7 Steps to Make Money on Etsy With Digital Downloads

The 7 steps to make money on Etsy with digital downloads are:

1. Pick a profitable niche.
2. Set up a digital Etsy shop.
3. Create your digital downloads.
4. Strategically price and discount your products.
5. Collect good reviews.
6. Follow Etsy SEO best practices.
7. Try Etsy marketing strategies.

Selling digital downloads on Etsy presents significant opportunities, with the platform boasting over 96 million active buyers, according to Statista. Etsy has seen a surge in digital download sales, which offers a lucrative avenue for creators to monetize digital products like printables, graphic designs, PDF guides, and templates. 

Unlike physical products, digital downloads don't require shipping or inventory. This model lets you make money on Etsy without making anything. It's a convenient and cost-effective product option for both sellers and customers. It's also a good option for creating passive income, since you only need to set up the digital file once and sell it multiple times. Top 1% Etsy seller Kate Antesberger of PlannerKate has made over 1,841,378 sale transactions for digital planners, printable stickers, and vision boards.

However, the market for digital downloads on Etsy is competitive. With thousands of creative sellers, standing out requires not only a unique and high-quality digital product but also effective marketing and SEO strategies. This saturation means newcomers must work hard to carve out their niche and attract potential customers while competing with established sellers.

This article explores the steps to make money on Etsy with digital downloads. We'll cover the steps from creating and listing your products to pricing strategies and marketing. We also look at the challenges and rewards of this business model, and offer a more profitable alternative.

7 Steps To Make Money On Etsy With Digital Downloads

1. Pick A Profitable Niche

Start by identifying areas where your interests intersect with consumer demand, while also considering less saturated, emerging niches for their untapped potential. Effective market research is key. You can use Etsy’s search analytics, Google Trends, and social media to understand buyer behavior and preferences. You can also assess the profitability of your chosen niche by comparing it with existing listings and customer reviews on Etsy.

Etsy’s Marketplace Insights Report offers helpful info on trends and digital product ideas. For example, the recent report says that there has been a 94% increase in Etsy searches containing the words “digital planner.” This could mean that there’s a growing demand for organization and scheduling tools like calendars and journals.

Sellers with a focused niche often develop stronger brand recognition and connect more effectively with their target audience. Skipping this step or opting for a broad niche could lead to low sales, making it harder to stand out in Etsy’s competitive marketplace. 

2. Set up a Digital Etsy Shop

To set up your Etsy shop, sign up for an Etsy account and choose a shop name that reflects your brand and offers. Then follow Etsy’s step-by-step guide to complete your shop setup. This includes filling in details like your shop’s description, setting up Etsy Payments, and adding billing information for Etsy’s selling fees.

You'll also need to create a banner and profile image that visually represent your brand. It’s important to write clear shop policies for customers regarding your digital downloads, such as usage rights and refund policies. Link any relevant social media accounts to help promote your Etsy shop and reach a wider audience.

3. Create Your Digital Downloads

Tools like Adobe Illustrator, Adobe Photoshop, and Canva Pro are great options for creating high-quality digital products and templates.

When designing, always keep your target audience's preferences in mind. Etsy sellers who dedicate time to crafting unique and professionally designed digital products experience a higher rate of repeat customers and referrals. Neglecting this can affect your brand reputation on Etsy and lead to lower sales.

How To Create Digital Downloads To Make Money On Etsy?

4. Strategically Price and Discount Your Products

To price your digital downloads effectively on Etsy, consider the cost of production, time spent on design, and market rates. Digital downloads can be priced anywhere from $5 to $30, depending on their complexity and uniqueness. Remember to include a markup of about 20% to 30% over your production cost to ensure profit.

Offering discounts or bundles can also help attract more buyers to your Etsy store. For example, you can offer a 10% discount when customers buy three items. It’s good to compare your pricing strategy with other stores in your niche, but don’t copy.

Keep in mind that Etsy charges a listing fee of $0.20 per item and takes a 5% transaction fee on the sale price (including shipping costs). Setting competitive yet profitable prices is key to your success on the Etsy platform.

5. Collect Good Reviews

According to customer service platform Dixa, 93% of customers will read reviews before making a purchase. This means that positive customer reviews build credibility for your digital Etsy shop. They influence the purchasing decisions of potential buyers and are a key factor in increasing your shop's visibility and sales.

