How To Create Passive Income From Etsy Digital Products

Are you a homemaker, scholar, or business owner aiming to create a passive income stream by selling artistic goods on Etsy?

If so, this article is just for you.

While many say that passive income does not exist, it is definitely not true when selling digital products on Etsy.

Digital products, in general, cost nothing to duplicate, they don’t involve storage or maintenance costs, and you don’t need to run to the post office every time you make a sale.

Sounds like a passive income, doesn’t it?

With 81.9 million active buyers, Etsy becomes a huge marketplace with a massive number of returning visitors.

That indicates that the customer base on Etsy is large enough, so you don’t have to worry about marketing your products elsewhere apart from Etsy.

All you have to do is to create the right products for the right audience once, and watch the sales come for many years – that is called passive income.

While many people believe that selling on Etsy can only be a little side hustle, there are plenty of success stories of how sellers made 7-figures from it.

This is just one of the thousands of profiles that managed to get success from selling digital products alone:

how much can you make selling digital downloads on etsy

In this article, we are going to explain, how you can start selling digital products on Etsy in a way, so it generates a passive income for the years to come.

We are going to cover everything, including choosing a profitable niche, keyword research, creating your products, and marketing them for extra exposure.

So without further ado, let’s get into it:

3 Must-Have Etsy Digital Product Selling Tools & Resources:

Choose Your Niche:

Your road to Etsy’s passive income starts with niche research. At this very beginning stage, you should take your time to find the products you would like to sell most as well as analyze the competition.

Creating a product that is too competitive or does not have enough demand could be a waste of time, so you want to do the niche research right.

This process involves choosing your favorite product categories and finding some profitable keywords within them.

When it comes to the profitable product categories, there are plenty of digital and printable products to sell, and you can create and sell anything like:

  • Art prints
  • Business cards
  • Checklists
  • Coloring pages
  • Craft patterns
  • Ebooks
  • Gift cards
  • Illustrations
  • Invitations
  • Journals
  • Labels
  • Notebooks
  • Patterns
  • Planners
  • Stickers
  • Templates
  • Vector graphics
  • Website themes
  • Workbooks
  • and many many more…

However, these product categories alone are typically too general and too competitive to target, and you have to come up with something more specific.

Here comes the keyword research

Just like Google, Etsy is a search engine where people look for various items. Your goal here is to appear a the top of the results to be discoverable.

The better keywords you find in the beginning, the more passive your Etsy business will be.

As a new seller, you will never rank on page one for the general term like “planner”, so you will have to find long-tail keywords that consist of more than one or two words. For example – a gardening planner for moms, or a vintage-style pink planner.

These types of keywords bring less searchable compared to the general ones, but at least they won’t be too competitive and you have a better chance of getting first sales.

For the keyword research on Etsy, you have two options – either you do it for free, or invest a little bit of money, but take away some profitable keywords.

Let’s cover these two methods in more detail:

Free Method:

The free Etsy keyword research is very straightforward and limited. You can start by typing the general keyword into the search and see what the suggestions populate.

keyword research etsy

The search suggestions will reflect the terms that customers are searching on Etsy. From there you can try to find some long-tail keywords, that do not return too many results once clicked.

You also don’t want to see sellers with too many reviews on the first pages, as these will be hard to compete with.

Since Etsy only gives 11 search suggestions, and that is not a lot, you can head over to other popular search engines, like Google, Pinterest, or Amazon to see what people are looking for there.

If a term is searchable on Google, there are big chances it will be searchable on Etsy too.

Using Keyword Research Tool:

With a free keyword research method, you may find the popular search phrases but you won’t be able to tell whether that phrase is too competitive or not.

A paid Etsy keyword research tool, called Sale Samurai, gives you a big number of relevant keyword suggestions, provides monthly keyword search volume, displays the competition score as well as provides many other important data.

Besides that, Sale Samurai also gives metrics for the world’s biggest search engine Google where you also have a chance to rank your Etsy products.

This tool can save you significant amounts of time, as it can help you to find profitable and uncompetitive niches fast, so you are not creating the product for nothing.

Sale Samurai is only $9.99 a month, and you can try it for 3 days for free.

Here’s a video explaining how to do keyword research with Sale Samurai. Although this video is based on finding physical product ideas, you can apply the exact same principles to digital downloads.

Create A Digital Product:

Most of the time, creating digital downloads does not require having advanced graphic design skills.

Moreover, you don’t even need to use advanced design software, like Photoshop, Illustrator, etc. Most of the products can be designed with a free and easy-to-use tool, called Canva.

What is great about Canva, is that it provides plenty of premade design templates, graphic elements, clipart, and fonts, so you never have to create designs from scratch.

Canva has templates for almost any product that you could sell on Etsy, including logos, social media posts, planners, business cards, posters, and more.

All you have to do is to select the template for your specific product, design it to your liking  (by changing fonts, backgrounds, colors, etc), and once finished, download it in the format you want.

canva etsy digital products
Designing Poster On Canva

While for some people Canva may lack advanced design capabilities, a massive part of digital products listed on Etsy was actually created by this tool.

Click here to try Canva for free

Outsource Digital Products on Fiverr:

If you don’t have time or passion for creating digital products by yourself, you can always outsource it to freelancers on platforms, like Fiverr.

Fiverr is a great place for finding experienced and skilled freelancers to work on any type of project, including business cards, illustrations, banners, and many other designs.

What is great about this platform, is that the prices for the services there are relatively low, and you never have to pay for a service if it does not meet your requirements.

But before you order any GIG on Fiverr, always check the seller’s reviews and make sure he is a reputable and reliable person to work with.

Contacting a freelancer before ordering, and asking for some samples is also a good idea to know him better and to make sure he will deliver to your standards.

