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What is a digital product? And which type should you create?

Megan Martin


Looking to create passive income in your business? Welcome to the world of digital products! If you’re wondering just what is a digital product… let’s break it down!

What is a digital product and how to pick the right kind for you to create and sell in your business

What is a digital product?

A digital product is anything you can create and sell on the internet-webs that doesn’t include 1:1 project time (service-based), *inventory + shipping and handling (physical products), or **multi-level marketing businesses.

Everything about a digital product happens online. From the creation, to marketing, to sales, and delivery, a digital product business functions completely online.

But there are a couple caveats I want to clarify before we go any further:

*There is an exception to the physical product rule: Technically you can set up a digital business with a physical product with a print-on-demand or dropship service. I’ll get into that in a minute!

**If you can create a revenue stream with a multi-level marketing company that runs on auto-pilot and doesn’t involve you placing orders for your customers manually, that could technically also be a digital business. I’m not an MLM educator so I don’t truly know that business model. But that doesn’t mean MLM’s can’t have a successful passive profit stream in addition to their product business. I’d argue it would be super SMART for you to have a digital product side of your business if you are in network marketing!

What type of digital product should you create?

Figuring out what kind of digital product you should create is one of the first decisions you will make. There are 8 main types of digital products you can sell. 

Knowing exactly WHICH one is perfect for you takes a little bit more than just knowing what kind of products are available. That’s why I created the “What’s Your Perfect Product?” quiz! In 7 questions, I’ll help figure out the perfect type of digital product for you to create based on how much time you have to devote in the short and long term, your business personality, and a few other fun questions.

Go through it and I’ll work my magic to help you feel more confident to get started in creating your first (or next!) digital product!

Find your perfect digital product with my matchmaker quiz HERE >>

8 types of Passive Profit you Can Sell


In the land of passive profit, this is probably the most passive category of them all! With a digital download, you take out the middleman and let your customers get what they need and make it happen with a wave of a magical wand download link in their inbox. You can create:

Done for you Downloads: These products are the internet version of straight out of the box and use it now downloads. Stock images and Printables are great examples of done-for-you digital products. You don’t have to do anything for them to be ready to go. Just plug, play, and get pretty!

E-Books and Guides: These helpful products give your customers valuable information they need to solve problems and make moves. E-books & guides can be great entry-level products to establish that like, know, and trust factor with your customers that is vital for repeat purchases!


Template products are semi-done for you that save your customers a lot of time and headaches! 80% of my products fall under the template category like my exclusive Showit Website templates for Digital Business Owners.

The key here is to make them as easy as possible for your customers to download and edit! Template downloads are less passive in nature than their Done-For-You Download cousins as you’ll have to check in on them often to ensure quality and software compatibility as well as an increase in customer support for any technical issues.


Online courses are all the rage for educators everywhere since you can share your knowledge with a whole lot more people than a traditional classroom can hold. There are plenty of options for creating an e-course from self-hosted on your own website, to a series of webinars on a platform like Crowdcast, to an e-course builder like Kajabi, and shared platforms like Creative Live and Skillshare.

Friendly Heads Up: There is STEEP competition here. Info products aren’t going anywhere anytime soon, but as more and more courses flood the market, buyers are becoming more and more overwhelmed. Don’t forget to validate your course idea before you spend countless hours producing it!

I spent over a year validating my course, Revenue Ripple, to ensure it was a needed product and to structure it in a way that was both sellable and easy to learn!


Membership sites are quickly growing in popularity. They’re an enticing spin on courses because you get more interaction with the content creator and have the added benefit of built-in community.

The drawback? Membership programs are semi-passive in comparison to courses as they typically involve regularly giving your members fresh content. I would go as far to say that a membership is the least passive in the bunch as it is a highly logistical and quick content turnover type of digital product. But with the *red ocean of courses growing, I think membership sites are going to continually gain momentum!

The beauty? Memberships create recurring revenue in your business. Ever heard the ole saying that it costs more to get a new customer than a repeat customer? Memberships are the perfect digital product type to build a tribe of repeat customers on autopilot.

In 2020 I launched The Digital Lab, a monthly membership for digital business owners to help you create, launch, sell, and scale with digital products and we have over 1,000 eager entrepreneurs inside doing BIG things!

*Red ocean = A term from one of my fave biz books called Blue Ocean Strategy that means a saturated and cut-throat competitive market. It is quite difficult to enter a red ocean and see quick traction. That’s why it is so important to know your core values, establish your unique value proposition, and know your ideal customer like your best friend.


Pretty self-explanatory here! A live online event can absolutely be a paid digital product. With people’s BS meter is through the roof as the online industry booms, building like, know and trust with potential customers does not come easy. But a live event creates an entirely different experience that people LOVE!

