How to Start A Digital Product Business – From Idea to Profit

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Key Takeaways

  • Even with excellent execution, a bad product idea will lead to no success.
  • Market research is crucial for understanding your niche, identifying gaps and demand, setting prices, and creating resonating products in a successful digital product business.
  • Build an audience through content creation aligned with your product, using various platforms, but prioritize building organic traffic to your website for long-term stability.
  • Create a beloved digital product by seeking user feedback, being meticulous, and focusing on customer needs and trends for success.
  • Scale your digital product business through organic growth, niche-specific content creation, paid traffic, and showcasing user results on your website for effective marketing and sales.

Define Your Digital Product

Identify the type of digital product you want to create. It could be software applications, mobile apps, e-books, online courses, digital artwork, music, stock photography, or any other form of digital content. Choose something you are passionate about or have expertise in, as this will make the process more enjoyable and sustainable.

Tips for digital product ideation:

  • Something not done before vs. something to improve upon.
  • Build something hard to replicate.
  • A good digital product is a mix of something that is a good idea but seems like a bad idea.
how-to-start-a-digital-product-business-digital-product-idea
Digital product ideas that will likely yield success.

Competition doesn’t follow ideas that seem bad, which gives you an edge on the market: unpopular idea but the right one. An idea should be easy to explain. If it takes time to explain what you are building, it’s either too complex, or you are not sure what you are doing.

The great execution of a bad idea will get you nowhere, but even a semi-good execution of a great idea will get you anywhere.

Types of digital products you can expand from or improve upon:

  • E-Books and Digital Guides: Create and sell ebooks on various topics, such as self-help, business, health, cooking, fiction, or specialized guides. Ebooks are popular due to their accessibility and ease of distribution.
  • Online Courses and Tutorials: Develop and sell online courses on platforms like Udemy, Teachable, or your website. Courses can cover anything from academic subjects to practical skills like photography, coding, marketing, or language learning.
  • Software Applications and Plugins: Develop and sell software applications or plugins that provide specific solutions or enhance existing platforms, such as productivity tools, website plugins, or mobile apps.
  • Stock Photography and Videos: If you’re a photographer or videographer, sell your high-quality images and videos to content creators, businesses, or individuals in need of visual content.
  • Graphic Design Templates: Create and sell digital templates for logos, social media graphics, presentations, website themes, or print materials like brochures and flyers.
  • Digital Artwork and Illustrations: Sell digital art and illustrations as downloadable prints or for use in various creative projects like book covers, websites, or merchandise.
  • Music and Audio Tracks: If you’re a musician or composer, sell your original music tracks, sound effects, or background music for videos, podcasts, or other digital content.
  • Mobile App Templates and UI Kits: Design and sell ready-to-use mobile app templates or user interface (UI) kits that developers can use as a starting point for their app projects.
  • Digital Fonts and Calligraphy: Create and sell unique digital fonts or calligraphy sets that designers and businesses can use to enhance their branding and designs.
  • Printable Planners and Organizational Tools: Design and sell printable planners, calendars, and organizational tools that users can download and print to stay organized and focused.

Do Market Research In Your Niche

Research the market and niche to understand your target audience, competitors, and current trends. Look for gaps in the market that your product could fill and ensure there is a demand for what you plan to offer. You can use tools like Google Trends, keyword research, and surveys to gather valuable insights.

It doesn’t matter what digital product you sell. What matters is that you know there’s a market for it. You can’t create a market that doesn’t want to exist. You also want to tap into a small market (currently) but one that can expand in the next ten years.

Types of markets and examples:

Core marketsWealthHealthRelationshipsCulture
Sub-marketsfinancemedicationdatingdance
Nichespersonal financefamily medicinespiritual singlessamba
Table listing the core markets, sub-markets under the core markets, and the niches below the sub-markets.

Understanding your niche is crucial for a successful digital product business. Beyond creating great content, it means delving deep into your target market—learning their language, preferences, and needs.

This knowledge helps set the right prices, craft resonating products, differentiate yourself from competitors, and create a brand. A profound understanding of your niche fosters meaningful connections with your audience, leading to trust, loyalty, and continued success.

