Real estate. (Ok, not 100% passive, but what is?) You can buy a duplex for not much more than a single family house in many US cities and, thanks to the low interest rates for an owner-occupied mortgage, rent out half and live for free.
Unlike tech, you will not have a giant windfall with real estate; but also unlike tech, it's very easy to price your product, find customers, and figure out what your cashflow will be for years to come.
A word of caution: unless you have the personal skills to deal with tenants, do not make the mistake of thinking that real estate is passive income. Like any earning occupation, landlording takes attention to detail, the ability not to procrastinate, and people skills. Unlike most occupations, landlording will bring you into contact with some of the worst people the planet has to offer, under what has to be the worst possible set of circumstances. If you want to lose your faith in humanity, I encourage you to take up landlording.
There are easier ways to live rent-free, unless, as I say, you have the personal skills to ride herd on grown children or if you are lucky enough to own your property in an area where normal people rent, and you can find good tenants on a regular basis.
>Unlike most occupations, landlording will bring you into contact with some of the worst people the planet has to offer, under what has to be the worst possible set of circumstances.
I suggest rephrasing to
>Unlike most occupations, landlording may bring you into...
I've had a rental property now for many years. It's in an evolving, urban Boston neighborhood and the property generates ~$1000 more than the mortgage, taxes and insurance per month. I have 5 tenants who are all recent college grads. My agent did credit checks on all of the original tenants and many new ones have cycled through over the years. Aside from replacing a couple of appliances (which consisted of ordering them online and coordinating delivery with a tenant) I've had zero issues. In fact, the last 3 years, I've given each tenant $100 off of December's rent to let them know I like having them as tenants. I have about $80,000 out of pocket invested so without even considering the equity I'm building in the house, I'm getting around a 15% rate of return (granted at a higher tax rate that a capital gains...)
Nice touch offering the December rent break. I guess it's just like offering incentives to good employees to generate loyalty and keep them around for the longterm. I am sure there is great worth in offering this small incentive to a tenant you want to keep, even if you could be charging more to a new tenant. Aside from the cost and effort of finding a new tenant, knowing that you have a consistent, paying renter that will take care of your investment is ideal.
My parents have a small, older rental house that they charge less than market rate for, as they have never increased the rent for the current tenant who has lived there for several years. They have had renters trash the place before, and they know getting a little less from a good renter is a preferred scenario.
Charging a little less than market value is definitely a winning strategy if you can afford it - a tenant who feels like they're getting a good deal is going to be a better tenant.
On the other hand, interacting with landlords as a tenant has already made me lose my faith in humanity. For how much any landlord I've rented from has cared, it was pretty much passive income for them.
Or pay someone else to manage the property for you. They are not cheap but with the super low interest rates now (along with house purchase and rental markets) you can likely find some workable solutions this way. It isn't passive, but with a property manager it is much closer to passive.
My parents run a property management business and they generally charge $100 of rent after the first month. You have to have a pretty high mortgage or a pretty undesirable property (i.e. have to take low rent) for that to cut into your positive net; In other words, likely if it's a old property you can't get rid of, but unlikely if it's an investment property.
Yeah, I thought that, too. My property managers were even worse than my tenants, and I went through a couple of services that had been recommended to me by people I trusted.
I actually had a year and a half with zero income from a house. None.
Best prospect for a landlord I think is to set up establishment in a neighborhood near a good school and only rent to students or recent grads working in the area.
> I did a course on lifecycle emails for SaaS businesses recently. That did pretty well - a few hundred sales.
A more professional-looking video on training.kalzumeus.com would've probably helped your conversion rate quite a bit. And avoiding the use of your internet handle on the site would've kept it from sounding cheesy to those outside the HN community.
> The question remains unanswered whether a "more professional" video would not have turned out cheesy.
I don't see how it would have. The whole point of making it more professional would have been to make it less cheesy. If you fail to do that, then you've failed to make it "more professional".
> IMHO success proves Patrick right.
