to get into passive income so you can get more flexibility around the holidays or to take more time off for the school holidays?
You’ve got to think about whether passive income is a strand of your business you want to grow. And know that it’s not something that will happen overnight - it’s also not going to make you a millionaire! The people who are successful at creating and selling passive income have worked hard at it and have spent a lot of time building a large audience beforehand.
You can use my pricing calculator to crunch those numbers. Establish how much time it will take you to create it and how many you’d need to sell to recoup your time and any kind of outsourcing costs. Crunch the numbers before you start, as the results can be pretty shocking.
Listen more to my podcast on passive income and pricing.
Like what you hear? Don’t forget to rate and leave a review to help spread the word!
The Pricing Queen podcast is produced by Decibelle Creative