How to Generate Passive Income from Online Courses
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Selling online courses is one of the most realistic ways to make passive income online.
Contrary to popular belief, it’s relatively simple and inexpensive to start selling online courses. To begin, all you need is yourself, a simple website, and a topic you can teach.
In this article, I’m going to tell you why you should sell online courses, and I’ll show you exactly how to make passive income selling online courses (it’s easier than you think).
Why Online Courses
In my opinion, an online course is the easiest way to generate substantial passive income online. Whenever I meet with new entrepreneurs, I recommend online courses as a viable revenue stream. Whether this is your main source of revenue, or one of the many revenue streams generating income for your business, you should sell online courses.
Below, I’m going to give you three reasons why you should sell online courses.
1. High-Value Product
Would you rather sell one online course for $500 or hustle to sell 50 copies of your $10 eBook?
For the same result, I’d rather work hard to sell one $500 course. Getting sales is hard, maximize your effort by selling a high-value product or service.
That’s why I love online courses. They’re a premium product. You should be charging a minimum of $200 per course (my courses sell for $400 each). Sell five online courses per month and you have a legitimate side hustle going.
Just five sales. That’s easy!
2. Passive Income
Online courses are my favorite form of passive income. You put in the hard work up front, building the course and setting up the sales funnel. Then reap the rewards of recurring passive income for the rest of your life.
Not a bad deal! A few weeks of hard work creating the course, and in return, you receive a lifetime of income without lifting a finger.
3. It’s Easier Than You Think (and Cheaper Too)
Contrary to popular belief, starting an online business and selling online courses is easy and cheap. All you need is an idea and a little hustle to get the business off the ground. My online courses that now generate a minimum of $5,000 per month in recurring passive income cost me $50 to start. You can do this for cheap. You can make money online with an investment of $50 or less. All you need to get started is an idea, web hosting and a domain name (which you can get for $2.95 per month from Bluehost).
In the subsequent sections of this blog post, I’ll show you exactly how to get started selling online courses. I will show you just how easy it is.
My Journey Selling Online Courses for Passive Income
I sell online courses in the insurance industry, on my website AssociatePI.com. My online courses help employees in the insurance industry pass their eight exams to earn the Chartered Property Casualty Underwriter Certification. My courses are entirely text-based, self-hosted on my WordPress website using the WPLMS theme, and took me no longer than one month to write each course.
I sold my first online course in June of 2015, a sale of $550 for two of my online courses. It was the first time I had ever sold anything online. I’ve since generated nearly $200,000 selling online courses.
This year, I am averaging around $7,000 in monthly passive income from my online courses at AssociatePI. On pace to surpass $80,000 in annual income just from online courses, and I don’t spend more than three hours per week managing the business at AssociatePI. Just three hours per week answering support emails. And that’s it. All I do is answer emails, the rest is completely automated and passive.
You can do this too. You can create online courses in your niche, in any niche for that matter, and make thousands in recurring passive income every single month.
How to Get Started
Getting started selling online courses is easy. All you need is a niche and a website. Find a topic where you have some expertise, find a topic you can teach, and create an online course.
The opportunities are endless.
Did you pass your CPA exams? Perfect, you can create an online course with study material and tips to pass each CPA exam.
Did you follow the Paleo diet and lose 20 lbs? Excellent. That can be your online course. You can create an online course about how to cook and follow the Paleo diet to lose weight.
Are you a productivity expert? Great, you can create an online course to help others manage the clutter in their lives to maximize their productive hours within the day.
The opportunities truly are endless. You will find hundreds of thousands of people online looking for your help, looking to purchase your online course. To give you some inspiration, check out what Ryan Levesque is doing with a website about orchids. He’s making $25,000 per month selling online courses about how to grow orchids. Orchids of all things! If he can make over $25,000 from a website about orchids (using this same process I’m going to detail below), you can make $25,000 selling online courses in your niche.
To make it even easier, I’m going to share a simple straight forward five-step process to get started making passive income from online courses. This is the process I use when launching a new online course. The process is simple, I’ll summarize it below and walk you through step by step.
