I’ve received some emails lately and had a couple of discussions with clients on setting up passive income so they only have to work a couple of hours a week. This is a topic that seems to keep rearing it’s head, and there’s a lot of myths, rumours and some truths floating around on what passive income is and what it does.
What is passive income
It’s where you create a product once and sell it forever. Set it up on your website with your shopping cart and people buy it from you without you having to do any more work or spend any further time on it in the future.
Ebooks, e-courses, recordings, reports – they’re all forms of products that lend themselves well to passive income.
Affiliate sales is another form of passive income, however in this post I’m focussing just on the sale of information products as passive income.
What makes passive income passive?
Think Tim Ferriss and his Four Hour Work Week – he recommends outsourcing everything in your business to India, setting up some streams of passive income and living happily ever after without having to do any work.
It’s a great theory, and very attractive at that, after all, who doesn’t want to have money coming in with no effort? But when you really start looking at what’s involved in so-called ‘Passive Income’ it’s not the mecca of riches that it’s purported to be.
Yes, it works to a certain point. But not as well as the get-rich-quick guru’s would have you believe.
It’s not really passive
You’re going to put a lot of work into the product to begin with. A good product that will sell over time isn’t going to be thrown together as fast as a blog post. Nor is it something that you can hand off to a VA or copywriter to produce 100% for you. YOU are going to have to put time, effort, hours, blood, sweat and tears into creating a kick-ass product.
You’ve got to promote it. Sure, there’s the initial launch and promotion that everyone expects to have. But what’s after that? Once you’ve launched it, how do people find out about it afterwards? Google searches and adsense/adwords? Not techniques that I’d want to be relying on exclusively.
Today’s product won’t work tomorrow
Information and products become redundant over time – often a very short time. Technology and knowledge advances and a advice that worked well only a few months ago may now be totally useless. You’re going to have to update your information and products and keep them current. How often you update depends on the product. The point is though; you can’t create a product and expect it to sell long term in a constantly changing world.
If you’re planning to make your main income from passive income then you’ll need to be constantly creating new products to sell and updating older products.
You can’t outsource everything
If you’re in a business for the long term then you’ll have to spend time building your business yourself. You can’t outsource your knowledge and experience. People who buy from you are paying for YOUR knowledge and experience, in a form that they can learn from.
It’s one thing to use a copywriter to turn a ho-hum piece of work into a great selling ebook. It’s quite another to be paying someone from India a pittance to write an ebook for you with information gleaned from a google search.
If you’re looking to build a community, build long term trust and loyal clients who love your product, then you can’t outsource the substance of your work. You’re the one who is going to have to put in the mental effort required to create the products to sell.
So am I for passive income or against it?
Yup, the tone of this post has been fairly negative hasn’t it? Information products as passive income does work, however it’s not a way for you to sit back and take ten months holiday a year while the dollars pour in. Anyone who tells you that it’s that easy is a snake oil salesman.
Heck, I have information products for sale on this site – that’s passive income like I’m talking about in this post. I’ve also got thousands of dollars in information products on my computer and my ipod. I’d be a real hypocrite if I said they didn’t work.
What I am saying is that information products aren’t a get rich quick scheme. It’s a way – and a good one at that – to leverage your work and maximise the return on investment of your time.
If you’re going to do it well though, then you’re going to have to work at it. It’s not set and forget, it’s continually tweak, upgrade, innovate and create.
What do you all think? Do you sell information products? Agree or disagree with what I’ve said? Come and comment and let me know what you think.