How to Make A Profitable Digital Product And Generate Passive Income

Filed in Case Studies, Digital Products by on January 16, 2017

digital-infoIf you ask me, digital info products are the key to the high levels of passive income we all dream of.

You know, the kind of easy, passive income that lets you quit your job, if you have one.

Or spend more time with your family.

Or travel the world while working from your laptop at another beach in Thailand.

I mean, if Stuart does it, the rest of us can too, right?

Because when you have a digital info product, you only have to create it once, and then you can sell it over and over again.

If you sell it to 300 people in your first launch, that's incredible. (If it's a $45 product, that's $13,500 in revenue.)

But at the same time, only 300 people have it, so you can launch it again, and maybe sell it to another 1,000 people. (That's another $45,000 in revenue.)

Those two launches might be enough for you for one year.

But then the next year, you can come back with a plan to sell it to more people in your niche that don't have it yet.

And make tens of thousands of dollars all over again.

And you don't even have to create anything from scratch to do it.

It's such an incredible concept, I knew I had to do it for my own business.

And shortly after I figured out how I'd do it for myself, I knew I wanted to share my journey with the NicheHacks audience.

Because while passive income from these digital info products is often labeled as "easy," I know it's not always so "easy" to hit the lottery with a good idea.

And actually create a product that will actually sell.

So I wanted to create a series of posts that would outline exactly what I'm doing to find an idea, validate with my target market, and show you my own highs and lows.

That way, if creating a digital info product is something that sounds intriguing to you, you can follow along, do the same things, and avoid any major mistakes I make.

As a disclaimer, I'm still in the process of creation.

And I'll be basically "live blogging" each time I finish a major part of the creation process, so some insights may not come until the end, since hindsight is always 20/20.

In this part, I'll talk about how I uncovered the idea for my digital info product, and how I validated it to know it'd be something worth selling.


What You’ll Learn

  • How to generate a list of profitable ideas to start with
  • How to do market research that will put you ahead of the competition
  • The basics of outlining an info product that will sell


(P.S. If you'd like to download a free list of 1,781 profitable niches click here or the image below)

1781 niches [new]


Idea Stage One: How To Make Money From Your Talents & Interests

Before I got serious about creating my digital info product, I had a million ideas.

I wanted to think they all had to be the potential to be million dollar products, but based on the law of averages, I had to humble myself enough to acknowledge that some of them would definitely flop.

But instead of investing loads of time into trial and error, I wanted to come out of the gate with a product I knew would sell.

And since I'm no kind of product expert, I knew I'd need some advice to help me identify which ideas had potential and which ideas were trash.

So to guide me through the process of product ideation, development, and launching, I signed up for Ramit Sethi's Zero to Launch course.


It's not cheap ($199/month for 12 months), but a lot of other entrepreneurs have been super successful with it, so I figured it'd pay for itself in the long run.

And fortunately for me, the very first thing Ramit coaches you through in Zero to Launch is figuring out what things you're good enough at to create a product around. 

Basically, you brainstorm everything you're already really good at giving advice on and map it out based on potential profitability and market demand.

The ideas you come up with are all based on life and hobby expertise you already have—the kinds of things your friends constantly ask you for advice on and the sort of stuff you could spend all day talking about.

If you want to follow along and uncover your own product idea, take a few minutes to jot down a list of things people are always asking you advice for. It can be anything, even if you're not credentialed. For example, I give a lot of marketing, but I don't have a marketing degree. But I'm good at it, and people keep asking me for it. So it counts. 

He teaches you to categorize your different ideas into a structure of four segments:

  • Labor of Love (low price, few buyers)
  • Mass Market (low price, lots of buyers)
  • Golden Goose (high price, lots of buyers)
  • High End (high price, few buyers)

Each category is based on potential cost and number of potential customers—with your ideal idea falling into the “Golden Goose” category. (A high price tag with lots of potential buyers.)

Now, take a minute to map out your ideas according to these four categories. They don't have to be perfectly researched, your best guess will work for now.