Step 1: Choose a Subject
First, you need a subject for your online course. It needs to be something that people want to buy.
If you already have a website, subscribers, or a social media following that’s great. Figure out what online course they want to buy. I do this with one simple survey question. I ask my audience, “what is the #1 biggest challenge that you are facing in regards to X?”
For The Entrepreneur Ride Along, my entrepreneurship website, I asked this exact question. I asked, “what is the #1 biggest challenge that you are facing in regards to starting and scaling your business?”. I learned a lot from this one question.
Most importantly, I learned that my subscribers fall into one of two buckets. They either want to start a business but have no ideas, or they have a business but no sales. So, I started two group coaching programs that I will turn into online courses. One to help people start their first business, and one to help people drive traffic and convert leads into paying customers.
For AssociatePI (my insurance online course website) I asked this same question. I asked, “what is the #1 biggest challenge that you face when studying for your exam?”. Once again, I learned a lot from this question. I learned that people were struggling to retain the information that they study, the study material from my competitors is dry or boring, and it took too long to study. So, I created an online course that was designed for faster and easier studying, one that allowed students to pass their exams in less time with less studying.
Finding a subject for an online course is that easy. Just ask what people want to buy!
If you don’t have a website or a following yet, that’s okay. Now is the time to start. What could you teach? If you own dogs, you could create an online course for training high-energy dogs. If you use Microsoft SQL Server in your day job, you can make an online course teaching people the basics of using the Microsoft SQL program. If you paid yourself through college without student loans, you can create an online course teaching your method of graduating from college debt-free.
What are you an expert at? What do you do on a daily basis that you can teach? That can be your online course. There are thousands of options out there. Thousands of online courses that you could be creating. If you just need some ideas, I recommend taking one of these six online business ideas for beginners that I wrote about. Take one of these ideas and run with it.
Once you answer the question “what are you an expert at?” and find a topic that you could build an online course around, go out and talk to your target market. Again, use the one simple survey question “what is the #1 biggest challenge that you are facing in regards to X?”. Go to Reddit r/samplesize, an entire subreddit where people answer survey questions, and post a survey to kick off your market research.
Join Facebook groups and LinkedIn groups, start talking to your target market. If you want to create an online course teaching people how to train dogs, then go out and talk to dog owners and figure out what they are struggling with. Figure out if they have a problem that you can solve with an online course.
Talk to your target market, ask them questions. Your target market will tell you what they want to buy. But don’t build it yet! In the next step we will figure out if people actually want to buy your course.
Step 2: Pre-Sell
Sell your course before you build it. This is called pre-selling. This is the most important part of this five-step process. If you take nothing else away from this blog, remember that you need to pre-sell your product or service before you build it, no matter what you’re selling.
A pre-sale means you’re selling your online course BEFORE you build it. You sell the course as an idea, at an extreme discount, to make sure that people actually like your idea and want to buy what you are offering.
This is the best way to validate your online course idea. Sell your course before you build it. If someone buys your product before you build it, then you know there’s a clear need for the product. Pre-selling can save you a ton of time and money before you dive in and waste months building a course that no one wants.
Once I complete step one, after I learn the #1 biggest struggle and the most common challenge that my target market is facing, I offer a pre-sale on my online course. I make sure they know that this is the course that will solve their #1 biggest problem. I offer the online course, making it available for sale before I even build it. I’m very open, I tell my subscribers that this is a pre-sale and they can buy the online course now at 75% discount because the course is not built yet. With this pre-sale, they get to be the beta testers and give feedback as I build it, ensuring that the course is exactly what they need to solve their problems. Then, once the course is built, they get full access to the course for life.
If I can get 5 to 10 people to pay me for a product before I build it, then I know I’m on to something. I know I’ve hit a sore spot and I know I’ve got an idea for something that people desperately want. Then I build it and deliver the product.