To collect good reviews, focus on delivering high-quality digital products, provide exceptional customer service, and encourage buyers to share their feedback post-purchase. These act as social proof that can improve your shop’s reputation and search ranking on Etsy.

Neglecting customer reviews can hinder your shop’s growth and trust with new customers, which is crucial for digital downloads where it’s not possible to assess a physical product before buying.

6. Follow Etsy SEO Best Practices

To increase the visibility of your digital products on Etsy, optimize your listings for Etsy's search engine. Use relevant keywords in your product titles and descriptions that potential customers might search for.

For example, if you're selling a digital wedding invitation template, include phrases like "printable wedding invitation" or "editable wedding invite". It also helps to use all 13 tags available on each listing to broaden your reach. These tags should be closely related to your product and can include variations of your main keywords.

Good Etsy SEO involves regularly updating your listings, using high-quality images, and encouraging customer reviews since these also influence search ranking. The goal is to make it easy for shoppers to find your products when they search on Etsy.

7. Try Etsy Marketing Strategies

Marketing your Etsy store and listings can bring in more customers. One effective approach is using Etsy's paid advertising system.

With Etsy ads, you can set a daily budget for as low as $1 and your products will appear higher in search results. However, you need to monitor your ad spend and adjust your budget according to the results.

Another strategy is promoting your products on social media platforms like Instagram, Pinterest, and Facebook. These platforms are great for visually showcasing your digital downloads. Include a link that will redirect to your product listing.  

Collaborating with influencers, Etsy affiliates, or other Etsy sellers in your niche can also enhance your marketing efforts. Be creative and consistent with your marketing and always keep your target audience in mind.

How Much Money Can You Make On Etsy With Digital Downloads?

You can make $10,000 to $50,000 annually on Etsy with digital downloads, depending on various factors like your niche, pricing, and marketing efforts. Some top sellers earn more, but this range is a realistic estimate for dedicated sellers. The most popular digital templates and prints on Etsy have garnered sales of 5,000 to 14,000 times. This shows a thriving market for digital products.

However, reaching these figures requires consistent effort in market research, product design, SEO optimization, and marketing. It's common for new sellers to spend months fine-tuning their products and strategies before seeing substantial sales. Keep in mind that sellers' strategies and the demand for their products determine the variation in income. 

Kay Zane from Quora shares that she made $20,000 in just 6 months by selling digital printables on Etsy. Her profits per month weren't consistent, but she reached her highest sales volume during the holiday season. She advises choosing a niche that can yield higher-priced products like ebooks and workbooks. Kay opened her Etsy store in 2020 and now runs her own low content PLR shop selling done-for-you digital templates.

What Kind Of Digital Downloads Are Making More Money On Etsy?

Printable Planners

Selling printables on Etsy involves designing daily, weekly, or monthly digital calendars that help with organization. The most popular printable planners on Etsy have over 8,000 5-star reviews so there’s a clear demand for the product. It’s easy to create Etsy printables with tools like Canva Pro, but you need creativity and good understanding of user-friendly layouts.

The market for these planners is also saturated, making it difficult to make your listings stand out. Because digital products like these can be easily copied, there are many cheap options available from other sellers. This makes it hard to set a price that is low enough to attract buyers but high enough to earn a profit.

Fonts

Fonts are designs of letters, numbers, and symbols offering various styles for text. This can be both popular and profitable in the digital marketplace, with examples ranging from classic serif fonts like Times New Roman to modern sans-serif types like Arial.

However, creating fonts requires significant artistic and technical skills, and the process can be complex and time-consuming. Despite the demand, particularly in fields like graphic design and publishing, the market is highly competitive, with hundreds of sellers offering the similar designs. 

Wall Art

Wall art is decorative pieces designed to be hung in rooms. Examples include digital paintings, illustrations, typography posters, and photo prints. These digital art pieces can range from abstract designs to motivational quotes or personalized images.

Wall art is popular on Etsy because of its appeal in home decor and personalization. According to Etsy Marketer, home and living furnishings were the top sales category on Etsy, with a 25% seller share. This makes it a profitable market for selling wall art.

