Top passive income ideas – earn money while you sleep!

This post explores the top passive income ideas you can use to earn money online.

When it comes to earning money online, what do you think is the ultimate dream? What is the best-case scenario, that everyone should aim for? The answer for many people is clear: to earn a full-time passive income.

Passive income ideas

What is a passive income? Essentially, this is any form of income that is… well, passive! That is to say that it doesn’t require any work on your part: that you earn the money even when you aren’t working. You’ll earn money while you’re sleeping, while you’re traveling, and when you’re having fun with friends. As a result, you’ll enjoy far greater freedom and a more relaxed and exciting way of life.

That’s not to say it’s easy though. Read on and we’ll explore the ins and outs of passive business models, and some of the best passive income ideas to get you started.

What is passive income?

Normally, when you work, you exchange hours of your time for money. You’ll probably be paid an hourly rate, and you’ll likely be contracted to work for a set block of time. That means you’ll spend those hours working every day, with very few exceptions. This is dead time.

Earn a passive income

Some of us – especially those who have made the leap to the gig economy – may work on a freelance basis. This means getting paid per-project, or per-quantity, which again means you’re exchanging time and effort for cash. There’s only so quickly you can write an article, build a website, or cut hair! While you might have some flexibility as to when you work, you’ll still be forced to work at some point.

Passive income is different. With passive income, you set up a wholly automated business model. That means you’ll generate sales, advertising revenue, interest, etc. when you’re not actively working. Normally, passive income business models will run themselves 24/7. That means that when you wake up each morning, you’ll be a little bit richer!

With passive income, you set up a wholly automated business model.

This has been made significantly more doable in recent years thanks to the tools provided by the internet. Now we can market to people all around the world, print items on demand, outsource fulfillment, and even use bots to handle customer queries. With enough systems in place, you can step back from your business and watch the cogs continue to spin.

Sure, you might need to occasionally tweak a few settings, create some new content, or even deal with occasional customers. But the majority of the time, your business will generate passive income while you busy yourself with other things. Like beautiful yachts and lazy afternoons on the couch…

Why passive income is awesome

You probably don’t need me to convince you that passive income is amazing. It’s a little like persuading you that free money is awesome. It is.

When you wake up each morning, you’ll be a little bit richer!

While there is still work involved in passive business ideas (more on that in a moment), once this is set up, you’ll no longer answer to anyone. Even as a freelancer, you’d be working for clients; meaning that you ultimately still can’t decide entirely how you structure your day. And you can still be reprimanded for getting things wrong.

When you charge per hour, you literally put a price on your time: the very stuff your life is made of. And it’s completely different from charging for the value that you are capable of providing (just ask the many office workers that have wasted countless hours talking around the water cooler). That is the time you could be spending with your family, time you could spend exploring the world, or time you could spend on projects that make you feel alive.

Relaxing and working

Another amazing thing about passive income is that it is endlessly scalable. There are only so many hours in the day. There is only so much that one person can work. Thus, your potential earnings are always going to capped based on how much time you’re willing to give up.

But passive income is income that doesn’t require you to be physically present or even engaged with your business. That means once you have set it up, there is nothing to prevent you from repeating the process again. And again.

You can live a life of luxury and enjoy the assurance that your empire won’t come crumbling down.

With 20 passive income ideas all running away in the background, you can live a life of luxury and enjoy the assurance that your empire won’t come crumbling down overnight.

Challenges

So, why isn’t this easy? Why isn’t everyone doing it?

The answer is that while the money will accumulate on its own once the model is set up, it’s actually very difficult to build that kind of business in the first place. You know it must be: otherwise everyone would be earning passive income.

It is still relatively rare to be able to create a business that can generate income without input. You need a great passive income idea, you need a grasp on some basic IT skills, you need the commitment to build the framework for that business, and you need a fair amount of luck for it all to come together and work perfectly.

Work online ideas

This can be likened to sowing seeds. You might spend months or even years working on a project with very little yield. But down the line, you eventually get to reap the rewards and live off of the business model for as long as you need.

The problem is that there are no sure things when it comes to passive income ideas. That means you could end up investing months of your life into a project, only for it to sink like a brick on arrival. You’ll then have spent countless hours and a huge amount of work on your idea, with nothing to show for it at the end.