Patrick's success has primarily been in the written word. This is his first foray into selling video-based content, and I think he has quite a bit of work to do on his presentation. Like most nerds, he's quite awkward on camera, but it's nothing that can't be fixed with some elbow grease.
Of course people will cite his Business of Software talk as a counterexample, but that was highly rehearsed (something he mentioned on HN) and consequently felt polished (yet still a little awkward), but the video on training.kalzumeus.com doesn't feel that way. Moreover, having to heavily rehearse every presentation you give does not scale very well when you're creating a series of them to sell online.
Some things that could've been easily improved in the intro video include wearing a proper suit (or at least a collared shirt) instead of a red tracksuit, properly styling his hair, wearing contacts instead of glasses (due to the reflections on them), not wearing an enormous geeky headset, removing the audio "booms" that frequently occur in the video, not being in a 和室 (Japanese-style room) and dropping the super-tacky gimmick with the $100 bill.
Success doesn't prove anyone right, it just shows that the current strategy is good enough. Who knows if executing it differently wouldn't have double or tripled the success.
Actually, A/B tests prove him right. Or occasionally wrong! But that's the point of such testing.
He mentioned he has an A/B test going between video/no-video. I imagine that, if the video version wins, he could consider testing 2 different videos (time and expense permitting).
Regardless, A/B testing is not a panacea[0]. Is it a good technique? Sure, in many situations. But just like with anything else, you have to take it with a grain of salt.
I don't think that Coding Horror article is very good. It is too hand-wavey and drawing an analogy that is stretched a little too far, without giving it a sufficiently hard background.
I think what he is trying to say is that Phil didn't test the higher order interactions enough, i.e. he didn't check that the effect that some pair of action have when done together (and the effect of triples, etc.). This is very important to note, and a good point. (I think one should preferably run a fully crossed factorial experiment[0], so that every combination is tested.)
But it is just saying "don't do A/B testing wrong", which is obviously true. I think a lot of problems with A/B testing are caused by people who don't have much statistical knowledge missing some of the subtleties that comes with any experimental design.
(On that note, there are many articles[1] about why one needs to be careful using A/B testing, which do have the backing of statistics.)
Right. Deliver an outstanding product right from the beginning with your very best work. That's the strategy I use. A/B testing, while important, is often overstated.
The site encourages people to sign up for the free trial of Bingo Card Creator. Some of them will pay $29.95 to print more than 8 cards. Trial signup rates and conversion to purchase are both low but the volume is enormous.
And to add to what Patrick said, via his long tail SEO optimization strategies the site gets a spike of traffic (starting soon!) that actually bring in these BCC sales.
This might not be the kind of answer you're looking for, but the best way to truly passively increase your wealth is to take care of your personal finances (e.g. pay off your student loans, pay off your credit card balance, invest in a lifecycle fund, see if your employer offers a 401(k))
I personally really liked the book I Will Teach You To Be Rich -- it has a poor name but it's dense with incredibly practical advice particularly for people coming right out of college suddenly making an income.
I support the idea of paying off debt. 401k (investment groups) however, is essentially giving your money to a gambler, and having him play your hand. Bet on yourself. Always.
In regards to the 401k, I disagree. Unless your employer only offers really crappy funds it's in no way gambling.
First off, your employer match is essentially free money. It's foolish to ignore that. The tax benefits can also be significant. For instance, I contribute 25% of my pre-tax salary to my 401k. That works out to $1500 a month but because my taxable income is lowered my monthly net is only decreased by about $950. That's $550 a month into savings that I wouldn't have previously had due to taxes.
If you follow the investing philosophy of John C. Bogle, founder of Vanguard, you'll likely do just fine. Assuming you're young, you just split your 401k between four index funds: total bond market, total domestic stock market, total international stock market and real estate investment trusts (REITs). I do 20/45/25/10. Yes, in the short term you might take a big hit but in the long term (>20 years) this is historically shown to perform very well. As you get closer to retirement you increase the proportion of your portfolio in bonds so as to lower your risk.