I already knew I wanted to create a course targeted towards freelance service professionals around the idea of presenting a premium image and charging premium prices.

I mapped my first ideas out on paper, and this is what it looked like.

I mapped my first ideas out on paper, and this is what it looked like.

Here's some of my ideas that fell into the Golden Goose category:

  • How to charge more
  • How to present an expensive image
  • Shamelessly charging a high price and getting booked for it
  • Setting up successful online sales funnels

Do you see how these ideas are still pretty generic? (How they're still just topics and not full-formed product ideas?) 

That's fine.

It's the next step in product creation, the market research, that really helps you start to refine what it is you will create.


Idea Stage Two: Market Research—Solve a Problem People Are Complaining About Right Now

This part will take you some time.

To be totally honest with you, it actually put me two months behind in getting my info product outlined.

But now that I've seen how useful it is, I'm so glad it happened.

Sure, I could have made assumptions about what my target market wanted.

But I'm so glad I didn't.

This was where I really uncovered their true pain points, and what I should solve with the product I create.

The gist is to make sure your idea is something your target market actually wants badly enough to pay for.

But really, especially if you’re not heavily entrenched in your niche yet, this is where you find out exactly what people want more of, but aren’t getting.

And you do it by finding their most vulnerable, emotional conversations available online. Here's how:

  • Read 2-4 star Amazon reviews to uncover what people like and what they want more of. Find out what they’re currently unsatisfied with from current niche gurus and figure out how you can fill that gap. Avoid 1 star and 5 star reviews, because they tend to be less nuanced and helpful. 
  • Ask for responses from your readers every time you send out an email—and promise a response in return. (The key is to ask them a burning question you know they want to answer. In my case, I asked people to tell me their biggest frustrations with their pricing and getting booked, and I was amazed at the responses.)


On Amazon, go for the 2-4 star reviews for better niche information.

On Amazon, go for the 2-4 star reviews for better niche information.


You can take your research offline too, believe it or not. (And you probably should.)

Find a MeetUp group related to your niche and ask members how they feel about the topic you want to create a product about.

If you find anyone super interesting to talk to, treat them to coffee and ask them to talk a little more in-depth about their blocks and struggles on the subject.

I think this part is so, so important, because the reason so many of us like the idea of being a niche marketer is that it lets us hide behind our computers, make money, and not have to deal with the real world.

And believe me, I’m the guiltiest of them all here.

But when you get out there and talk to actual people, you’ll be amazed at how quickly your ideas get validated.

And then you can perfectly refine them to hit at real, targeted, hurtful pain points that will promote fierce reader loyalty.

For example, I want to make a course that helps coaches, consultants, and webpreneurs convey a premium image and a premium value.

Which in turn means they can have a premium price tag and become much richer from their business.

I’d noticed a lot of local entrepreneurs that fit those demographics were constantly shocked when I told them I was repeatedly booked solid for the prices that were listed on my website… premium prices.

So I created opportunities for them to talk about this subject a little more in-depth (like in MeetUp groups)

And I got instant insight into what fears they had around raising their prices, and what I could do to help them get past it.

For example, a lot of people were overly concerned about market rate and losing business to a “cheaper” service provider.

So by coaching them on how to position themselves apart from and above the rest of the market, I can give them confidence to both raise their prices and get booked at them.

And honestly, even if you aren’t planning on selling your own info product, knowing your target market’s truest pain points can really help set your website apart from competitors in your niche.

For example, let’s say you’re writing about women’s weight loss.

If all of your other competitors are talking about weight loss for health purposes (like diabetes, high blood pressure, etc.), it might be your first inclination to follow along with what they're doing.

But, if you can get real women who are struggling with weight loss to truly open up for you about their feelings, you might discover something totally different. 

Though their doctors might tell them to lose weight to avoid high blood pressure and diabetes.

For your niche audience, their actual desires to lose weight might be more about feeling confident and sexy in their own skin.