You also have to acknowledge not every niche is equal. The “least” amount of money can be made in culture and the most in wealth.

Build An Audience

The next step in starting a digital products business is to build an audience. If you are using paid traffic to get traffic and an audience for your digital products, you must build the product first.

Building an audience starts with being a content creator and creating written, visual, video, or sound-based content for your chosen platform.

Content creation and audience building can take a long time. The key is to focus on the subject that you are interested in and want to create a digital product for. You should also be an expert on the topic you are creating content about or an enthusiast interested in the topic/niche, ultimately leading you to become an expert in the field.

Sales will happen almost automatically when the content you create is aligned with the product you plan to create and sell.

Remember, building an audience solely on social media platforms or relying solely on paid advertising is risky.

Type of content to create for building an audience:

  • Written: articles, blog posts, newsletters, etc.
  • Visual: art, images, photographs, etc.
  • Video: short form, long form
  • Sound: music, sound effects, songs, etc.

Types of audience to build:

  • Social media following
  • Organic search traffic (Search Engine Optimization (SEO))
  • Community (private, public)
  • Paid traffic

The best place to build an audience is your website. While social media is great and probably the easiest path for audience building, it’s also the riskiest. You can lose your audience in seconds if the platform’s moderator so chooses. With a website, you own everything, and no one can take away your audience.

Building organic traffic to your website is the slowest path but, at the same time, the most resilient path. A website also enables you to build a brand, which is hard to do on social media platforms.

Create A Digital Product Users Love

Your job is to build a digital product your users love, and this is done by talking to the users and getting feedback on the product. It’s better to build something that a few users love than something many users like.

It’s easier to expand something that a few users love to use than expand/transform the product to something many love. Transforming the feeling of like into love is harder.

The way to know your product is working is that you get growth by word of mouth. This is when you see organic growth (opposite of paid growth/forced growth), which will grow your digital product business without the need for money.

Most digital product businesses fail because they fail to create products users love. Think about the digital products you use and notice the simplicity in them. Observe what makes you like a certain digital product and how you could implement the same product development strategies and qualities in your own business.

How to approach digital product creation:

  • Fanatical: Be fanatical about the product details, customer support, user feedback, fixing errors in the product, and making the product great.
  • Users: Get close to users, and ask for feedback. Users can and will say how to make a product they’ll pay for. You only need a few to create a successful digital product.
    • What do they like?
    • What would they pay for?
    • What would make them recommend it?
  • Engine: User feedback -> Product iterations/improvements -> Users use the product -> User feedback.
  • Time: Take enough time to develop the product to its best possible version before trying to scale it to the masses.

Your digital product is (in many cases) never finalized but always improved. Without constantly improving your product, erosion will eventually happen, and better, more relevant, updated products will surface.

Your product should go through a proof of concept (POC) phase. In this phase, your product is tested to determine whether it gives users what is promised.

The first version of your product does not need to be perfect, complete, or even 100% working. It needs to deliver the minimum viable results in a minimum viable model. Ask for users’ feedback, so you can improve what is lacking and re-iterate and develop the product further.

Think about what the customers want, not what you want. Focus on their changing needs and trends that are merging.

Types of digital products you can sell online:

  • Knowledge: information, expertise, consultation, etc.
  • Software: platform, application, plugin, video game, etc.
  • Digital items: planners, printables, templates, audio, video, etc.

Scaling Your Digital Product Business

When you’ve built a small following, gathered enough user feedback, and improved your digital product, it’s time to scale your digital product business.

Scaling can happen organically; if your product is shared by word of mouth, it can happen by you creating more and more content in and for your niche, or you can scale with paid traffic.

For scaling your digital product business, it’s worth having a place where you can direct your users to. The best option is to have a website. With a website, you have full control and ownership of what happens with it and inside it.

With a website, you have a point of business where you can drive traffic to. Remember, scaling is easy when the product works, people love it, and you can show user results.

Nothing speaks louder in marketing and sales than actual user results.

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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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