Hey friends,

For years, I used to wonder what the best way was to make money online. I've come up with cool ideas on my own, and working at AstroLabs I've seen hundreds of different ideas that other people have come up with.

My conclusion is that people (myself included), overcomplicate things.

If you boil it down to its essence or first principles, there are only two main ways to make money online: products or services.

Products

A product is something that can be sold multiple times, that typically is independent of your time. Examples of selling products online are:

1) eCommerce: Selling physical products where you own the inventory (apparel, electronics etc.). This is straightforward, but needs you to think about how to store items, deliver them on your own etc.

2) Dropshipping eCommerce: Selling physical products where you don't own the inventory (apparel, electronics etc.) This is typically done where you partner with a supplier (through services like Ali Express) to ship items directly to customers (which usually results in lower margins).

3) Virtual (Digital) Products: Selling anything that can be downloaded or sent electronically. For example, eBooks, courses, graphics, videos etc. What's great about virtual products is they don't need you to worry about inventory and shipping, since it's all delivered online (an example of this is my Digital Marketing book).

4) SaaS (Software as a service): Next up is software that you charge people for. For example, sending Newsletters through Mailchimp, or Zoom for video calls. This is usually done on a recurring basis (charged monthly or yearly), so although it's probably the hardest on this list to scale, it's a very attractive way to make money online. It could also be done on a transaction basis, such as charging platform fees or a % (Patreon, Upwork etc.).

5) Digital Data / Attention: This involves selling data online. The most common approach is to sell personal data. For small scale companies, this usually involves selling business leads (for examples, what property sites do). For influencers, this could involve selling their audience by doing "shoutouts" for brands, which involves selling "attention". For larger companies, it could involve selling the option to target their users online (Facebook ads, Google ads etc.)

Services

A service is something that you offer that is tied to some kind of labor or manual effort. Examples of online service business are:

1) Time Based Services: The quickest way to make money online is to sell your time. If you're a writer, write for others. If you're a marketer help them market. If you like working out, help people get fit. The issue with this, is that it's hard to scale your time because you only have a certain number of hours in the day, so your earning potential will be capped. Unless of course you hire people to do the work for you.

2) Productized Services: This is where you take your service (your time), and try to make it "product like". The idea here is that you want to charge for your service, but instead of charging on a time basis, you charge for the finished product. For example, if you're a web developer you don't charge for billable hours, but instead charge for a finished website.

3) Drop servicing (hire people): Similar to dropshipping, except for services. The way this works is that you offer a service, but outsource the actual work to someone else. For example, you could create a company that gets customers in need of development work, and outsource the actual work to a freelancer you trust. This might seem like a novel thing, but it's actually just the very regular business practice of hiring people and using their labor as leverage (I told you people like to complicate things). The main difference between straight up hiring someone versus a drop-servicing model is drop-servicing usually involves freelancers working in other countries, so the risk is minimal (you don't need to pay a regular fixed salary).

Products vs Services

So which one is better, products or services? Even though there is no one right way, each one has its benefits. For someone working on their own, services are easier to get started with, but products have higher leveraged earning potential, since you aren't limited by your time.

Your Next Steps

Choose a product or service that you could sell online. Even if you’re working full-time, I think everyone can have a side hustle. Think about the different products or services you could sell and choose one to try to make your first $1 on (I found that getting past the barrier of making your first $1 online is the hardest part).

Further reading

• There are two articles that I always find myself coming back to when it comes to making money online:

1. The Stairstep Approach to Bootstrapping by Rob Walling

2. The ladders of wealth creation by Nathan Berry

Next Week

If you’re still unsure of what to sell, stay tuned for the next edition, where I’ll go over a few practical techniques I recommend to help you come up with ideas on your own!