The idea of creating something once and then watching the revenue roll in with little to no effort sounds incredibly enticing. However, generating passive income isn't as easy as most people would make it out to seem.

Since 2014, we've generated over $4 million selling digital products, and we've learned a lot about what it takes to create consistent sales.

These are the 3 myths of passive income we see all too often…

Myth #1: You Can Create a Passive Income Business Without Building an Audience

Passive income only works when you have a steady stream of qualified traffic finding out about your product. Your potential customers need to hear from you multiple times and learn to trust your expertise over time.

This means you’ll need to capture their attention and communicate with them consistently if you want to make sales, and that means building an engaged audience.

Email Marketing, Not Social Media

Building an audience doesn't just mean amassing followers on social media. Social channels are where most people consume content mindlessly—they scroll, read for a moment, and then move on to the next thing. Social media is great for awareness and reminders, but it's not the most effective tool for driving sales.

Instead, you should focus on building an engaged email list by providing consistent, valuable content tailored to your target audience. Attract people by delivering value around a problem they need solved and continue to build trust over time.

Email marketing has been our #1 driver of revenue and almost rarely is it truly "passive." Yes, we do have email automations and email funnels, but we find the majority of our sales always come through focused launches.

Myth #2: Passive Income is ‘Set it and Forget it’…and it Will Last Forever

Many people assume that if they can just get the right funnel with the right price point and strategy, sales will continuously roll in without any additional effort.

The truth is, nothing stays the same forever.

You might be able to…

1. Nail your content creation efforts on TikTok,

2. that drive people to a lead magnet on your website,

3. that convert those people to your email list,

4. that puts them through an email automation with a sales funnel,

5. that converts people to buy your digital product!

This strategy is great in theory and can absolutely work. But, the TikTok algorithm will change. Your content's reach will dwindle over time. People's attention and desires will shift. Something that worked for a few months or even a year, might stop working overnight.

Constant experimentation is necessary

The biggest thing to realize is that passive income isn’t the savior of your business. You have to continuously test, tweak, and evolve if you want to keep those sales coming.

What works today might not work tomorrow. The more you are willing to adapt and change your strategies on the fly (and not get stuck on set it and forget it), the better chance you have of continuing to learn what marketing and sales strategies work over time.

Myth #3: You Can Create Passive Income About Anything

In the “passive income” world, we often see people trying to jump on a trend or topic with high demand, even if they lack direct experience.

For example, someone might try to teach how to be more effective on Instagram without having figured out Instagram themselves.

This is something our friend Paul Jarvis calls teaching “second-hand knowledge.” While it could work to some extent, customers aren’t as easily fooled as marketers want to believe. We believe the best digital product ideas stem from your authentic experience.

Make sure your product is on a topic you know intimately, with processes and information you’ve picked up and practiced over time, and add your own unique personal spin to it. Authenticity and expertise resonate more with audiences and lead to better trust and sales.

Practical Steps to Actually Achieve Some Passive Income

Build and Engage an Email List

Start by creating an email list where you deliver consistent, helpful information around your product topic. This keeps your audience engaged and builds trust over time. Make it a habit to nurture this list and provide value regularly.

Regularly Re-Evaluate Your Marketing Funnels

Plan on re-evaluating your marketing funnels every three months with an experimenter’s mindset. Analyze what’s working and what’s not, and be willing to tweak your approach. The digital market is dynamic, and staying flexible and responsive to changes will keep your sales steady.

Leverage Your Authentic Experience

Create products around topics you have direct experience in, teaching them in your unique way. Your firsthand knowledge and unique perspective are valuable. When you teach from experience, it shows, and it helps to establish you as an authority in your niche.

Passive Income Conclusion

Passive income from digital products can absolutely happen, but it’s not as effortless as most people make it out to be.

Generating sales while you sleep requires a well-thought-out strategy, continuous engagement, regular evaluation, and LOTS of trial and error.

You might be able to find a passive income product for a short period of time, but we believe creating a consistent, sustainable calm business around an engaged audience is the best long-term solution. Instead of making a splash of money, you should aim for being known for solving a certain problem for a specific group of people.