Indeed. With a historical performance of 9% a year returns and a 100% employer match, you'd have to be pretty pessimistic about the future of the economy to not have a 401k. (Though one could argue that taxes will be higher in the future, and so paying taxes now might be better than paying taxes when you take the distribution.)
You don't even have to manage the split yourself, there are plenty of mutual funds that target certain retirement year changes and rebalance the portfolio as appropriate (basically: less risky investments as your retirement date nears). There are fees for this, of course, but for my fund they amount to $90 per 10 years per $10,000 invested. I think that's worth it if you don't want to actively manage your retirement portfolio.
The point of 401k is that you compound the growth on the deferred tax money, and then pay much less /present value/ tax once you retire.
Index funds and high yield bond funds give you low overhead with almost no "gambling" element.
Drawbacks: Limited maximum contribution, very long deferred gratification, vulnerable to future policy changes.
Exactly. I keep all of my 401k in index funds, same with my Roth IRA. I have other non-tax-advantaged accounts I use to investing in individual stocks.
If your employer matches, you are literally earning 100% on your investment immediately. Few other investments can promise the hope of that, let a lone deliver.
If your employer doesn't match, then it can be a bit of a gamble. But you have the option to buy the market (index funds, etc) instead of a particular stock/fund, so you can bet on the entire economy.
And remember that both cases use pre-tax dollars, costing you less for the same investment amount.
This is long, so I apologize in advance, bare with me.
A 401k is NOT a safe investment. People constantly mistake prior history to future events yet there is no causality here. In fact, with QE3 in the wild, the value of your employer matched dollar continues to degrade.
The question I ask myself is "What will my dollars be worth at the age of retirement?" and the scenarios I paint continually are ones where I do not like the outcome, should I continue down a traditional 401k path.
@Saryant and @wikwocket's advice is reasonable, if the current model is sustainable. I have personally decided that it is not. This is just me. No hard feelings guys/gals. I just don't trust someone who manages my account making a gain in the good times, but suffering no losses in the bad times.
@hartleybrody
I really really love practical advice. And so you are in luck, because I have a practical "betting on myself" story.
When I moved to Bend, Oregon it was 2005, I was 24, and it was shortly after my brother had passed away. I was pretty emotional and wasn't in a rational state at the time.
So when friends, family, every-freakin-person was saying the following mantra.
"Buy now or be priced out forever"
And with this chant ringing in my ears, I went to a mortgage broker. This broker proceeded to approve me for up to 415k dollar loan, in Central Oregon, with my wage of 45k annually. (If you have been following the mortgage crisis this isn't the worst atrocity)
And sitting there with my young wife, wanting something solid to cling to, a small mechanism clicked in my brain, despite the emotion. It didn't feel right. So we walked away. I said to my wife
"I'll perform some research and we'll come back."
And so what did I do? I did what any solid nerd would do and went out to gather data. How? I learned all about scraping (screen scraping, web crawling, etc) from my new buddy Matthew Turland (plug his book not mine, which had not been written at the time but I'd like to think my quesitons helpd him realize his expertise. Yes it's all about me ;-) http://www.phparch.com/books/phparchitects-guide-to-web-scra...)
Using this knowledge I scraped and regexed the county records (http://www.deschutes.org/Assessors-Office/DIAL-Search-Form.a...) and do you know what I learned? I saw that on average the annual increase in real estate prices in Central Oregon hovered around 3%. Yet by the time 2005 rolled around, 50% YoY increases were the norm.
"Whoa" I thought channeling a Matrix style Keanu. "This is Not sustainable"
And so this is the beginning of "betting on myself". By analyzing the data, I knew that this growth was not going to last, so I convinced my wife (bless her for trusting me) that housing was a malinvestment, even though ALL our friends were arguing our stupidity.
It was almost like the biblical story of Noah, where everyone thinks you are crazy for saying a flood is coming. With everyone thinking you are crazy, you eventually just shut up.
