Digital Products Are Not a Vehicle for Passive Income… Or Are They?
Most people create for a hobby or a passion. Then some made money from ads. Then careers emerged. Then endorsements. Then the term “influencer” was born.
Now it’s Canva + ChatGPT + TikTok, and the promise is simpler: make a PDF, sell it for a fiver, retire to Bali. I’ve watched this pattern before. Network marketing did the same maths in the 90s. The pitch changes. The fundamentals don’t.
Why the maths never adds up (network marketing edition)
There has been network marketing forever. Avon, Tupperware, Ann Summers parties. Visit your friends in the local community, if they buy something, you get a commission. Modern versions include Herbalife, FM World, and, most recently, selling holidays. The network just became digital.
Say you have 1,000 followers across Facebook and Instagram. Your product costs £100. You post your Herbalife pack or knock-off fragrance and 10% of your audience sees it. That’s 100 people. Starting to sound reasonable, except they’re just the ones who saw it. Are they buying? Maybe 10% of them. Ten supportive people who share it or buy as a gesture. You might make a grand, but then what?
Are they going to do that every week? Are ten different people you went to school with going to buy every single week? If you’re lucky it’s one or two a week, which sounds like £400 a month. But that’s not passive. That’s you sourcing products, creating content, waiting for Auntie Jacquie to order if she’s feeling flush. It’s not sustainable. The only people it benefits are the ones making the stuff, because you keep buying it.
The Etsy automator
“Buy directly from somebody who has put their heart and soul into making something special.”
That’s Etsy’s strapline. Sounds wonderful. Except you’re not buying directly, it’s from a marketplace that connects buyer and seller. There are fees. There’s shipping.
I’ve bought three prints and two toy boxes so far. I’ve a talented cousin who makes driftwood houses, aged 40 and still living at home, has to go to the beach to get the materials, doesn’t drive. Doesn’t sound passive. An ex-colleague, a talented designer who makes things (not sure what), probably high net worth already. Could be passive, or semi-passive, who knows? Final example: an ex-colleague of my wife who had to give up 20 hours a week in the office or stop making baby grows because she was consistently above the tax threshold. Now it’s her job. Not a hobby, not supplementary income. She’s a slave to it.
Then there’s happydayz designs.
Looks like they have a native Canva integration. Several designs ranging from birthday invitations to weddings and christenings. Themes include Lilo and Stitch, personalised names, Marvel. Except they’re Canva templates. Selling a Canva template for 95p. I reckon the whole thing is automated.
This is the one that interests me, because it says “40 sold in the last week”. Found 40 people to buy one template. Which was probably a template in the first place.
£38.40 for pressing some buttons. Sounds passive.
£1,996 a year if that continues off one product.
What would I do with that money? That’s a mortgage overpayment or a summer holiday paid for. I wouldn’t have to be in the town called malice anymore. It’s helpful but not life-changing. But if I keep doing that until retirement and let it sit in a bank account, starts to sound useful.
He’s had this gig eight months, sold 9,100 of the things, which is £8,645. A used car or a decent family holiday, or maybe a deposit on a renovation, depending on fees. Invest it and it compounds.
71 designs doesn’t sound passive
That’s 1.5 a day over eight months. He’s working on this. That’s not set-and-forget by any means.
I want to find out more about this Canva integration. Can I recreate this and pay for Christmas next year? It’s also not putting your heart and soul into something. It’s information technology, for want of a better word.
Earn with Kate
That’s Etsy covered. Now back to the TikTok crowd.
I see plenty of these “before you go to sleep tonight, open up Canva and create a digital product, sell it online 10x a day for $5 and that’s $1,500 a month” posts. This oversimplification of the maths is what’s annoying me.
In my “how easy is it to monetise a playbook” experiment, I have one product for £5 on Payhip. Been on there a fortnight and it’s not selling itself.
Back to the oversimplification: she has 2,000 followers on TikTok. To sell ten times a day, she needs a conversion rate of 20%. Unheard of. So it’s not coming from the following alone, or these are just lead hooks.
Looking at the link on the Stan Store, there aren’t any $5 products. Most are around $25, which makes the task easier. Then there’s a bundle for $125. She sells that twelve times, there’s her $1,500. Making slightly more sense now, but do I think she’s selling that twelve times a month, every month? No. Even doubling that money isn’t quite a salary. Thirty-six books a month, and you might be entering salary territory.
