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Digital Products vs. Digital Services – The Difference Explained

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Key Takeaways

  • The key distinction is that digital products are usually self-contained and consumable by the customer, whereas digital services involve ongoing interaction or work performed by a service provider.
  • Digital products and services are accessed via computers and mobile phones.
  • One of the main differences between digital products and services is that products are one-time purchases, whereas services tend to have a subscription model.
  • Both business models enable you to sell the item infinitely and in scale.

What Are Digital Products?

A digital product is an intangible good you can sell on the internet. Unlike physical products, customers who buy digital products don’t expect to interact (taste, touch, smell, wear, etc.) with them in the real world. Instead, they interact with digital products through their devices’ screens.

Why sell and not sell digital products?

Selling digital products provides many advantages over physical products.

Some of the reasons why you should sell digital products:

  • Inexpensive to Make: Depending on the kind of digital product you create, you can make them inexpensively if you have skills like graphic design, music production, or copywriting. Also, some of the software you need to make digital products is free to use and available on the internet (like the free version of Canva). 
  • Unlimited Inventory and No Warehouse Costs: You can sell infinite copies of digital products once you upload them to the internet. And when you sell them on existing platforms, you won’t have to pay any money for housing your files. Contrast that with selling physical goods: not only is the size of your inventory limited by your budget, but you’ll also have to pay to warehouse your goods.
  • No Shipping: Digital products are delivered instantly and automatically. Once the buyer downloads the product, the only factors that’ll keep them from immediately receiving their product are if they’re using a slow internet connection or if the digital product has a heavy file size. Therefore, you won’t have to ship the product to them or charge your customers shipping fees.

Some of the reasons you shouldn’t sell digital products:

  • Easy to Pirate: Digital products are computer files, which means they’re easily shareable. Unfortunately, the fact that they’re easy to share also means they’re susceptible to piracy. In other words, nothing stops someone who buys your digital product from uploading it to the internet for free. 
  • One-Time Purchase: You can’t earn recurring income with a digital product. Once the customer buys the product, the relationship ends, as does your opportunity to make more money from the same customer. Your only option is to do upsells, do customer ascension, and have the customer buy another digital product from you or some other form of service (which isn’t a product anymore).

Examples of digital products

Common examples of digital products include:

  • e-Books
  • Audio Books
  • Courses
  • Music
  • Software
  • Templates
  • Digital planners

Check out:

Best digital products to sell online

Best digital products to sell online besides info products

Types of digital products to sell online

Places Where You Can Sell Digital Products Online

The list below is a few of the places you can upload your digital products and sell them to customers:

What Are Digital Services?

A digital service is a service you can offer through the Internet. Technically, you’re not the one doing the work, as digital services can be completely automated. They’re computer programs that can offer the service over and over again to many customers at once. In some cases, digital services employ a mix of humans and computers.

Why offer and not offer digital services?

As with digital products, there are many benefits to offering a digital service, including the following:

  • Recurring Income: Digital services use a subscription business model known as SaaS (software-as-a-service). People who use a digital service have to subscribe to the service for a predetermined period (usually a month). Once the period ends, they have to subscribe again if they want to continue using the service. The arrangement means you can make recurring income for as long as your customers keep subscribing to use your service.
  • Less Stressful: Offering a digital service can be less stressful than offering a physical service. As mentioned above, a computer program does all the work. 

Some of the reasons why you might want to avoid offering digital services:

  • Technical skills required: Unlike digital products, there’s a slightly higher barrier to entry when offering a digital service. Unless you have coding skills, you can’t create a computer program that performs the task your customers need help doing. Of course, you can hire people with skills to build the application for you, but there’s a drawback to that as well, which brings us to our second point.
  • Expensive to start-up: Creating an application through which you offer a digital service is expensive. If you don’t have the skills to code one up yourself, hiring a developer can set you back thousands of dollars.
  • Digital services take longer to produce: It’ll take you much longer to create a digital service than a digital product. Even if you don’t build an app, getting your customer-facing digital service (e.g., coaching) off the ground will take time.

Examples of digital services

Some of the most common examples of digital services include:

  • Graphic design (e.g., Canva Pro)
  • Print-on-Demand (e.g., Redbubble)
  • Self-publishing service (e.g., Amazon’s Kindle Direct Publishing)
  • Email automation (e.g., ConvertKit)
  • Accounting software (e.g., QuickBooks)
  • Coaching and memberships

Places Where You Can Offer Digital Services Online

Most likely, you’ll be offering a digital service through a proprietary website, as there aren’t many platforms that host completely automated digital services for free.

However, if you’re offering a service like personal coaching, you can market through the following platforms:

  • YouTube
  • Meta
  • X
  • TikTok
  • Instagram
  • Reddit
  • Pinterest
  • LinkedIn
  • Your personal website

The Difference Between Digital Products and Digital Services

  • Digital Products: Digital products are typically tangible digital assets that users can purchase, download, and use. They are often in the form of files, software, media, or other digital items that customers can own and access. Examples include e-books, software applications, templates, music tracks, and graphic design assets. Users typically pay for digital products upfront and can use them independently.
  • Digital Services: Digital services, on the other hand, involve the provision of intangible services or expertise over digital channels. Individuals or companies often provide these services to address specific needs or solve customer problems. Examples of digital services include web design, content writing, consulting, coaching, SEO services, and digital marketing services. Users pay for the expertise and assistance provided by the service provider.

While both digital products and digital services are offered online and involve digital content or interactions, the key distinction is that digital products are usually self-contained and consumable by the customer, whereas digital services involve ongoing interaction or work performed by a service provider.

In the context of selling online, businesses and individuals can offer both digital products and digital services, depending on their expertise and business model. Each has its unique characteristics and considerations, including pricing models, delivery methods, and customer interactions.

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Okuha

Digital Artist

I’m a digital artist who is passionate about anime and manga art. My true artist journey pretty much started with CTRL+Z. When I experienced that and the limitless color choices and the number of tools I could use with art software, I was sold. Drawing digital anime art is the thing that makes me happy among eating cheeseburgers in between veggie meals.

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