The problem is that creating wall art isn't easy. You need to have a keen eye and insights into what people like . Plus, there are thousands of sellers offering wall art on Etsy, so it's hard to get noticed. This means you might not make a lot of money from each sale, even if your design is good.

Trackers

A tracker is a digital or physical tool used to monitor and record various types of personal data or activities for purposes like organization, habit building, and goal setting. Habit trackers, budget trackers, fitness or health trackers, and productivity trackers are some common examples.

While these tools have grown popular on the Etsy platform, creating profitable trackers involves knowing user needs and balancing functionality with aesthetics in your design. Established Etsy stores can sell 30 to 50 of their trackers per day, but newer sellers might struggle to compete with their listings.

Worksheets

A worksheet is a document used for organizing information, facilitating learning, or aiding in task completion, often found in formats like PDFs or editable digital files. A few popular examples are educational worksheets for students, budgeting and finance worksheets, or business planning worksheets.

Their popularity has risen with the increase in digital learning and self-organized education, making them a best-selling niche in online marketplaces like Etsy. However, creating effective worksheets demands not only subject expertise but also skills in layout and design to ensure they are user-friendly and engaging.

Checklist

A checklist is a type of digital or printed document used for itemizing tasks, goals, or items. These include to-do lists for daily tasks, grocery lists, travel packing lists, event planning checklists, or business project milestones.

Checklists have become popular for both personal and professional use since it helps with organization and productivity. The market for digital checklists can be profitable since they are widely used. And since almost anyone can create and sell a basic checklist, the market has become crowded with new sellers opening an Etsy shop every day.

Coloring Pages

Coloring pages are illustrations provided in a format suitable for coloring, typically targeted at either children or adults as a recreational or relaxation activity. For children, these pages often feature characters from cartoons, animals, or educational themes, while adult coloring pages might include intricate patterns, mandalas, or scenes from nature.

Creating these pages requires artistic talent and an understanding of your target audience's preferences. The market for digital coloring pages is competitive, with many artists offering a wide variety of styles and themes.

This competition often drives prices down, making it challenging for creators to earn substantial income unless you have a unique selling point or a strong following. 

Crafter Guides

Crafter guides are instructional resources designed to help in crafting activities like knitting and crochet patterns, to DIY home decor projects, scrapbooking tips, and more complex activities like woodworking or metalworking. They provide step-by-step instructions, techniques, and often include patterns or templates. These digital products are consistently popular since crafting and craft supplies are the 3rd highest-selling niche on Etsy, according to Statista.

The challenge with selling crafter guides is you need to know the specific craft well enough to communicate instructions in writing and design. Many crafters also prefer low-cost or free resources which makes it hard to set a price that’s good enough to create a good profit margin.

Social Media Templates

Social media templates are pre-designed layouts used for creating visually consistent posts on social media. Examples include Instagram post templates, Facebook cover photo templates, Pinterest pin designs, and Twitter banner layouts. They often come in sets or themes which allows for cohesive branding across posts.

The demand for these templates has increased with the rise of social media marketing. Digital Etsy stores selling social media templates and planners can achieve 30,000 or more item sales.

However, creating these templates requires design skills, a keen understanding of social media trends, and the ability to cater to different branding styles. You need to update your designs every time there are changes to a platform’s layout and algorithm.

Tips On Making Money On Etsy With Digital Downloads

Choose A Popular And Profitable Niche Through Market Research

Conduct thorough market research to pinpoint a niche that's both popular and profitable. Analyze the competitive landscape, understanding pricing strategies, and identifying the specific demands of your target demographic.

Utilize tools like Google Trends, Etsy's own market research tools, and social media insights to gain a comprehensive understanding of what's in demand. Seek out niches that are not only popular but also have a dedicated customer base, such as eco-friendly products, personalized items, or unique digital artwork.

Sellers who skip market research may find it challenging to differentiate themselves in oversaturated niches, potentially leading to frustration and limited growth in their Etsy business. 

Take An Etsy Online Course

Etsy online courses cover a wide range of topics, from the basics of setting up your shop to advanced techniques in customer engagement and brand building. Look for courses that offer real-world case studies, interactive sessions, and post-course support.

