Can You Really Make Passive Income On Etsy?

When I see people talking about passive income on Etsy, I roll my eyes because I think people know that it’s not really passive, but that’s how it’s always presented.

The idea of making income without doing any work is attractive, of course, but it’s not real. Selling online takes work regardless of what product you sell.

There’s no real “passive” product that will sell on Etsy, or anywhere online, without you having to do some work. And often, a lot of work. If you sell on Etsy you’ll have to design and create new listings, keep up with customer questions and problems with downloads or problems with POD products, and handle returns and complaints. None of that is passive, so the idea of a profitable business that you don’t have to work on is a fantasy.

Plus, if you do list something and it brings in a ton of people who are buying things from you with no effort on your part, it’s probably because you have an audience already and you’ve spent years building that audience, and there was nothing passive about doing that.

Can You Really Make Passive Income On Etsy?

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Some of the links in this article are affiliate links that will pay a small commission if they’re used to purchase something.

digital shop on etsy
A digital download shop on Etsy.

What’s the truth about “Passive Income” on Etsy?

I asked the people in my public Facebook group who do have “passive income,” businesses, which are usually defined as digital downloads and Print-On-Demand businesses, what the biggest lie about passive income was.

They mentioned two main points:

You’ll still have to do work in your shop.

The number one thing they said was that it doesn’t matter what you sell online, you’re still going to have to do work. Businesses don’t get created by themselves, and they don’t keep themselves going without input from the business owner.

You’re going to have to create new products, and you’re going to have to deal with customers both before and after they buy something.

You’re going to have to promote your business and send people to your listings and do the SEO so that they can find the listings in search.

All of that adds up to time spent, which isn’t passive in the sense that you don’t have to do any work.

People who promote passive income are usually making money in other ways.

The truth about people who promote passive income businesses on YouTube, which is the main place where people get the idea to start that kind of business, is that they’re earning non-passive income from telling other people to start passive income businesses.

They all either sell classes about how to do passive income, or they send people to their affiliate links for tools that they promote for affiliate income.

There’s nothing inherently wrong with doing either of those things, but if most of your income is made from telling other people that they can make money without any effort, it’s more than a little deceptive.

And if they’re making money from products, it’s not just Etsy that they sell on, they’re selling on multiple platforms.

That all adds up to not doing anything passive, because you end up working very hard to get income in different places and cover all of your bases that way.

Is passive income on Etsy really possible?

There is no real passive income on Etsy, you’ll always have to put work into your business. No matter what kind of thing you’re selling, the right approach is not to list ten things and then walk away and assume that Etsy is going to sell them for you, because it doesn’t work that way.

Regardless of whether it’s Etsy or anywhere else, running a business requires work.

Plus, if you’re running a POD (Print On Demand) business, you’ll be competing with a lot of other people who are trying to make passive income, because the idea of that has been pushed like crazy recently, and competition has risen dramatically.

Remember that if you’re listening to someone say that you can make a lot of money by doing little to no work, a lot of other people are also getting that same message.

If you’re using the same images from the same clipart companies that other people use, your products won’t have a standout reason to buy them instead of someone else’s, so that means you have to do more work to be original.

And you’re also running the risk of using images that aren’t really supposed to be used for POD products, since there’s a lot of digital image theft online.

Even if you’ve bought a license from someone, you don’t know 100% that they’re the ones who created the images, they might not have the right to sell a license, and you’re running a risk of an infringement claim.

You could put all your time into building your business and then all of a sudden you’ll get copyright claims and Etsy could suspend your shop.

So let’s say that you do want to do this and you want to create your own artwork. Is that passive? No, because you have to create the artwork.

Anyone who does POD will tell you that it’s not easy, it’s not passive, and it’s not something you can just ignore and expect it to work out.

And even though it’s a little less hands-on than if you were making all the physical products yourself, it’s not like there’s no action needed.

When I think about it, I spend more time on my digital listings than I do on my physical products for the money that I get from each shop, if that makes sense.

Click to watch the video.

Let’s refer to it as “digital” income.

If we call this type of business model “digital income” instead of “passive income,” it would be a lot more accurate.

Digital businesses can be run without inventory or stock, so they have the advantage of not having to put a lot of money into them upfront.

However, digital doesn’t mean work-free, so it’s not passive!

How much work is a digital download or POD Etsy shop?

The time that I put into my digital shop is a lot more per product than the time I spend on my physical shop, and I get less income out of it than my physical products shop.

The idea that you can set one thing up and then sell it forever is fantastic. I think that’s great. I think it’s a great business model if you can set it up that way.

When you have evergreen content, which is something that you can put in once and sell forever, it does require less maintenance over time than a physical product business does.

So yes, you can set something up like that, but the people in my Facebook group pointed out that things don’t remain evergreen for very long because trends change, colors change, etc.

You have to keep coming up with new products on a regular basis to keep customers coming back and to keep your shop looking updated.

So digital downloads is not a business model where you can just set things up and expect the same products to sell forever.

The other thing is that when I look at shops on Etsy that have digital downloads and so-called passive-type products, they have thousands of listings.

Creating that many listings happens over time, so you’ll have to put regular work into your shop.

Is there any type of really passive income on Etsy?

The one thing that’s probably the most passive if you’re really looking for something is affiliate income. Affiliate income is when you post a link to products, generally someone else’s but it could also be your own if you’re in Etsy’s affiliate program, and then the company pays you a percentage when someone clicks on that link and buys the product.

Etsy has a good affiliate program and they’re expanding it in different ways to include more sellers, so you should look into this as a possible income stream.

I wrote another article about the affiliate program with more details here: What Is The Etsy Affiliate Program? Insider Tips!

Affiliate income is pretty passive, because people make a lot of money posting affiliate links on their YouTube videos and sending people to those services.

You’ll still have to do the work to post the links and build a following, but if you already have a social media following or a blog that you can post links on, it could be a good way to earn some money.

pattern online for sale
Digital download pattern.

Is digital “passive income” worth it?

Even though I’m saying that “passive” income is a misnomer, I’m not saying that it’s a bad thing. I think that every Etsy seller probably should have at least one digital product somewhere in their shops, whether it’s a class, a tutorial, or patterns. I think that having digital downloads is a good thing and most Etsy sellers have the ability to do that because we have artistic skills.

It’s definitely worth putting something in your shop that people can download to learn how to make something, and it is a good way to make a product once and have it sit there and sell forever.

But you’re still going to have to do the work to get people to come to buy it.

A lot of people who start these businesses with the idea that they’re going to have passive income are not successful because they’re told that all you have to do is list it and people will buy it, and to just copy what’s popular.

And I know that the people who promote passive POD and download income say, “No, don’t copy” with a wink, wink, nudge, nudge.

Realistically, they’re telling you to copy. We know that. They’re saying to copy what’s popular, put that in your shop and everyone will buy it.

That’s not realistic, because if everybody copies the same thing, all the shops are going to look the same, and what will happen then is that people just start competing on price.

I hope that people who want to start these businesses are successful, but I want them to be successful in a way that they go into it with the right mindset and know that digital income is not going to be passive.

Kara Buntin

Kara Buntin has run a profitable home-based business since 1999, and has a background in art, theater design, and cake decorating. She's a top Etsy seller with over 51,000 sales on Etsy and her own website, and helps other home-based business owners with their business goals and SEO. She founded the Artisan Shopping Directory website to promote the artisans who are members of her EShop Success marketing program.

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