There will always be that inherent risk.

There are ways you can minimize the likelihood of a business idea falling flat, but there will always be an inherent risk. You’ll need to be the kind of person who is willing to dedicate large amounts of time to a project that may or may not pay off.

The other problem is that even successful passive income ideas take a while to gain momentum. That means you’ll be required to work for free for the first few weeks or months. This is something that many of us won’t be able to afford to do.

You’ll be required to essentially work for free for the first few weeks or months.

If you’re still living at home with your parents, or if you work a job that gives you an abundance of free time, then you may have the spare time to commit to your business idea. Otherwise, it will mean working extremely long hours (doing this on top of your regular work), or taking far longer to get the idea off the ground.

Top passive income ideas

The best way to understand passive income is to start making some! Here, we will share some of the most common passive income ideas you can employ online, along with a few less obvious suggestions. So how can you earn money doing nothing? Keep reading and find out.

Build a website

The most common business model associated with earning a passive income is to build a website. You’ll pick a niche (a subject area), build a website, and then create some content to populate said website. With that done, you’ll then wait for people to start finding your site via social media and/or Google.

Setting up passive income stream

Over time, more and more people will begin visiting your website. Once you start getting a few thousand views daily, you can begin to earn money by placing adverts. These might be PPC ads (pay per click) meaning that they pay out each time someone clicks on one. Google AdSense is perhaps the best known PPC network to provide this deal.

Also read: How to become a blogger – your complete guide

Alternatively, you might make money from sponsors or banner ads paid monthly. Other site owners will sell a product of their own or will sell products for commission (affiliate sales).

Whatever the case, the more the traffic grows, the more revenue you bring in. To be successful, you’ll need to spend a long time building your site, creating content, and then marketing it. You’ll also need to ensure your site is optimized for monetization; that the ads are in the optimal locations and the audience is engaged with your brand (meaning they are actually interested in what you have to say).

The more the traffic grows, the more revenue you bring in.

If you want more information on this strategy, then I highly recommend the website SmartPassiveIncome.com, which has a lot of relevant information on the topic.

Mobile app

This is something that often isn’t considered alongside traditional passive income ideas. However, selling a mobile app is actually a fantastic way to generate a steady revenue without having to exchange your time for money. This is particularly doable on Android, thanks to the low barrier to entry (and low cost of a license), as well as the large pre-existing distribution platform. In other words, thanks to Google Play, all you need to do is upload your app and then watch as the orders come in. Google will handle the rest!

Also read: I made $50,000 from Android apps and you can too

Digital product

A mobile app is an example of a digital product, but when most writers speak about digital products in relation to passive income ideas, they are talking about information products.

An information product can be anything that has value due to the information it provides. These products are typical digital downloads like the app, meaning that they don’t require any fulfilment, storage, or returns. They include eBooks, “reports,” and online courses. They typically consist of a PDF, or a few video files.

Sell digital product

To sell a digital product, you need to have useful information to share, and you need to develop trust with an audience. It also helps to create an emotional response for your product by using cool graphics and a well-written sales pitch. You can then use an eCommerce storefront such as Shopify or WooCommerce to handle the transactions and digital delivery, meaning you don’t need to lift a finger!

Amazon FBA

It makes sense that you could sell digital products and turn a passive profit. But it may surprise some people to learn that even selling physical products can be a mostly passive form of income!

That’s once again possible thanks to the many tools and services provided by the web. Consider Amazon FBA for example, which is a service provided by Amazon to store and deliver products for sellers.

Actual sales will now be entirely automated!

As a reseller then, you can order large quantities of goods from a site like Alibaba, and Amazon will store and deliver those items to sellers. There’s some admin and marketing to do, but actual sales will now be entirely automated!

Also read: How to make money online from a digital product

Affiliate selling

I mentioned selling affiliate products in the context of monetizing a website, but it can also become a standalone business model.

An affiliate product is a product that earns you money. You can find these products through Amazon Associates (where you can sell Amazon products for around 4-8% commission), or through sites like JVZoo (where you can sell eBooks and digital products for up to 90% commission!).

As an affiliate, you are given an affiliate link. You then promote that link, and if someone should click on it and then buy the product as a result, you get to keep your share of that cash. Again, there’s no delivery or storage involved, and you don’t even need to create the product in the first place! Better yet; you also get to pick the precise product you want to sell based on its historical performance.

