The three levels of earning active and passive income using the internet
Level 1: Services
Selling your services online means using the skills you currently have to get hired online. Whether you’re a UI/UX designer like me or a data analytics guru, you can get a freelance gig doing almost anything online. Be it being a virtual assistant, or an encoder, with any skill level you can get paid.
Of course, the caveat here is that pay is directly correlated to skill level. Meaning, the more skilled you are, the higher the chances of you getting paid more. For example, if you get a transcription gig, you can get paid as low as $2 per hour, but if you are a senior developer or a software engineer, you can get paid as much as $100 per hour.
In a previous blog, I mentioned the platforms Upwork and UserTesting, where you can earn money by selling your services. You can also check out Fiverr and Guru to find freelance gigs online.
This is also be a great opportunity for you to learn that new skill you’ve always wanted to! Nowadays, it’s easy to acquire more skills through low-cost and free online classes. For me, it is coding, specifically front-end development using Codecademy.
Services are categorized as Level 1 because you are essentially trading your time for money therefore, there is a limit to what you can earn and that is based on how much time you spend on a project. The next levels will discuss ways on which you can earn more online that do not depend on how much time you spend working on them.
Level 2: Products
Another great way to make money online is through selling products online. There are 2 types of products: physical and digital.
Physical products are much harder to handle because of inventory and handling costs. Although today, lots of people make money through drop shipping, where a manufacturer can directly ship the products to the end-customer. All you have to do is a little bit of marketing and a lot of product research before deciding to start this kind of business. Also think about what platforms to use such as Shopify or Amazon to sell your products on.
I would also categorize affiliate marketing in the physical products type because consumers are actually buying physical goods by using your affiliate link or code. Affiliate marketing simply, is when an online retailer gives commissions to individuals who sells their products through their own efforts like self-promotion. This can be associated to more costs than people anticipate, so I recommend doing thorough research before choosing this path. There are loads of free tools online to learn more about affiliate marketing, so please educate yourself first!
Now, digital products are downloadable tools or products such as artwork or PDF guides. This is a great source of passive income because once you put your digital product out there for sale, customers can download them unlimited times, increasing your per hour rate per product. For example, you spent 1 hour creating a digital postcard that you sell on Etsy for $2. Each time someone purchases and downloads your art, your hourly income increases by $2. If 100 people buy your product, you have officially made $200 on something you worked on for 1 hour! Incredible, right?
Level 3: Trust and attention
Like getting anyone’s trust in real life, this last one may take a long time to achieve. This involves getting people’s attention by creating free and interesting content online, and eventually, they will trust you enough to purchase your products or pay for your content.
You can do this by creating a blog or a Youtube channel and writing or creating videos about the things that genuinely interest you. If you’re a subject matter expert at something, great! Talk about that. If you think you can create amazing content about simple every day life, great! Post videos about your life. Sure, it takes some amount of luck to achieve viral success but the more genuine you are and the more you work on your craft, it will translate in whatever media you choose and people will subscribe and follow you!
Once you’ve achieved to grab people’s attention by creating free and interesting content online, you can start selling people your own products or get sponsorships from various companies. If you are a nutritionist for example, you can sell PDF nutrition guides and cookbooks to your subscribers, and online classes on Skillshare. Or if you’re a tech Youtuber, you can post affiliate links on your Youtube page and make small commissions. These may seem intertwined with Level 2 because of the digital content and affiliate marketing, but by grabbing people’s attention and trust, it will be exponentially easier to get people to purchase these products.
If you’re not comfortable doing these, you can also ask people to directly fund you through Patreon! That way, you do not have to compromise on your content by catering to sponsors or pushing your subscribers to buy products through affiliate marketing.
Conclusion
These are the three levels of making money online, as inspired by Ali Abdaal on Youtube. I think starting with Level 1 and increasing your skill level will pay off not only on a monetary level, but it may also help you achieve your personal goals of just educating yourself more everyday. Level 2 will definitely help you make passive income so you won’t have to sacrifice your 9–5, and earn enough to make that home downpayment! Lastly, Level 3 while the hardest, can be the most rewarding because it can be directly tied to your passions, which means you can earn while doing what you love.