And selling people on health benefits and selling people on feeling sexy are two completely different things, aren't they?

This will take a lot of time, but trust me, it's so, so worth it.

To do this for yourself, look up the books your niche audience members read on Amazon. Read through the reviews with a careful eye, and write down any pain points you see mentioned there. 

Then, make a list of all the places people in your target niche hang out—either online or off. With that list, come up with at least three ways you can interact in each of those places with your target audience. Create a to-do list of these actions, and do one every day. You'll be surprised with what you uncover. 


(P.S. If you'd like to download a free list of 1,781 profitable niches click here or the image below)

1781 niches [new]


Idea Stage Three: Outline Your Product With Irresistible Solutions

Once you've got a good grip on what real people in your niche actually want, you can start to outline your product.

To do that, you take a "Golden Goose" idea you know you're good at giving advice on, match it up with the deep pain points you uncovered, and figure out a way to deliver it that makes sense.


Here's how:

  • Identify the most common, painful problem you came across in your market research
  • Identify the most desired outcome
  • Outline "lessons" you can guide people from Point A (the painful problem) to Point B (the desired outcome)
  • Make bullet points within each lesson of the information you'll cover


Once you have that, you can start thinking about the format that would best fit the information you'll deliver.

You can take pricing norms into consideration, too, if you're concerned about profitability.

For example, you'll have a really hard time selling an ebook for more than $50

But if you add a few videos and some "homework assignments" in separate documents to the ebook, you could charge $200 because it's got a much higher perceived value with the video attached.

If you feel like $50 or less is the perfect price point for your niche, then there's no need for you to make videos.

But if you want a higher-priced, more "premium" product, finding a way to work in 3-5 videos or more would be a great way to up the price and your potential profitability.

And within the outline you made above, you should be able to figure out where videos would be most beneficial to your niche.

I'll be honest: I thought this would be the hardest part.

When I started thinking about creating an info product, I had no idea where to start, and the first place my mind went to was the actual creation of it, not the market research.

But now that I'm actually doing it—especially since I've spent so much time in market research, it's flowing really easily.


Here's one page from my product outline brainstorming.

Here's one page from my product outline brainstorming.


I've got a great outline with 7-8 sections, each with a PDF "lesson" and a video, and some sections even have PDF-based "homework."

(When I write the next post on creating my product, I'll walk you through the structure a little bit more. I just haven't made the PDFs or the videos yet, so that'll have to wait until next time.)


(P.S. If you'd like to download a free list of 1,781 profitable niches click here or the image below)

1781 niches [new]


Conclusion: More Validation, The Launch, & The Profits

I haven't actually done the product creation or launch yet, but I will be sharing those processes in upcoming posts.

The next step for me is to do some more intensive validation via my email list to get some committed buyers (which I'll tell you about later), then create the product and launch it.

I'm not expecting anything major with my first launch, but I do know that the first launch is crucial to get the ball rolling in the direction of bigger and better things.

So I can't wait—even if it's not one of those awesome six figure launches we read about all the time. (I doubt it will be.)

Hopefully, by seeing how I do it, you'll also be able to do something similar for your own niche business, and by being the owner of an info product, establish yourself as an influencer.

(Plus you'll be able to learn from any mistakes I make, avoiding them for yourself.)

If you're still stuck on choosing a niche, or you don't know which one would be the most profitable, check out Find Your Perfect Niche in 7 Easy Steps. It's a guide by Stuart, and he knows what he's talking about. 


Chelsea Baldwin
Chelsea has a background in journalism and IT, and besides writing for NicheHacks, she's the founder of Copy Power, a business and a website that helps business owners figure out how to get remembered online via copywriting.

She excels in the topic of SEO but can write on a wide range of topics of which you can discover by clicking on her name.

Comments (9)

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  1. Johnny says:

    Thanks Chelsea for outlining the product creation process in such detail. Wish I've read this before launching CrakMillionaire, my very first digital Mass Market info product.

