How to Sell Digital Files On Etsy to Generate Passive Income

When people see Etsy, they visualize a marketplace for handmade crafts and artsy product which is challenging, if not impossible, to be a leading source of passive income. However, you might not be aware that Etsy also allows users to sell digital files. Passive earnings off of digital files sales on Etsy is simpler than ever with an automated, robust system that lets you earn profits in your sleep.

What is a Digital File/Product?

Before anything else, let’s go over the basic definition of a digital file you could sell to someone on Etsy. The world of information products has expanded in the past few years, and Etsy has jumped on the bandwagon when it comes to connecting buyers with sellers. Digital files in this scenario are anything that can be shipped electronically rather than physically. This could include ebooks, digital patterns, vector illustrations, fonts, and more (even icons and logos count!).

What unique aspects of Etsy can digital sellers leverage? Etsy doesn’t endorse utilization of other channels on their platform, as they take a percentage on each sale made through their site. That said, you’ll discover many benefits of Etsy when you sell digital files. For example, you’d be able to utilize Etsy teams, a feature that enables you to publish in discussion boards, join groups with other merchants, and promote your listings. Etsy merchants are also known to be team players, as they’ll promote your items (if you form a good relationship with them), which can boost your exposure and sales.

Getting Started

digital files on Etsy

Though selling digital files on Etsy is a route to set up a passive income stream, it does require some effort up front.

Firstly, you’d have to list a digital file on Etsy. The process is similar to creating a physical product listing, except that you’ll be uploading the digital product when someone gives an order. After prospects buy a digital file, it becomes immediately available to download in their “downloads page.” When you’re about to do this, follow these recommendations:

1. Mark the listing as “digital.”

Choose “digital” as the listing type (it’s the 7th option) when you put together your listing. The quantity can be set to a high number like 100 or 200, so you won’t have to renew your listings after a sale is made. Alternatively, you can instruct Etsy to renew listings automatically by choosing the 6th option from the Listing Details tab.

2. Upload High-Quality Images

It’s not ideal to use real-world images for digital listing as they could confuse prospective buyers (they could start thinking it’s a product they can touch, feel and experience). Instead, use a tool like Photoshop to create images. Also, it’s the best practise to display a clear title on the product’s right, so customers can see what you’re offering as they scroll through different Etsy listings.

3. Clearly Convey That It’s a Digital File

In the file’s description, there’s an option to insert a section that clearly explains how the item is going to be delivered, such as in what resolution, file format, etc. You can also mention what software will be required to view the files. Some people prefer that everything is said about a listing, even if it’s second nature to the sellers. Another thing you can do is add a disclaimer in the description that how refunds will be managed since the items will be delivered instantly.

4. Upload Relevant Files

Once you’ve added the description, move onto the section called “Digital Files”. That’s where five different files can be uploaded for a listing. However, if a digital product has a greater number of files, Etsy gives an option to upload a zipped file (it’s going to be counted as one). You’d also find a button that enables sellers to insert a “special note” for purchasers of digital products). It shows up beneath the email’s content that confirms they’ve bought a product on Etsy. You can tell them how the files will be sent, and what to do in case they lose the data (how to do a re-download).

5. Insert the Right Keywords & Tags

Once you’ve managed the Digital Files section correctly, start filling out the keywords and tags section. That’s important as it will determine how your listings show up for different search terms. As you’d be selling digital files, you can leverage tags like instant download, digital file download, .doc, .PDF, printable, etc. to better optimize your listings. Of course, mix and match these tags and keywords with the original name of your file for the best results.

Note: Remember that the large part of launching a digital files business on Etsy is learning and modifying your listings over time. Experiment at the beginning by testing a few designs. In other words, you don’t need to list hundreds of digital files to get started. Just list a couple, see what people say and then expand on whatever category or type of file gets you more sales.  

Managing Queries

When you begin selling digital files, you might get bombarded with technical questions from buyers. Don’t be surprised, however, as many individuals aren’t that tech savvy to know how to convert an image from portrait view to landscape view, or how to turn a PDF file into a Microsoft Word document. A lot of these questions can be avoided if you include step-by-step instructions in the email that is sent to buyers when they purchase your items.

Also, it is ideal to get familiar with the several color modes and printing processes a customer might be utilizing. Feel free to get a few of your designs printed in different patterns to see how they’ll look on paper and anticipate what the buyer could experience.

A Note About Pricing

How does a seller place a price tag on a digital file? That can be difficult to configure out if it’s your first time selling digital products. However, it’s not a dead-end ahead. You can begin by figuring how much you’d charge for a sketch or hand-made at if you had it printed, packaged, and shipped. Additionally, you should also factor in the time you put into creating each digital file and what you would consider a reasonable margin to reach your product’s price. Moreover, you should add costs like Etsy fees before you list a final price.

Some sellers think digital finals can eat away the sales of their other products on the platform. In reality, that’s unwarranted. It’s because you’re going to be selling to two different consumer groups, one that buys digital items and one that buys physical items.

Overall, you’ll have to find a happy medium when it comes to the product’s price. Conduct a couple of searches to see what competing files are priced at. But don’t ask twice the amount as everyone else. Begin in the middle, and you can work your price down or up based on customers’ response and product sales.

Bonus Tips to Sell

  • Use Proper Branding: Don’t be shy of naming your digital items, but keep a line between items that’d be printed verses the ones that’d be downloaded on digital devices. For printed ones, you can include a logo, while digital ones can be limited to your personal or company’s name. Also, you can include your web address and contact information in empty spaces; that’d allow people to find you again and again.
  • Make Images as Clear as You Can: Etsy maxes out the seller at 800*1000 pixels, so keep these dimensions in mind when creating images for your digital files. Square images work well for the way the platform’s search is set up. If square images aren’t possible for all files, make sure the main image is in this orientation at the very least.
  • Test Custom Option: Etsy has a little button that you can push to tell buyers that you’ll customize a single digital listing out of your range of offerings. It’s recommended that you test it for a while and take it off. If you decide to keep it there, you may find that there’s a lot of back and forth dealing with changes. Digital files are meant to generate passive income, not additional one-off works.
  • Include Top Selling Files: Now, Etsy doesn’t have a search feature for just digital files. However, you can figure what digital items are top sellers by selecting a category that’s included in top level searches. Then, you can find top sellers that are digital focused to include in your range of offerings. Examples include “photography” and “graphic design” in the handmade category.

Final Verdict

It’s everyone’s dream to earn money while they’re enjoying their favorite activities. With Etsy digital files business, you can front-load all your hard work at the initial stage and then reap the benefits later. Once your listings begin picking up momentum, you’d be able to enjoy sales with minimum to no marketing. Of course, it’s going to be even sweeter if you love being creative.