Live events are great for educators who prefer to directly engage with their students over the more passive course product, but are the least scalable of the digital product world (unless you flip it into a recorded evergreen digital download or course product later!).

The 3 main types of live online events are:

On-going Class: Akin to a college class taken online, you can host a class live online for a period of time to share what you know!

Workshop: Workshops are one-off educational events where you teach your content to a group of people live. 

Summit: Summits are live events where you invite a panel of industry experts to speak one by one like a virtual conference. Summits can be all live or also made up of pre-recorded speaker sessions that go live at a certain time during the event.

When done strategically, live events are the perfect way to fill your community loving heart and grow your audience and authority. You can also use live events to prep your customers to launch another digital product that is the perfect next step for them. Yes!


Starting a shop online is easier than ever with robust programs like Shopify. To keep it really passive, you can sell those digital downloads covered above or create an automated physical product storefront like: 

Drop-ship Store: A drop-ship store is basically a middle-man between a manufacturer and the consumer. Your customer visits your store, purchases, and if set up for passive automation, the order would be sent to the manufacturer who then packages and ships the product direct to the customer. Drop-shippers are akin to curators. Do you like cute office supplies? You could seek out companies who make office supplies with drop-shipping and link their products to your branded storefront!

Print-on-demand Store: A print-on-demand shop is similar to drop-shipping in that you don’t carry inventory. You create an original design and find a printer who will print your design on a product (example: a mug or t-shirt) every time a customer makes a purchase from your store. Many printers also have drop-shipping built into the process so it stays more passive on your end. This is a great way to get into e-commerce, but your profit margins are likely to be slim with one-off printing.


Collaborative Digital Products: Collaborating with other brands to create products that would mutually benefit both customer bases is a great idea for some passive income! You can create any of the above product or store ideas and jointly market them for more exposure.

For example, I collaborated with my good friend Laura Foote to produce a Lifestyle Collection of styled stock photography for the SC Stockshop audience (like the image below!). The gals at the SC Stockshop helped us determine what to create and managed the delivery and customer service side of the shop while Laura and I worked to produce new imagery! Hundred of business owners now use these images!

What is a digital product - an example of a collaboration with Megan Martin Creative and Social Squares

Licensing your Designs and Products: Similar to a collaborative product, you can also solely create a product and license it to another company to sell. You can license out virtually any type of product! It is very popular in the graphic design industries. For example, big retailers often license work from surface designers to create those graphic tees you love to buy!


Got an audience? You can earn passive revenue simply by sharing about products and services that you love. There’s two main ways to create a digital marketing revenue stream: 

Influencer Marketing: With the rise of the personal brand swaying consumer purchases worldwide, influencer marketing has blown up! Big brands are seeing mega sales by focusing less of their marketing dollars on traditional advertising methods and instead are hiring micro-influencers with captive and engaged audiences to rep their products. This form of marketing is a little more work than traditional passive income as you’ll have to consistently create content and pitch brands to pay you, but it can lead to increased success in the more passive version of…

Affiliate Marketing: Similar in nature to Influencer Marketing, affiliate marketing is easier to get into when you have a smaller audience. Many companies invite content creators of all audience sizes to rep them with affiliate income potential. Once you create the content, you can scale the foot traffic to consume it, therefore increasing your odds of earning more.

Friendly Heads Up: Although probably the easiest barrier to entry of the passive income world, affiliate marketing isn’t always a home run ordeal. Affiliate splits are often extremely low (especially for physical products) which means you need a whole lot of clicks and/or buys to see a considerable return. It can be hard to achieve that with a small audience. In my experience, it has been much more fruitful to work with other digital product creators that highly compliment what I sell in my business. That way I don’t have to go out of my way to create extra new content, but rather seamlessly can work in affiliate earning placements in the content I’m already producing.

Influencer Marketing and Affiliate Marketing often go hand-in-hand. Big brands may hire you to create sponsored content (influencer marketing) and also give you a special commission-generating link for your audience to click to purchase (affiliate marketing). It can be a winning combo of passive income if your brand and audience are primed for it!

This list is just the tip of the iceberg of passive profit revenue ideas, but they cover the gamut of digital products! As a family, we have additional revenue streams coming in through buying, flipping, and selling homes and long-term residential rental properties.

It is safe to say The Martins have caught the passive bug!

Curious to know which one of the 8 types of digital products is PERFECT for you to create and sell based off your unique personality and expertise? Take this quick and fun quiz and get matched now!

8 Types of Digital Products you can sell
What is a digital product and how to pick the right kind for you to create and sell in your business

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