But $18,000 for a sale of twelve digital products a month is starting to look appealing. That’s a deposit on a new car. That’s a new kitchen. It’s not a salary, it’s not life-changing, but it’s helpful. It also maxes out an Individual Savings Account (ISA). Here could lie the passive bit.
The bit they never mention: distribution
The trouble is they never break down the breakdown. I can’t be on TikTok getting the impressions and the click-throughs and the conversions through my own audience. How well do organic posts do in 2025?
Let’s finish the maths. With 2,000 followers, only 10% see your post. That’s 200 people. To get ten sales from 200 views, you need a 5% conversion rate. Possible, but you’re burning through your entire engaged audience every single day. The cohort burns out in ten days. You’d need 6,000 new followers monthly just to maintain that rate, assuming none of them see your content twice and get tired of it.
Or you run ads. A £25 product with a 2% conversion rate (optimistic for cold traffic) means you need 500 clicks to get ten sales. At £0.30 per click, that’s £150 daily in ad spend, or £4,500 monthly, to generate £7,500 in revenue. You’ve netted £3,000 before fees, hosting, transaction costs and time. Not passive. Not a side hustle. A part-time job with cashflow requirements.
The bit they never mention: existing audience
People who succeed at this had something before they started selling PDFs. A newsletter with 10,000 subscribers. A YouTube channel. A consulting practice. Distribution that took years to build.
The Reddit thread on passive income from digital products is telling. One commenter: “It’s possible but not easy. You need traffic, good marketing, and a product that solves a real problem.” Another: “I make about $200/month from templates but I spent 6 months building my Instagram to 15k followers first.”
Nobody starts at zero and makes $1,500 in month one. The ones making real money either bought ads (not passive), built an audience first (took years), or got lucky with SEO on Etsy (lottery odds, and Etsy keeps changing the algorithm).
The grey market on Substack
It’s not just Etsy bros and TikTok girls oversimplifying this. I’m seeing content on Substack from older people discovering AI and making supplementary income (because it wouldn’t be passive at this point). Before I call it, I have a look around. There are plenty of notes on Substack: “find a problem that’s talked about online, and solve it with a PDF. Sell the PDF.”
PDFs have been the bane of my existence my whole career, and now these are the way to a comfortable life?
Nobody talks about distribution. Nobody mentions marketing in relation to PDFs, which is odd. Because I know first-hand it’s not Field of Dreams. If you build it, they don’t come.
The other thing: people who talk about money tend to not have any, in my experience.
The only scenario where this makes sense
If you’re retired and you’ve got time, an extra £2,000 a year sounds brilliant. No boss. No commute. Tinker with Canva for a few hours a week, upload some templates, let the Etsy algorithm do its thing. Compounds nicely in a pension. Beats volunteering at the charity shop.
If you’re working full-time with two small kids and a mortgage, that same £2,000 costs you evenings and weekends for eight months to build 71 products. Your hourly rate works out to about £3.50. You’d be better off getting a pay rise or switching jobs.
The maths only works if your time is free. Which it isn’t, unless you’re already retired or independently wealthy. Then it’s a hobby that pays for itself.
So what’s the experiment?
I’m a Head of Growth. I’ve scaled three startups into mature sales pipelines from digital marketing. I’ve watched social media evolve, same as Mobilegeddon and every Google SEO update. If the maths works, I should be able to make it work. If it doesn’t, I’ll know why.
Here’s what I’d need to test to make this viable:
Etsy automation: Can I replicate the Canva integration model? What’s the actual time investment per template? What does Etsy SEO look like in 2025? How long until the first sale?
Paid traffic: What’s the real cost per acquisition for a £25 digital product? Can I get below £5 CPA on Meta or Google? Does the landing page conversion rate justify the ad spend?
Organic distribution: If I post about the product twice a week for three months on LinkedIn, what happens? Do I need 10,000 followers before anything moves?
Email list test: What if I build a free lead magnet first, get 500 email addresses, then sell them a £25 product? Does that change the economics?
The hypothesis: digital products can generate supplementary income, but only if you solve the distribution problem first. And solving distribution is neither passive nor quick.
There might be some digital products heading your way soon. Once I’ve run the numbers properly and figured out if this is viable for someone with a day job, or if the only profitable digital product is a course about selling digital products.
Which would be ironic, but also possibly the point.