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Picture this: you’re on a stunning beach, lazily sipping on your Mojito when you hear your phone go off. You want to ignore it, but you get a dozen pings in a few seconds, so curiosity gets the best of you.

You pick it up and read: “Congratulations, you just made 17 sales and earned $7800”. Passive income tastes even better than the mojito, doesn’t it?

I’ve got two hot takes on this:

1. Caipirinhas are better than mojitos. This is a matter of taste and you can disagree with me but:
2. Passive income from digital products is a myth and this is not a matter of taste or opinion.

I’ll show you why today.

“If you productize it, you can sell at scale and generate passive income.”

Ever heard this piece of advice? I’m willing to bet you’ve seen quite a few plaudits for productization over the past few years. It is perhaps exactly what put that mojito-sipping-while-getting-effortlessly-rich image in your head.

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The lure is incredibly strong and there is some truth to the productization advice. Let’s start with a quick primer before we unpack it.

What is productization?

​Investopedia has a rather restrictive definition of productization: ”the process of developing or altering a process, idea, skill, or service to make it marketable for sale to the public. Productization involves taking a skill or service that has been used internally and developing into a standard, fully-tested, packaged, and marketed product.”

Meh.

Rather dry and a far cry from what productization evangelists tell us. Typically, productization is seen as a cure-all solution, something that helps you sell at scale → fast growth with minimal effort, and voila, passive income! Who wouldn’t like that?

However, things aren’t as cut and dry as they seem. Productization doesn’t work for just any kind of service.

First, let’s make sure we’re on the same page about what productization means.

Two types of productization

There’s one type of productization that simply packages services into product wrappers. You’ll usually spot it on pricing pages, where it’s used to simplify things and focus on outcomes rather than the full process.

I use this approach on my agency’s websites too. Just like in SaaS, every price level looks like a product, but it’s a service.
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The second type of productization and the one we will be discussing today refers to an actual transformation of services into products. For instance, instead of writing each article from scratch, my agency could productize it into “100 pre-written articles in the health niche”.

Don’t worry, I’m not doing that! (Do these things still exist? I hope AI killed them!)

Other products that my agency could create based on our services are:

• Copywriting and content writing courses
• Social media templates, courses, and calendars
• SEO courses, proprietary frameworks sold as PDFs, and more.

Should I do it?

Some could be successful — others not so much.

It all depends on the time you spend making the sale versus the time you spend delivering the product/service.

Sale and delivery — which do you want to focus on?

No matter what you sell, there are two stages to every closed deal: sale and delivery.

• When you sell services, the delivery takes longer and is usually costlier than the selling process. This is especially true if you sell services with ongoing delivery, like on a monthly retainer, or if your clients have a reason to keep using your skills — graphic designers, social media managers, fractional CMOs (or agencies) are good examples here.
• When you sell products, the sale takes longer than the delivery. The product is usually fully ready to go before you make the first sale. Just like in regular eCommerce, digital products are created once and sold for as long as possible with minimal updates or no updates whatsoever.

This is where the lure of productization stems from: you create once and sell forever — or for years to come. Simple, right?

Well, closer to oversimplified in fact.

Digital products aren’t passive income

I know there’s a high probability you’ll disagree with me on this. But hear me out first: passive income means that, after the initial investment (be it time or money), you will generate income without doing anything or without doing much.

I spent ages trying to find passive income streams. So far, I found two:

• Renting out real estate properties — it’s passive as long as a property management company handles everything for you.
• Stock market investment (or similar) — again, passive as long as you get a broker to manage it for you. If you manage it yourself, you’ll spend hours every week staying up to date with the market or the companies you invested in.

Things are quite similar with digital products: you may think that the bulk of your work is done the second you publish your product but, in fact, it has only just begun.

Sure, you may get the odd sale here and there without putting in much effort. To be honest, that’s my favorite type of sale too. I get unexpected pings about making a sale every now and then and I love it. The best kind of sales (to me) are those that I can’t easily track to a specific social media post, email, or conversation I had.

