How to Earn Passive Income on Etsy With Digital Downloads in 2024

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I’m super excited to have a guest post from Trina, a mum who earns passive income on Etsy. 

Hello, my name is Trina, and I’m a full-time seller on Etsy. I have three Etsy shops selling Prints, clip art and patterns on digital paper.

All of my products are digital, and once I set up the files and the listing, my items repeatedly sell on Etsy without me being present – day and night.

Hello, passive income.

Making Money on Etsy with Digital Downloads

Selling your creative products on Etsy and working remotely

I moved to Hong Kong from the UK for my husband’s work almost four years ago and found myself painting a lot more in my spare time.

I’ve always been interested in watercolour artwork and had some experience. Suddenly I found myself with a lot of finished art and nowhere to put them. At the time the botanical theme was popular, and I loved painting leaves.

I sat down and just painted and didn’t stop for several days. That’s how creatives often work, in substantial batches and get into deep work for several days. I find it produces the best products in the end.

I already had some idea on how to manage an Etsy shop with my clip art – I’d set this up several years earlier, but it never really took off.

It meant I was familiar with the platform and how to get started.

Getting started on Etsy

The hardest part was just starting and not looking back. If you are unsure if your work will sell, don’t let it stop you from trying.

Most creatives are their worst critic, but everyone produces work which other people will enjoy and ultimately pay for, you just need to find your customers.

I wasn’t sure if my work would sell at all on Etsy, but I didn’t let my fears stop me, I just did it.

How I got my first listing on Etsy

I purchased a print on Etsy and checked off how other sellers were delivering their files and what they included. I had a cheap scanner and cleaned my work up in Photoshop, although you can use other software for this.

I put my first item for sale the following week.

Initially, I had very few sales, perhaps 1 or 2 in the first weeks. But the foundations were there. I continued to tweak my tags and keywords and started to see some traffic and sales.

These first few sales motivated me to continue – I knew I could make more money.

Don’t let the fear of starting stop you – just do it. Even if it’s not perfect

I got my other products up there reasonably quickly, and one particular product took off. I think what worked well was that I kept my paintings within the same theme so buyers could choose two products together and it drove sales.

I also continue to use a coupon tactic such as buy one get one free, and this works well for digital as there are no overheads or inventory to consider. Customers love quick wins and adding in a coupon can quickly increase sales.

To maximise this, I placed my three best sellers together in a combined item listing, and it is still my best seller to date. I’ve had people purchase them for wallpaper, notebooks, clothes and cushions.

For this reason, you must sell high-quality images – and be prepared for questions on size and downloading.

What other things can I sell on Etsy?

I love painting, so it was a natural fit for me. But maybe you enjoy craftwork or pottery. Etsy is such a vast market place – and there are so many ideas on the platform; it’s a case of trying.

There are Etsy sellers all over the world, as many as 1 million shops – the benefit of this is that your customers are already on the platform. You can work on driving traffic when you are more established.

The key to having a product on Etsy, which sells well, is to solve a problem for your buyer.

What problems does your item solve?

How will your item benefit the buyer?

Once you have this worked out – you can sell many things either digitally or physically on Etsy.

Related: Check out our list of the best things to sell on Etsy to make money for some ideas.

Digital is what I sell because I like passive income – I have three children, and I want to be around for them as well as have my own small business. I work during school time and the evenings if necessary. I love the set it and forget it concept.

What can I sell digitally on Etsy?

It’s interesting to see how many creatives are selling digital items. You can create PDF to sell quickly on – such as your crochet patterns, or let’s say you know how to make paper, sell your instructions in a PDF.

Perhaps you love drawing stamps – then why not sell those drawings as SGVs or even printables so the customer can print on sticker paper?

You may nurture a kitchen garden full of herbs, – why not sell information on garden planning, or planting information.

Other ideas for digital products to sell on Etsy:

  • Photos
  • Digital planners
  • Patterns for clothing, crochet, garments
  • Training PDFs on any subject, accounting, business, pets, home organisation, kids schooling
  • Digital cards, adverts or CVs

People are often surprised at the number of items you can sell on Etsy – you can find lots more ideas if you look inside Etsy Categories.

The possibilities are endless. Just get creative.

What are the negatives of selling digital items?

When you sell digitally, there is always the risk that someone will steal your work and resell it as their own.

But you can combat this by placing a watermark on your printables; inevitably there will always be those who don’t play nicely in the sandpit.