    Guys, if I could do it, anyone can! It really is a great way to a steady passive income.

    This being my very first time commenting on NH, and reading the blog for almost two years now, I gotta give a big shout out to Stuart and all of you for helping us along on this journey with great content and always valuable information!

    Thanks guys!


  2. I think the concept is great, but just like creating a website or having a squeeze page. It doesn't matter unless you can generate traffic.

    I'm sure there's a lot of people out there would could create great products, but just wouldn't be able to put it in front of enough eyes for it to matter.

    Once you build a sales page for your product, what are some effective ways to get eyes on the offer to get some sales?

    • NicheHacks says:

      The same ways you get traffic to anything, there's 100s of strategies share here:

      You could also reach out to affiliates to get them to promote your product.

      Traffic isn't hard to find, people are everywhere on the web and looking for stuff to entertain and educate them. If you've got good content, that people want to see, it's very easy to drive traffic to it.

      I mean you can even pay for traffic now and get it on demand. It's the easiest it's ever been in the history of the web to get traffic.

      • I know it seems mind blowing to you that you have a whole category of posts devoted to driving traffic, and yet people still post asking how to get traffic.

        As equally mind blowing for me and many others. It's the linch pin that send Affiliate Marketing dreams to crumble.

        I think a lot of marketers rely on free traffic sources, but don't put it in the time to see any real returns from their efforts. You basically have to live on your computer. It's just not realistic. Or maybe people just don't want it bad enough.

        Is the juice worth the squeeze?

        Paid traffic sources make you put faith in your product or what you've manifested online. Going all in with uncertainty about what you're promoting is a recipe for disaster.

        Scared money doesn't make money I guess.

        It's a touch nut to crack and we're all looking for someone who already has to replicate what they've done.

        Then Maybe we can make "Passive Income from Digital Products".

        • NicheHacks says:

          You don't have to live on your computer, you have to be smart and put systems in place to drive traffic where you do the work once then it keeps on sending traffic.

          We barely spend ANY time driving traffic or actively marketing this blog and yet traffic grows every single month without fail and always has.

          Too many people ar sitting around WAITING for Google to send them traffic that is probably never coming. Google doesn't care about you and there's no guarantee there.

          It's nice, it can be passive when it comes, but it's unpredictable and you'd be foolish to build a business on it.

          The problem with the average affiliate / marketer is that they don't care about the people in their audience / the traffic they try to drive to their site.

          They just want to make money from them above all else which is totally self centred and totally against what the audience member wants.

          No one is surfing the web looking to give strangers money just because the stranger wants it.

          There needs to be more focus on solving problems, helping others, giving value, making it about other people and less focus on yourself.

          And that starts with GIVING and good, high quality, problem solving content that educates and entertains long before ASKING for anything in return.

          It's not what the average, struggling affiliate / marketer, does though, is it?

          They just plaster the web with cheap / low quality content, that helps no one, solves no problems, and is littered with affiliate links they hope someone gets tricked into clicking.

          I'm not saying this is what you do.

          I like to think anyone who's been around NH for a while has gotten to know how things actually work from the lessons and experience we share here but I'm sure you've seen what I'm talking about 100s of times over, right?

  3. A very nice write-up Chelsea and yet another helpful piece on Nichhacks.

    All the ideas in the article is true but most people don't get it especially fnew bloggers.

    I want to ask, how can someone who is just starting a blog get many people to buy his/her digital product?

    Because their blog is new and they don't have enough traffic that that lead to sales even though the product is very useful.

  4. Amar kumar says:

    Hey Chelsea,

    As product creators, we often think we are the expert. And that may be true when it comes to our subject matter.

    But we’re usually not as much an expert at knowing what our prospective customers are thinking. That’s one of the biggest reasons so many products fail to sell. All that’s needed here is a bit of research.

    Knowing what the market wants from you is vital if you want your digital products to actually sell. Eventually, thanks for sharing your best experience with us.

    With best wishes,

    Amar kumar