How to Sell Digital Downloads on Etsy to Grow Your Passive Income

Are you a creator, small business owner, or side hustler looking for a way to generate passive income? Selling digital downloads on Etsy may be a great option for you!

Selling digital products is an easy, low-cost way to generate income without the demands of selling physical products. Say goodbye to inventory, storage, and shipping hassles, and hello to a low-maintenance business that leaves you the time and freedom to do other things.

In this article, we’ll show you how to set up your Etsy store for success from day one. 

Find out how much money you can earn (and how much the platform keeps), decide which products to sell, and open an Etsy shop that builds trust, generates interest, and makes profits even as you sleep.

In this article, we’ll discuss:

What is a digital download product?

A digital download product is any digital product that can be downloaded or printed. 

The most common digital items on Etsy are products that can be printed immediately after purchase (“printables”). 

For example, printable planners, invitations, and artwork are popular on Etsy.

Party printables and invitations by InkObsessionDesigns 

Digital downloads aren’t limited to printables, though. You can also sell spreadsheet, audio, and video files.

Why sell digital downloads on Etsy? 

Digital downloads open up a world of possibilities for creators and entrepreneurs. The format makes it easy to create and sell new products. And the passive income allows you the freedom to choose how you’ll spend your time.

For some people, this means spending more time with family or doing the travel they always dreamed of. 

Others use the time to create more products, invest in another business, or continue with a separate career.

For example, artist Lisa Norhen, whose work can be found in stores such as Wayfair, Kohl’s, and Target, sells printable versions of her artwork on Etsy. 

LisaNohrenDesigns Etsy shop

She has sold over 13,000 products on the platform and is recognized as a “Star Seller.” According to Nohren, selling printables provides her the freedom and flexibility to do the things that matter most to her. 

“The best part about selling printable art is having a business that basically runs itself 24/7, which allows me much more time and flexibility to create art, travel, or do other things.”

Lisa Nohren, LisaNohrenDesigns

Nohren adds that printable artwork “also gives the customer an opportunity to purchase quality art at an affordable price with a variety of printing options.”

Selling digital downloads allows you to do several things you otherwise couldn’t, such as:

  • Serve a wider audience by providing affordable products.
  • Sell your creative work without the hassles of shipping, inventory, and quality control.
  • Promote an already-existing business with complementary products.
  • Earn a part or full-time passive income.

What are the benefits of selling on Etsy?

Etsy is an excellent platform for selling because it’s well-known, trusted, and already has buyers who are probably looking for products like yours. 

As one of the most popular e-commerce sites in the world, the platform receives more than 465 million visits each month.

But what makes Etsy different is its audience. 

Unlike Amazon, eBay, and Walmart, people don’t head to Etsy looking for the quickest, cheapest, and fastest products. Etsy built its reputation on selling unique, hand-crafted items to an audience that appreciates craftsmanship and art.  

As a result, Etsy shoppers are looking for exactly the type of products you probably sell — unique, original items sold directly by their creators.

The platform makes it super-easy to upload digital products that automatically get sent to buyers immediately after purchase. All you need to do is upload a digital product(s) once, and it can keep selling over and over again.

How much money can you make selling digital downloads on Etsy?

Like any business, how much you earn on Etsy depends on how much effort you put into promoting your shop. Selling digital downloads on the platform has proven quite profitable for many people.

For example, 35-year-old mom Rachel Jimenez launched her Etsy store in 2019 and earned $110,000 in her 2nd year. 

What was she selling? Printables!

Initially, Jimenez began with products like a printable “Elf on the Shelf” game. 

Today, her Etsy store, Prosperous Printables, continues to sell children’s products but has also branched out into other areas. It now provides templates, forms, and designs for niche industries such as beauty, nutrition, and real estate. 

Jimenez currently earns $9,500 a month from her Etsy printables business.

Prosperous Printables Etsy shop

How much does Etsy take from sales?

Opening an Etsy shop is free, but (like any e-commerce platform) sellers pay listing costs, transaction fees, and payment processing fees.

Etsy costs and fees for U.S. sellers:

  • Cost to open a shop on Etsy: Free
  • Listing cost: 20 cents per listing (must be renewed every four months)
  • Transaction fee: 6.5% per transaction
  • Payment processing fee: 3%  + 25 cents per sale
  • Offsite ads fee: 12 – 15% if the sale is driven by an offsite Etsy ad

What kind of digital downloads can you sell on Etsy?

On Etsy, you can sell nearly any digital download created or designed by you. You can sell instant downloads or personalized products you customize and deliver after the purchase.

However, there is a list of prohibited items you should review before you set up shop. It includes things like alcohol, drugs, illegal products, hazardous materials, and a few other stipulations.

What are some examples of digital downloads to sell on Etsy?

From printable artwork, planners, and party invitations to spreadsheet calculators, there’s something for everyone on Etsy.

For example, CreativeJam sells various templates and digital planners, including a Cleaning Schedule Planner.

CreativeJam sells various templates and digital planners

MyProductiveLife sells budget and planning spreadsheets, such as its popular Debt Snowball Calculator.

MyProductiveLife sells budget and planning spreadsheets

EvoPrintables specializes in “functional planners and beautiful invitations,” including a Daily Planner Set in PDF format.

EvoPrintables Etsy shop page

Star Seller PupMuffinPaper offers unique printable greeting cards for nearly any occasion.