I’ve overcome this by not being too precious about my work. I know I’m selling a good product for a fair price and that’s ok for me.

I’m not going to lie, I’ve had a few shops selling my files as their own, but Etsy dealt with it quickly for me, removing the items the same day.

For this reason, always keep a record of your work – so you can easily prove it as yours should you need to.

Why start on Etsy?

Etsy has a huge customer base, with built-in traffic. Ideal if you are just starting. Setting up a shop is simple, and the basics can be completed in a few minutes.

There is a large community and helpful articles to get you started and make things simple. But not just that –

  • You can begin at any time and with only one product
  • The seller’s fees are reasonable charging only 5% and $0.20 per transaction
  • Having an Etsy shop is free, there are no monthly fees
  • You can sell anything on Etsy – even old items, digital items, and craft supplies, clothes
  • You can grow your shop at your own pace
  • There is a considerable amount of free information on owning and growing your Etsy shop online
  • Built-in traffic, but you can pay extra to advertise if you’d like to
  • You can easily put your shop on hold if life gets in the way
  • Most appealing – work remotely or from anywhere

What other platforms can I use to sell digital items?

More seasoned sellers are also starting a shop on Shopify, so if you want to progress later on and move off Etsy and onto your store, it’s easy to move.

You can run two shops in conjunction if you are selling digital since there is no limit on supply. Once established, you can begin a website and have a shop attached.

Taking the first steps to build a passive income online is the best way to create an income from something you love.

How does Etsy deal with Taxes?

Etsy is a market place and collects taxes on your behalf, but as the digital world is changing very quickly, this can be a worry. Etsy does a great job in submitting your sales taxes for you; you can read more in this article on Vat on Etsy.

Please note – this is not legal advice, and you should do your research before you begin.

How to maintain an Etsy shop? – my weekly schedule

I log into my Etsy shop most days to check stats and orders. Even though I don’t need to complete anything as the files are sent directly by Etsy after they receive payment – I check for customer conversions and any updates.

Etsy rewards you with traffic if you stay active in your shop – uploading new items regularly and keeping up with changes.

Staying active in your shop and managing your business is the best thing you can do for your SEO (search engine optimisation) and you will move on quicker if you organise some workflows and organise your time correctly.

I update my tags and titles every few weeks and keep an eye on new ideas coming through. I subscribe to the Etsy newsletter to spot trends and watch for new ideas.

While digital can be seen as a set it and forget it, business model, you must maintain your shop. E.g. swapping out seasonal items and changing your shop header often. Ideally, you want to have some repeat customers as well as new ones.

It also means you can set your working hours and go on holiday without the worry you don’t have to pack orders and send out deliveries.

I encourage buyers to join my mailing list – so I can contact them via email later if I have a sale or a new item, this ensures I have a way of contacting them off Etsy too. Help setting up a mailing list for Etsy

What do I need to get started on Etsy?

To open an Etsy shop and begin selling – you will need the following

  • A bank account to receive money
  • A credit card on file
  • A form of ID – especially if you are not in the USA
  • Your address
  • A product to sell either in file format for digital or a product
  • A way of taking photos of your product, such as a mobile phone

Read more on how you can get started quickly on Etsy here: How to start an Etsy shop

It’s also a good idea to map out your ideal customer. But this is not as complicated as it sounds, as the basics are just knowing a few details of who you want to target as a customer. Such as

  • location
  • age
  • gender
  • What they purchase now (knowing how your buyer’s shop is key to success on Etsy)
  • What problems your customer faces
  • How your product solves that problem for them

When setting up your listings, always remember who your target buyer is and how to communicate with them.

You want them to see they need your product because it solves a problem for them.

Starting an Etsy shop can be a delightful experience and allows all creatives to sell their products without the hassle of setting up an online store independently.

It’s straightforward to set up and begin selling with the internet – everyone from your teenager to the non-tech Mum wanting to make money at home can start.

Best of all, it appeals to everyone, and you don’t have to be in the USA to see success.

My advice to all creatives is just to begin, don’t let any fears hold you back. The minimal initial investment you make can blossom into a family business – whether you want to make a full-time income online or just some extra money for the holidays.

Etsy is a great place to start.


About Emma Healey

Emma is a recognised family finance and budgeting expert and founder of Mum's Money. Her advice has been featured in Readers Digest, Yahoo Finance, Lifehacker, The Simple Dollar, MSN Money and more.