There’s no delivery or storage involved, and you don’t even need to create the product in the first place!

Again, this works best for those that have already established an audience. But failing this, you can alternatively create a sales page (a single-page website that promotes the product and includes your link), and then drive traffic there using advertising. As long as you spend less on advertising than you make through affiliate sales, you’ll grow your profit.

 “Productize a service”

Selling a service as a card-carrying member of the gig economy is a great and easy way to make your living online. The problem is – as mentioned already – this doesn’t translate particularly well to a passive or scalable business model.

A solution is to somehow productize your service. That means taking what you’re doing and then turning it into a pre-packaged solution that you can sell with zero input.

Productize service

For example, if you were selling personal training programs on Fiverr, you could remove yourself from the process by switching to 30 pre-written programs that you select automatically via an online questionnaire! All you need to do is to provide the link.

Service arbitrage

The other way to remove yourself from a service-based business is to outsource the actual work to someone else. This way, you essentially get paid to do a job, and then pay someone else slightly less to do that job on your behalf!

This is how most organizational hierarchies work in business, except that the manager is usually responsible for overseeing large teams, managing workflow, and dealing with administration and the future trajectory of the business.

Service arbitrage

Online, you can keep this process much simpler. You can literally just pass work you receive on to someone who is willing to do that work for less, and that way pocket the difference! This isn’t even as morally dubious as it sounds: “white label services” are more than happy to let you resell their work in this way and actually use it as a way to get more business.

This is called “service arbitrage.”

Also read: Easy side hustles you can use to start making money today

Kindle books

Don’t have the coding chops to make an app? Then why not try selling a book on Kindle! This is an incredibly straightforward way to start generating income, and all you will need is a Word document that has been correctly formatted and an account with Kindle Direct Publishing.

Like Google Play, the Kindle store is a distribution platform with its search engine built-in. That means you don’t need to do a whole lot of promotion and don’t need to deal with orders or refunds. As long as you have a title that is searchable, people will discover your book on their own, and the sales will roll in steadily.

Courses

If you have a talent or a skill, then you can create a course or a series of lessons to sell through sites like Udacity, or Teachable. Whereas Udacity or Udemy will let you sell courses individually, Teachable provides a profit share at the end of each month based on how long users spent watching your videos.

Sell courses

Either way, this can be a great side hustle. In fact, I actually met a guy who earned a full time passive income from courses about self-improvement!

Stock photography

Website creators, app developers, marketers, and businesses from all industries need photography to adorn their websites, fliers, and even their products.

Stock photography sites provide a place where those businesses can find images to match the type of content they’re creating and provide a place for creative individuals to sell their work. If you’re a photographer, for example, there’s a good chance you can sell some of the photos that are already on your computer collecting dust. Alternatively, just spend a few days taking professional shots of things you think bloggers or businesses might be able to use. Try to think about common topics for blog posts and articles or even slightly more niche subjects that other creators won’t have covered. For example, many articles can benefit from photos of money or wallets. How about a half-smoked cigar? Or a waterfall scene?

There’s a good chance you can sell some of the photos that are already on your computer collecting dust.

In the same vein, you can also sell graphics to be used on websites, Photoshop actions, stock video footage, stock music, and more.

The list of passive income ideas goes on…

This was by no means an exhaustive list of passive income ideas. You could likewise create a web app and charge a monthly fee for access, you could sell printed t-shirts through sites like Spreadshirt, or you could create a successful series of YouTube videos and place ads on them. The possibilities are genuinely endless.

Just remember that in order to be successful, you’ll need to put in the work upfront. As with any business model then, I highly recommend choosing a subject/industry/product that you are passionate about. This way, you won’t resent putting in the time, and you’ll be more likely to create something that stands out and takes off.

That said, you should also keep your end goal in mind. If earning a passive income is your intention, then this will alter the way you approach a blog for example. Pat Flynn recommends targeting smaller niches that appeal to professionals as being particularly easy to monetize and grow.

Passive income ideas

Finally, don’t expect your passive income ideas to take off overnight. See this as a side project to begin with, and even if you only make $30 a month to begin with – that’s still $30 you wouldn’t have had before!

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