I love them because it feels like I didn’t do anything to make that sale — no pitches, no sales calls, no proposal emails — nada.

However, that’s just a feeling. I know that those seemingly out-of-the-blue sales are the compounding result of the work that I put in weeks or days before.

Digital products don’t bring passive income. You may not need to have a discovery call with each client but you have to work for every sale you make.

Based on my experience and that of every other digital product creator I’ve spoken to:

• The moment you stop promoting your offers, sales drop. Perhaps not to zero — if you already have multiple sources of traffic — but there’s a noticeable drop.
• If you stop showing up on social media/email or any other channel you’re active on, traffic drops, and so do sales.
• When you stop collecting new testimonials/reviews, sales drop again.

In other words: digital product sales are the result of consistent, regular, and strategic work. Just like any other sale.

Why do you think your favorite 7- or 8-figure creators keep showing up daily and take minimal breaks if any? They know that the machine needs constant feeding if it’s going to keep producing revenue.

That being said, productization itself is a good idea — if it works for you (you prefer to work on selling them rather than on delivering services) and if it works for your audience.

Not sure if it works? Here’s how you can find out:

Should you productize it?

The final answer is usually tied to how price-sensitive your target audience is. If a lot of them balk at your prices (think more than 25%), a productized, more affordable alternative is usually a good idea.

Other conditions your audience needs to meet for a productized service to be successful:

• They’re DIY-ers, tinkerers of sorts, so they will be inclined to invest time rather than money. Psychological ownership is a powerful thing.
• They understand they still need to invest some money to gain the knowledge you’re selling.
• They have a modicum of understanding about the product/industry/niche. Even for 101-style products, your audience still needs to grasp basic concepts so they understand why that investment makes sense. For instance, if you’re selling copywriting courses, they need to know why copywriting is important in any business.

Lastly, make sure a productized service/offer matches your value ladder:

• Is it more affordable than your services?
• Can you use it to upsell them to your services or can you sell it to enough people so you don’t need to sell services anymore?
• Is it related to your other products/services?

In last week’s issue of IPF, I told you I built The Guided Strategy Template as a stepping stone to my 1:1 Strategy Sessions — it gives me the opportunity to upsell and, most importantly, I can help people who can’t pay $350 for a strategy session with me but still need to build a roadmap.

Before you start productizing your services, run your idea through the bullet points above. The best of them will meet both your clients’ needs and your long-term business goals. Like a perfectly-drawn Venn diagram.

One thing to keep in mind: most people want support, not knowledge. And most people are willing to pay premium prices for customized services rather than one-size-fits-all products.

Think of this when you productize your services. Better yet, remember that it doesn’t have to be either/or: you can have digital products that complement your services. My Guided Strategy Template complements my 1:1 Strategy Sessions, for instance — it’s completely free if you book a session and it’s a very relevant bonus.

There are countless variations to a combined approach. My favorite is adding a mini-service to complement a digital product. For instance, if you sell online courses, you can add a 1:1 session with you as a bonus. Or a personalized review of their course homework. This way, your buyers get something personalized too.

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Adriana’s Picks

1. X/Twitter may become a paid-for-all platform, according to Elon Musk (who else?). You won’t be able to use it at all unless you pay.
2. AI art isn’t copyrightable, according to a recent verdict issued by a federal judge. Only human-made art can be protected by copyright…so far.
3. Did you spot the subtle change in the Facebook logo? Yeah, me neither.

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That’s it from me today! See you next week in your inbox!

Here to make you think,

Adriana

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Need me in your corner? There are three ways I can help you:

1. Boost your chances of success by 400%: document your strategy with The Guided Strategy Template.
2. Get my product launch email templates that sell: 5+1 emails you can send to your list in 45 seconds.
3. Book a 1:1 strategy session with me. Let’s unlock your growth in 60 mins!

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