Making a Passive Income Online

Passive income, in my opinion, means an income which does not require a lot of regular maintenance work or continuing effort. I have been thinking about ways to make a passive income online and although I haven’t really tried and tested any of my ideas, if you are interested in the topic, please read on.

1. Design shop
Are you a talented designer? Do your designs stand out from the crowd? If so, you are only a few steps away from making a passive income online. Design a few icons, templates, themes, etc, set up an online shop where you can sell your creations and wait for money to roll into your paypal/bank account.

2. Information/Portal site
A large population of the Internet community uses Internet to find information. If you have a website with comprehensive and hard-to-obtain information on some niche topic, it is very likely that you will be getting a lot of visitors via search engines or by word of mouth every day. So how do I make money from an informative site, I hear you say. Ever heard of advertising revenue?

3. ebook
Do you know an industry secret on how to [INSERT ANY TOPIC IN DEMAND HERE]? Why not reveal your secret in an ebook, and you could be living on royalties from your ebook sales.

4. Affiliate marketing
“Affiliate marketing is a web-based marketing practice in which a business rewards one or more affiliates for each visitor, subscriber, customer, and/or sale brought about by the affiliate’s marketing efforts.” (Ref: Wikipedia) An example of an affiliate marketing is promoting a hosting package offered by a hosting company on your website, and getting a commission when someone purchases the hosting package via the link provided on your site. Although the rise of web 2.0, social networking and user generated content have made affiliates less popular, affiliate marketing still exists for us to take an advantage from it.

I am using Template Monster Affiliate Program for my Website Templates website. Although I am far from making six-figures, I am getting some lunch money regularly through the commission without having to update the site.

5. Free Software
Before you think I am contradicting myself, let me assure you that giving away your software for free is not a business model, rather, it is a distribution method. Write a ‘usable’ software, and distribute it for free. But to make money from your free software, you need to offer extra functionalities which are only available to subscribers. If a user of your free software think the extra functionalities are worth paying for, he will choose to become a subscriber. It’s a win-win for both parties because you know you will be rewarded for those long hours and efforts that you put into writing extra functionalities and the end user is not forced to pay for anything.

There you have it, and as you are probably thinking, it does require a lot of work at the start because to have a stable source of passive income, a great deal of time, effort and research is required to begin with.

[Updates]
Someone asked me why I did not include blogging as a way to make a passive income online. It is because I don’t think making money via blogging equals making a passive income. In normal circumstances, maintaining a blog requires a continuing effort such that you are expected to produce an up-to-date and fresh content at least once a week for the lifetime of the blog.