Digital products that sell on Etsy and how to get started

digital product that sells on Etsy
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Spoiler Alert: I will not go into details about what digital products are and why selling them is a lucrative business. I’ve a separate post for that.

Nowadays, people are more into passive or semi-passive income.

Digital products give everyone an opportunity to sell the same product multiple times which is originally created only once. The product is revised/updated frequently (as needed) but the effort is far less than time to initially create the product. That is the beauty of digital products.

Being able to sell the same product to multiple customers makes it passive source of income.

Once the product is listed for sale, the income generation is automatic.

Etsy is one of the best marketplaces to sell digital product.

What is Etsy?

Etsy is a global online marketplace, mostly famous for handmade items, that facilitates the buying and selling of unique items. It is a popular platform for all the creative self-employed and entrepreneurs. In order to sell on Etsy, the items must be handmade, vintage (20 years and older) or a craft supply.

Reselling is strictly prohibited on Etsy and if found reselling, Etsy will take down the shop (I’m talking from my personal experience 😊).

Etsy’s motto has been “What you can’t find elsewhere you’ll find it here”.

Popular digital products on Esty

Etsy is very popular for digital products. Most of the seller also accept custom orders but the main reason of its popularity is because it’s the market for same digital product. This benefits the seller because they can create one product and sell it as is to multiple buyers with or without minor modification.

The following are the three major digital product categories that’s popular on Etsy.

1. Digital planner

Digital planner is one of the best-selling digital products on Etsy. These are PDF format digital downloads which can be used as life, finance, business, or academic planning tool. These planners can be used in iPhone, iPad or tablets and consist of one full year of planning.

Most of the planner that’s popular on Etsy are the bundle sale that has features for everyone. These digital planner works well with GoodNotes for adding text and features.

Kieran has a very famous digital planner that has been sold over 35,000 times on Etsy which cost $13.12.

electronic planner template
Example: Digital Planner that sells well on Etsy

2. Templates

Another digital product that sells very well on Etsy is template. The templates can be anything related to Invitation, Thank you Card, Menu, Invoice, spreadsheets, resume, Website themes- literally anything. This is just a small list that I’ve come across with.

Etsy has limitless template products that sells very well.

These template files are like a guide for the customer to build upon. In absence of a template, the customer would have to build the product from scratch.

For a fraction of cost, it’s a great deal for the customer.

I have been testing digital products on Etsy for a while now. You can find me on Etsy as HustlingEngineer. I don’t have a lot of products but have been testing excel template files I created for my online store.

If you want to checkout my excel template, you can find it in my store.

3. Craft supplies (Crochet/knitting/ embroidery and sewing pattern)

Craft supplies another the highest selling category on Etsy. The digital products under craft supplies include crochet pattern, knitting patterns, quilt pattern, and many other sewing patterns.

Along with other supplies, these digital craft products have good market.

Look at this Crochet Unicorn Blanket pattern by BriAbbyHMA on Esty, which has made almost 28,000 sales. The product cost only $5.99.

digital design pattern
Example: Digital pattern that wells very well under Craft Supplies

Is selling digital products on Etsy profitable?

I know what you are thinking:

Are these digital products really profitable on Etsy?  

Anybody who’s just starting out, I would not recommend going all in on Esty with digital product ideas. This can be a great side hustle for anyone who want to get their feet wet with digital products. This is completely passive, therefore once the product is created and listed, you just wait for it to sell.

Even though the digital products are completely passive, expect to have some revisions to your product to make it better.

Sales, shipping and handling are all automatic. The best part about digital products is, they are non-refundable. Hence no worries about returns.

Do you need a business license to sell on Etsy?

You do not need a business license to sell on Etsy. Most of the seller on Etsy are only part time. However, if you are planning on taking your Etsy side hustle to your full-time venture, it is always a wise decision to open a business account and start using all the benefit that it has. If you’re looking to open business bank account, consider reading this article.

As a seller on Etsy, you’ll be required to verify your address and connect your bank account in order to get paid.

Etsy also collects and remits sales tax on sellers’ behalf therefore you are not required to report your sales, if you live in the states that Etsy has listed in their article.

How to get started and increase sales on Esty with digital product?

If you are trying to test out your digital product ideas on Etsy, I’ve a pro-tip for you.

I know, everyone can do a little research, create couple of pictures and post it on Esty for sale.

But how do you get the ball rolling?

I will share you some of my tested steps I used when I wanted to try out my own digital product.

As in every marketplace it is hard to get traction. You have to compete with so many other sellers within the niche, it almost feels impossible to rank higher. Everyone prime target is to be in front of the Customer.

Yes – you have to do the market research, find niche related keywords, descriptions, upload stunning pictures and explainer video but if your listing is relatively new, it’s hard to rank on the first page.

Etsy has such a great marketing option for every seller

You’d be amazed by how easy it is to use. You do not need a marketing manager to manage Esty ads. You just set your daily budget you’re comfortable spending (start with a dollar) and select the listing you’d like to advertise and then you’re good to go.

With a daily budget of $1, I setup my add for a month and waited for the search keywords to load under stats for my advertised listings. As the keywords started populating, I revised my listing with the new keywords.

You will not be charged for the impressions. The advertising cost is charged only if a customer clicks your advertisement. 

Once ads are on for a month, you’ll start getting some exposure and eventually some sales. You would not necessarily have spent all $30 dollars by month 30.

After a month, you can decide if you’d like to continue advertising with Esty, pause it or completely stop advertising. The advertisement on Etsy not only gives you search keywords but also an opportunity to set your products’ price point. Depending on how much money you spent for a sale, you’d want to price the product similarly, so it covers the advertising cost.

This one strategy I used while getting into selling digital products has helps me learnt a lot on the Etsy marketplace. I learnt about my potential customers, their search pattern, winning keywords and most importantly, I learnt about how to price my product.

Another best way to set price point is testing product cost.

Cheap product price is not always the best price to attract customer. Sometimes, if the product is too cheap, it loses value.

So, there you have it!

All the basic you need to start selling your digital product ideas. Start testing those ideas and create digital products. Who know, one day you might live off of just by selling your digital products. I love the freedom that these passive income source provides!

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