Star Seller PupMuffinPaper

Whether it’s music, art, courses, forms, or any other type of digital download, if you make it or design it yourself, you can probably sell it on Etsy!

According to a 2023 Etsy statistics report by Influencer Marketing Hub, demand for printables has skyrocketed in the past year. 

Planners are among the most popular items in the “printables” category.

Among the top five most popular items on Etsy are a handful of categories suitable for digital downloads, including:

  • Wedding invitations and decorations
  • Party invitations and supplies
  • Notebooks and journals, especially those that focus on mental health and self-care

Interestingly, successful sellers don’t always fall into the “most popular products” categories. Instead, many market to smaller niche audiences instead of competing to sell more generalized items.

How to sell digital products on Etsy

In this section, we step you through what you need to do to become an Etsy seller, including preparation, opening an Etsy shop, and listing your products.

Laying the groundwork for a successful Etsy shop

Set your store up for success — and sales — by taking the following steps before you begin selling digital downloads.

1 – Understand Etsy fees and policies

Understanding how things work on Etsy will help you make informed decisions on what to sell and how to price your products.

The Etsy Seller Policies outline everything you need to know about its payment system, fees, privacy, prohibited items, special programs, and general house rules. 

2 – Decide what product(s) to offer and set your prices

If you’re undecided about what products to sell and how to price them, check out what other sellers in your industry are doing on Etsy and Pinterest!

3 – Do a bit of research

An afternoon of research can go a long way toward your shop’s success. 

For example, you can:

  • Take a few minutes to learn how Etsy SEO works so you can incorporate keywords and ranking strategies into your store and product descriptions. 
  • Skim the Etsy Seller Handbook and add it to your bookmarks bar. It’s packed with tips, ideas, and guides to help you succeed. You may not need them all right now, but the bookmark will come in handy when you do have questions.

4 – Create product photos and descriptions

You’ll be prompted to list your first product when you open your Etsy store. To make your opening easier, you can prepare the listing in advance.

Here’s what you need to list a product:

  • Keywords: You’ll want to know your product keywords so you can include them in the title, description, and tags. If you’re unsure how to use keywords, go to the Etsy Seller Handbook Keywords 101 section.
  • Title: Write a clear title that states what the product is. Try to use your keywords in the title.
  • Description: Write a crystal-clear description (up to 5,000 characters long) of your product, with keywords included. Customers should fully understand what they’re purchasing before they buy, and this description is your chance to do that.
  • 13 tags (up to 20 characters each): Take advantage of the 13 allotted tags for your product. Use words and phrases that describe your product, and include your keywords, too!
  • Images: Create awesome product images because they can make or break your sales! The recommended image size is 2,000px for the shortest side of the image and a 72PPI resolution.
  • Note for buyers: Write the note for buyers that appears on their download page immediately after making a purchase. This is a great opportunity to offer an additional free digital product in exchange for opting into your email newsletter!

To customize your shop, you can also prepare the following images:

  • Shop icon
  • Mini shop banner
  • Large shop banner
  • Profile photo

After completing these steps, you’re ready to open your Etsy store!

How to set up your Etsy shop to sell digital products

5 – Choose a name for your shop

At a loss? Check out Etsy’s tips for choosing a shop name.

6- Create your Etsy shop

To create your shop, open a free account (if you haven’t already), then go to your Profile > Sell on Etsy > Get Started button.

The “Get Started” button will start you on your seller journey by guiding you through opening your shop and listing your products.

  • You’ll begin by answering a few questions about what type of products you’ll sell. 
  • Next, you’ll view a list of helpful resources to select if you want to learn more. 

You can skip either of the above pages and return to them later if you prefer.

  • On the following page, tap or select “Start your shop.” 
  • Choose your language, country, and currency.
  • Enter your shop name (don’t worry, you can change it later if you’re unsure).

Congratulations, you just opened your Etsy store!

How to list digital downloads on Etsy

7 – Create your first product listing

Next, you’ll land on the  “Create a Listing” page. This is your chance to add photos and videos, fill in your listing details, choose a category, and fill out your product title and description. Be sure to select “digital” in the “shipping” section!

You’ll be asked to set your store policies, and you can start with the standard policies if you like. Finally, you’ll fill in your bank and billing information (so you can get paid!). 

What’s great about the entire process is that Etsy does an excellent job of walking you through the process step by step. You can stop anytime and return later, or finish it all in one sitting and launch your store.

How to promote your Etsy digital downloads for free

8 – Share on social media

Share your product images on social media networks like Pinterest, Facebook, and YouTube.

9 – Build an email list

Collect email addresses from your customers and ask them to opt into marketing emails. You can automate marketing emails to help boost your sales and encourage repeat business.

10 – Encourage reviews

Encourage your customers to leave reviews after they buy from you. Good reviews help build trust, increasing your sales over time.

Consistently marketing your products on social media and email marketing will help drive more customers to your store. 

Successfully selling digital downloads on Etsy

Selling digital download products can be an excellent way for creators to generate passive income. Etsy is an outstanding platform for creators who want to sell because of its niche audience.

Setting up your Etsy store is free, and its commission and transaction fees are fair and competitive with similar platforms. 

It takes time for a new store to begin selling products. But if you’re consistent with marketing, reviews, and friendly customer service, your business will build over time.
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