These courses often provide insights on photography and presentation of digital products, pricing strategies, and how to create compelling product stories. If you're looking to expand your products, you can also take a more specific Etsy dropshipping course.

Not taking an Etsy online course can lead to a longer and more challenging learning curve. You'll have to rely on trial and error before you start making a profit. It can also increase the risk of making costly mistakes or falling victim to scams promising Etsy success without delivering substantial value

Optimize Keywords For Your Title And Descriptions

Use long-tail keywords that target specific customer queries. Tools like EtsyRank and Marmalead let you research keywords that are relevant but not overly saturated.

Learn about SEO best practices and how to integrate keywords naturally into your titles and descriptions. Remember, SEO is an ongoing process, so regularly updating your listings based on current trends and search patterns is crucial.

Sellers who neglect keyword optimization may struggle to compete in crowded markets, making it harder for potential customers to find their products. This can lead to frustration and limited growth for beginners Etsy sellers.

Market Your Product

Extend your marketing efforts beyond the usual platforms. Collaborate with influencers, leverage Pinterest for visual marketing, and consider email marketing campaigns to nurture repeat customers. Create a cohesive brand identity across all platforms, and use storytelling to make your digital products more relatable and desirable.

Interactive content, such as behind-the-scenes creation processes or customer testimonials, can also improve engagement. Without proper promotion, your listings will remain unnoticed.

Maintain High-Quality Customer Service For Great Reviews

Outstanding customer service is the backbone of any successful online business. Consider creating a FAQ section on your Etsy page to address common questions.

Personalize the customer experience with follow-up messages, and maybe even include a surprise bonus digital product to delight your customers. Happy customers often become brand advocates, sharing their positive experiences with others. If you do not maintain high-quality customer service, you may get a damaged reputation and slower business growth.

Discount Your Products Or Provide Coupon Codes

Offering discounts or coupon codes can entice new customers and reward loyal ones. Discounts and coupons should be used strategically to boost sales during slow periods or to clear out less popular items. Consider time-bound offers to create a sense of urgency.

Use Etsy’s analytics to track the effectiveness of your discount campaigns, and tailor future promotions based on these insights. Loyalty programs for repeat customers can also be a great way to encourage continued patronage.

However, you should be cautious about overusing discounts, as it may impact their profit margins. It's essential to balance offering attractive deals and maintaining a sustainable business model.

Create Product Bundles

When creating bundles, think about complementary products that offer value to the customer. For instance, if you’re selling digital planners, bundle them with matching digital stickers or note templates.

According to Shopify, orders containing product bundles such as sets, capsules, or bundles (excluding sale-only orders) experienced a noteworthy 20% boost in Average Order Value (AOV) for the brand.

Offering complementary items or creating themed bundles, sellers can provide added value to customers, encouraging them to make larger purchases. Not doing this may cause lower sales and missed opportunities for increased revenue.

Promote Your Products With Etsy Ads

Invest in Etsy Ads to further enhance your store's visibility To get the most out of Etsy Ads, start by setting a clear budget and goals. Experiment with different ad formats and track their performance.

Use Etsy's analytics to understand which products are more popular and focus your ad spend on these items. Regularly review and adjust your ad strategy based on performance metrics. Remember, the key is to find the right balance between ad spend and profitability.

However, beginners who overlook the importance of Etsy ads may struggle to gain traction in the competitive marketplace. Without utilizing this promotional tool, their products may remain less visible to potential buyers. 

Is Making Money on Etsy with Digital Downloads Worth It?

Yes, making money on Etsy with digital products is worth because it allows beginners to tap into a large market without needing to manage physical inventory. The Etsy platform is known for its unique and creative products, attracting potential customers who are specifically looking for digital items like art, templates, or guides. You can start selling with minimal upfront costs and reach a wide audience easily. Etsy's platform with over 96 million active buyers according to Statista, offers a vast audience for your digital products. This means you can sell on Etsy without inventory.

However, there are some risks involved in selling digital downloads on Etsy. The marketplace is competitive, with many sellers offering similar products. Standing out can be challenging and requires effective marketing and unique product ideas. Also, digital products can be easily copied, so protecting your intellectual property can be a concern. It’s common for other sellers to make a cheaper version of your original design and profit from your idea.