The true validation of an online course comes when someone pulls out their wallet and pays you for the product or service that you offer. I’ve seen far too many entrepreneurs (including myself) build online courses on a hunch without asking if anyone wanted the course, or without pre-selling the course. I know from experience, building a course without proper pre-selling and validation is a recipe for disaster. You will waste months building and perfecting your online course, and no one will buy it.
Do not skip steps one and step two of this five-step process. These first two steps are the most important in this five-step process. Figure out what people want, figure out what their challenge is, and offer a pre-sale for an online course that will solve their problems. If people start enrolling in your pre-sale, and people start buying your course before you build it, then you can go out and build the online course.
Step 3: Choose a Platform
In this step, we are choosing which online course platform we will use.
You should be on step three only after you have successfully completed step one and step two. If you talked to your target market and figured out what they are struggling with, and you pre-sold your course. Then you can think about which online course platform to use.
Building an online course is much easier than people think. You don’t need to pay for custom programming, you don’t need any coding skills, you just need about $50 and the ability to type on your keyboard.
Here are a few of my favorite online course platforms. I recommend you review each before choosing the platform for your online courses:
This is what I use for my online courses. This is a fully customizable WordPress theme. Fully loaded with online course features. Just load up the theme to your WordPress website and follow the simple instructions to build your online course. It’s as simple as adding units and creating quiz questions, the payments are processed directly through your WordPress website. See the photo below for a screenshot of one of my courses using the WPLMS platform, you can see the platform is very clean and professional.
Teachable is a hosted platform, which means your course is hosted on their servers, so you technically wouldn’t even need your own website. The courses, payments, and everything else is managed by Teachable. This removes the hassle of needing to learn WordPress. Simply set up your courses on Teachable and start selling!
Similar to WPLMS, LearnDash is a WordPress online course platform. This is a plugin that you can load into any WordPress theme to add an online course feature to your website. Just like WPLMS, payments are processed directly through your WordPress website.
Thrive Themes now offers an online course feature. I have not personally used the Thrive Themes course builder, but it is a great option for anyone already using Thrive Themes on their WordPress website.
Kajabi is an all-in-one online course platform. It covers everything you need from email management to website page builders, to professional-looking online courses. I love how easy Kajabi is to use, it’s extremely simple to set up a professional-looking online course and website.
Like Teachable, these online courses are hosted on Thinkific’s website. This offers similar features to Teachable; I recommend comparing Thinkific and Teachable to determine which platform meets your needs.
I have not personally used Udemy, but I’ve seen entrepreneurs have success on this platform. Udemy is an online course marketplace, kind of like Amazon for online courses. People come to Udemy looking to purchase online courses about a specific subject. Here you can publish your online course directly on Udemy, and people will find it through Udemy’s platform. The only downside is you are facing a lot of competition from the thousands of other online courses published to Udemy.
Step 4: Build it
Building your course is the simplest step in this process. Simply choose if your course will be a video-based online course or a text-based online course, then go and teach! You are the expert, you have the knowledge, now go and convert that knowledge into videos or text for others to learn from.
In step one, you learned what your target market is struggling with. In step two you learned that people were willing to pay you to solve their problem. Now solve it with your online course.
If you are stuck, ask your pre-sale team for input and feedback. Even if it’s only one person. Get your pre-sale team’s input on everything including what topics they want to be covered, if they want video tutorials, and what extra free giveaways they want to be included in the course to help solve their problems.
But remember, don’t overdo it. Don’t record forty hours of video content because you want people to get their money’s worth. That’s overwhelming. Add enough content to solve your customer’s problem, don’t overdo it. All they want is a solution, that’s why they bought your course. If you can do that in five hours of video, broken up into five chapters. Then do it, that’s your online course.
Step 5: Passive Income
Online courses are my favorite form of passive income. Build it once, put in a lot of effort upfront, then set it and forget it. Let the money roll in automatically for the next fifty years. That’s the beauty of online courses.
That being said, there is a little bit of work that you need to do before the passive income starts rolling in. You need to set up a passive income funnel.
In this last step, step five, you are setting up a sales funnel for passive income. I’ll walk you through the sales funnel that works for me.