Related: How To Make Money With Low Content Books

Set Up The Etsy Store:

Setting up an Etsy store is Easy as 1,2,3.

To start, create a free account, and click on Start Selling. Then fill in a few details about your shop preferences, like language, country, and preferred currency.

Then come up with a nice branded name for your shop, but don’t think too much as you can always come back and change it.

Once finished, it’s time to create your listing.

Creating Your Listing:

create listing etsy

At this stage, you will have to provide some photos of your listing, as well as describe your product by optimizing it for the search.

Photos are the first thing the buyer sees when he lands on your listing, so take time to present them well. Make sure to upload at least 5 pictures of your product, but if you can – add more.

Also, pay most attention to the thumbnail picture, and make sure all photos are high-quality.

If you are selling a printable product. you can go the extra mile to print it and demonstrate to the customers how the printed version looks like.

If you have designed your product in different versions (such as color, size, etc), you can add up to two variations where customers will be able to select them from the drop-down menu.

Optimizing your listing:

The next step would be to add some information about your product, such as title, category, description, tags, etc.

And here comes the SEO (Search Engine Optimization).

Optimizing your listing plays a critical role in your products being discovered by buyers. There you will have to use keywords that are relevant to your product, so the buyers could find you easier.

When looking for your keywords, Etsy considers three areas – title, category & tags.

Title: It is a very important factor and you want to use your main keyword there. If you are selling printable stickers for phone cases, you should definitely include that keyword in your title. It is also a good idea to enrich your title with additional keywords describing your product better, like color, style, and size.

Category: While Etsy takes categories into consideration for rankings, it’s easy to just pick one product category that best represents your product.

Tags: Tags are like additional keywords, and you should include the ones that you haven’t mentioned in the title. You are allowed to add up to 13 tags, so try to use them all.

Another important field you have to fill in is your product description. Although Etsy does not take it as a ranking factor, the description plays an important role in your conversions.

There you will have to provide as much relevant information as possible about your product.

In the description field, you can describe:

  • Size and dimensions
  • Color & style
  • Purpose of use
  • How a product is delivered
  • How a product can be used

Keep in mind that only the first two lines of a description will be displayed to the customer at first, so make sure you write them in a catchy and persuasive way.

Since the majority of products on Etsy are shippable, make sure to clearly state that you are selling a digital product to avoid any confusion with a customer.

Inventory and Pricing:

The last step of your listing creation would be to set the pricing and inventory.

Choose the most appealing pricing for your product. When pricing your product consider the amount of time and money it took for you to create it by also looking at how your competitors are pricing similar items. Don’t price your products too low.

Since you are selling digital downloads and you never run out of stock, you can set your inventory to 999, and you are good to go.

Market Your Digital Products:

Selling on Etsy can be a passive business, but if you want to get more sales, you will have to put effort into marketing your products outside the platform.

While this is not necessary and often just listing your products on Etsy can be enough, marketing them will drastically increase your chances of being discovered and getting sales.

Here are the top 3 ways to market your Etsy products:

Social Media:

There can be many social media channels to be active on, but the best one for Etsy is Pinterest.

Pinterest works as a visual search engine, and you can take advantage of it by demonstrating your beautiful-looking items.

Moreover, there’s a huge amount of art-minded users who are looking for various printable and digital product ideas on Pinterest, and the best thing about them – they typically have money to spend.

You can share your digital product images on Pinterest by leaving a link to your Etsy shop. You can also join Pinterest Tailwind Communities with like-minded people, who could help to market your products by sharing them.

Besides Pinterest, Instagram is another great platform to showcase your artwork.

However, Instagram does not work as a search engine, and you have to be constantly active on this platform to maintain engagement. That’s why Instagram is not considered a very passive option.


Blogging can be the most passive yet very profitable marketing channel. You can be blogging either on YouTube, or on your website, but for that, you will need a specific topic (the niche).

To start blogging, first, you need to come up with a topic, like weight loss, beauty, parenting, or anything else that interests you. Then you will have to publish as much as possible content in that niche.

Once you get regular visitors to your website or YouTube channel, you can then recommend your Etsy digital products, which will help your audience along the way. It can be, for example – a weight loss tracker, beauty appointment planner, coloring books, or anything else.

Blogging isn’t a quick process, and it can take some time for your to get regular visitors. But once you manage to organically rank your website or your videos, it can become a very passive marketing channel, which could bring traffic on autopilot for the years to come.

Email marketing:

No matter what marketing channel you will choose to be active on, you should always focus on building the email list, which is the most profitable asset of all successful sellers.

About 40% of Etsy customers are repeat buyers, and email marketing is significantly responsible for this. To collect the email lists you will need to have your own website with a landing page or an opt-in form.

There you will offer something in exchange for the subscriber’s email address – it can be anything like a freebie, or a coupon code, which will encourage the user to share his contact details.

After that, you will start building the relationship with the subscriber by providing helpful information, while at the same time, letting him know about the newest products, discounts, freebies, coupon codes, and other promotions.

The best thing about email marketing – everything can be automated. You can prepare the sequence of emails in advance and automatically send them once the subscriber goes into your email list.

And if you manage to automatically generate traffic to your primary marketing channels (like a blog, YouTube, or Pinterest), you can also grow your email list on autopilot.

That makes email marketing an extremely passive marketing method.

Final Words:

Etsy can be a fantastic business model, capable of generating unlimited amounts of income if done right. It is not only that it can become a passive income stream, but you can start it completely for free.

However, if you want to save yourself time, and tons of headaches, the only thing we recommend investing in is a keyword research tool – Sale Samurai.

Other than that, creating and selling digital downloads on Etsy only demands some passion and dedication to succeed.

So get ready to create a lot of high-quality products first, before you enjoy the rewards of passive income.