Kirbie Earley from Columbus, Ohio, US runs the Etsy store DigitalWhimsyPrints which sells digital prints, planners, and templates. She's in the top 32% of Etsy sellers and has sold 42 types of products. Kirbie shares that the top 1% of sellers are those that have already been on the platform for a while and have amassed a substantial following. She warns against thinking of Etsy as a get-rich-quick scheme.

The competition on Etsy is stiff with its 7.5 million active sellers according to Etsy Marketer. Standing out from other digital download sellers can be challenging. It's important to manage expectations and understand that success in this business model requires patience, creativity, and persistence.

5 Dangers Waiting for You in Making Money on Etsy With Digital Downloads

1. Selling Digital Downloads on Etsy Has Fierce Competition

The Etsy marketplace is characterized by fierce competition, with millions of sellers vying for the attention of buyers. In fact, in 2023  Etsy had over 5.4 million active sellers worldwide.

This high level of competition presents a significant challenge for beginners in the digital downloads niche, as they must find ways to stand out and attract customers among a vast pool of sellers. The dangers of this intense competition include difficulty in gaining visibility, potential price wars, and the need for exceptional product quality and marketing skills.

For newcomers, it's crucial to enter this competitive landscape with a clear strategy and a unique value proposition to thrive in selling digital downloads on Etsy. As the user c3paperie on Reddit shares, other sellers can just imitate your digital products and sell them for less.

2. Selling Digital Downloads on Etsy is Prone to Copyright Infringement   

Copyright infringement is a significant risk when selling digital products, especially if they involve artwork, music, or written content. To mitigate this risk, create original content and understand the legalities of what you're selling. If you use elements that are not your own, ensure they are royalty-free or you have the necessary licenses. It's also important to be aware of Etsy's policies regarding intellectual property to avoid potential legal issues and store shutdowns.

3. There’s No Package Presentation When Selling Digital Downloads on Etsy

Selling digital downloads on Etsy lacks the physical package presentation that many customers appreciate. Research shows that a well-designed and appealing packaging enhances the overall customer experience and can lead to higher customer satisfaction and loyalty.

However, beginners may struggle with this aspect as they may not have the resources or expertise to create elaborate packaging for digital products. This limitation can affect their ability to compete and create a memorable customer experience, potentially impacting their success in the digital downloads market on Etsy.

4. Etsy May Require High-Cost Software

Some digital products may require expensive software for creation. However, there are cost-effective alternatives. Many high-quality free or low-cost tools can be used for creating digital downloads, such as Canva for design or Audacity for audio editing

Additionally, investing in software can be seen as a long-term investment in your business, potentially leading to higher-quality products and thus, more sales. Novice sellers may face initial difficulties in catering to less tech-savvy buyers, impacting their sales and growth trajectory. To overcome these challenges, newcomers must prioritize user-friendliness, clear instructions, and products that resonate broadly with customers.

5. Selling Digital Downloads on Etsy is Not Accessible to Everyone

Selling digital downloads on Etsy offers significant opportunities but also faces the challenge of reaching potential buyers who are not tech-savvy. A notable portion of the market may be inaccessible due to varying levels of digital literacy and access, particularly among older generations and in certain socio-economic and geographic areas.

This digital divide means that beginners in this market need to be strategic, creating products that appeal to a broad audience and providing extensive customer support and clear instructions for use.

Navigating these challenges is not easy, especially for newcomers. Failing to bridge the digital gap can significantly affect their ability to establish a successful presence and cater to diverse customer needs and preferences.

Why a Local Lead Gen Biz Outshines Making Money on Etsy With Digital Downloads?

While making money on Etsy with digital downloads offers opportunities, local lead generation stands out as a more profitable business model since it has less competition. Selling on Etsy deals with risks like market saturation, the need for constant product innovation, and dependence on their policies. This limits your business’s scalability and stability.

Local lead generation stands out as a more profitable business model since it has less competition, especially in niche markets. It also has greater potential for recurring revenue through continuous lead supply.

The local lead generation business model is independent of third-party platforms which gives you more control and consistent income. This is proven by lead gen sites that can earn $500 to $2,500 from supplying leads to local businesses, making it a more scalable and sustainable alternative to Etsy's digital download marketplace.