At a high level, my sales funnel is as follows:
- Step 1: Get traffic
- Step 2: Collect email leads
- Step 3: Send automated emails for a few weeks
- Step 4: Get sales from my email list
Personally, my traffic comes through my blog. I write blog posts, use a bit of SEO magic to rank my content on Google, and let the traffic roll in. With this strategy, I have over 6,000 new organic visitors finding my website every month (see Google Analytics screenshot below). SEO is my preferred method of driving traffic, but it’s definitely not the only way. You can use paid advertising like Facebook ads or Google ads to drive traffic to your website. You can build up a social media following on Instagram, LinkedIn, and Facebook to get traffic to your website. You can start up a YouTube Channel or Podcast and drive traffic to your website that way. No matter what method you choose, the end goal is the same. You want to get people to your website and subscribed to your email list.
95% of my online course sales come through my email list. Of the $8,000 I generated from my online courses last month, all but one sale came through my email list. And that’s a website with over 6,000 new users per month. Only one person out of 6,000 organically bought my online course! The other 30+ sales came through my email list. That’s my way of saying you need an email list and an automated email sales funnel. It’s the key to passive income success.
To collect emails, you need a lead magnet. Something that your website visitors want to download. For my online courses, I give away a free practice exam. In exchange for an email address, I will send my subscribers a free 10-question practice exam.
Then, once I have their email, they are entered into my email sales funnel. They receive a few emails per week providing even more value. More blogs, more resources, and more practice exam questions. Lots and lots of value to build trust, show my expertise, and show the value that I have to offer. Mixed into these valuable “trust-building” emails I send a few sales emails, with a direct call to action to buy my online course. In these sales emails, all I am doing is letting my subscribers know that if they need more help with their studying, my online course will help them pass their exam with ease in less time. The sales come in automatically. I don’t do anything. People find my content and blogs by searching on Google. They find me organically, visit my website, and download my free practice exam. Once I have their email address, they receive my helpful emails and then buy my online course. Simple, and totally hands-off.
Now, once this funnel system is set up, all you have to do is worry about traffic. Get more traffic to get more sales. It’s that easy!
Frequently Asked Questions
Absolutely. Online education is a $250 billion industry (source). And it’s not just huge corporations that are making money. Anyone can create a course to make money online. Of course, there’s no guarantee that any course will be a success, but this is a booming industry with plenty of opportunities and unlimited potential.
There are people in a wide variety of income brackets from creating and selling online courses. Some people are making $1 million+ per year. Many others are making six figures. And of course, there are also lots of people making smaller amounts, including many who use course creation as a side hustle. There’s no limit to what you can make, although it’s important to point out that some niches are more profitable than others.
There are thousands of people earning a living by creating online courses. It requires hard work to set up, just like any other type of business, but it’s a very realistic and practical option. You may need to create multiple courses to reach your income goals, and your business is likely to grow each time you create and release a new course.
Yes! Most people today love the convenience of online courses for something that they want to learn. And the best part is, courses have a very high perceived value, which isn’t the case with books or e-books.
Top instructors have made a few million dollars on Udemy. Of course, not every instructor has success, but there is plenty of potential. Udemy has a large, established audience. As an instructor, you can benefit by getting your course in front of more people quickly.
Yes, Skillshare is an excellent platform. The most successful instructors on Skillshare have created several different courses, as you’re unlikely to make a huge amount from any one course. The courses can be rather short (some are even 20 minutes or less), so the barrier to entry is low.
Final Thoughts on How to Make Passive Income with Online Courses
You should sell online courses. It’s one of the easiest ways to make recurring passive income. Not to mention, creating an online course is easier than you think.
In summary, to start making money from online courses you simply need to pick a subject, pre-sell the course to make sure your target market is interested, build the course, and set up an automated sales funnel for recurring passive income. That’s it. Now that is something you can do.
Now it’s your turn. Go out there and sell your first online course today.
Want to learn more about online courses? Check out this 7-step launch strategy that sold 394 online courses in two weeks.
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