Then the RE market stalled. This were slowing down, but no one was putting it together.
Then Lehman Brothers Crashed. And the World was like "WTF Lehman? Alright this sucks but the losses are limited."
And here is where I bet on myself again. I poured half our savings into GOLD.
OMG!
OMG!!
OMG!!!
This really is gambling. But the data and the research I had, helped me see that there was this crazy opportunity. Buying into everyone's fear.
One thing I'd like to point out, is that I consulted with my wife. I told her my thesis and she concluded.
"Well you were right about housing, I'm going to trust you. If we lose the money, we will move on."
The last bit was really important. I only risked what WE were willing to lose.
Ok. Where was I? Oh yeah...
So I buy gold, then I start tracking foreclosures. But I get really bored of tracking them by hand. So I write this sweet bot that scrapes the county records and converts the PDF documents to readable text using tesseract (<== so much badassness, I love tesseract)
Finally, last year, I reasoned that it was decent enough time to buy (Rent VS Buy argument and data to support it given our local environment) and cashed out our gold and bought RE.
Soooooooo....
Quite the rant, I realize. But hopefully it articulates the "betting on oneself" philosophy that I've taken.
It may not pan out, I'm ok with that. I like my odds better than the 401k folks.
One thing that sets me apart is that I've learned a crap pile about a ton of different topics I never knew anything about. (Scraping, Economics, etc) and am leveraging what I consider expertise into hopefully long term gains.
You reached the correct conclusions empirically, but you could have saved a lot of time and effort by having the philosophy that would lead you to them. Or more specifically, an understanding of economics. I don't mean this to sound smug, or anything like that, I'm just saying that I went thru the same process you did- only I did it in 1998! and then because I didn't believe it, again in 2001. By 2001 I knew there would be a housing bubble, even though there were (at that time) no signs of one. Hell, 911 was the news at that time.
Some pointers to help you be able to make these kinds of predictions (and thus maybe look for better data for more interesting and profitable investments)--
The book "The creature from Jekyll Island" by G. Edward Griffen (?) is the history of money in america, the federal reserve, and the "bailout cycle" that happens over and over every 20 years. (And people act outraged at the "bailouts" in 2008, as if it hasn't happened dozens of times before.)
And "economics in one lesson" by henry hazlitt-- you can find a free copy of this out of copyright book online if you google around. A great overview of economics, starting from the premise of the broken window fallacy and how it illustrates why so many efforts that sound plausible totally fail (like keeping interest rates low and making banks loan money to people who can't repay - the Clinton and Bush policies that led to the housing bubble.)
Also the topical articles at http://mises.org are great and that site also has around 900 free economics books you can download.
I went the options-spreads on canadian junior mining companies route, and I got out of the market in the summer of 2007 when I felt the crash was imminent. (I was a year early, but for that kind of deal you don't worry about not nailing the absolute top!)
Spreads might be something good for you too-- "Options as a strategic investment", by McMillan is the bible. (Using spreads I get better returns at much less risk than people who buy stocks directly.)
Economics is a lot like programming- the basics are easy but there's no end to what you can learn, and it gives you such great power-- especially when the rest of the world has as much understanding of the science as the average person does of writing software-- essentially none. And, even better, the people who create economic opportunity for you telegraph what they are going to do years in advance- they campaign on it, even!
Thanks for the great suggestions Nirvana! I was only seventeen in 1998, so I was kind of hung up on teen spirit, girls, and rock'n roll.
> Or more specifically, an understanding of economics.
You are very correct. I had no frickin clue about economics. I kinda feel like you have to have the experience and wisdom to judge books. I didn't have that at the time. I needed to fill that gap in. So although it may appear I wasted a lot of time, I feel that I have a really solid grasp on many things that were mysteries to me before. And I can't really put a price on what that is personally worth to me.
> I went the options-spreads on canadian junior mining companies route, and I got out of the market in the summer of 2007 when I felt the crash was imminent. (I was a year early, but for that kind of deal you don't worry about not nailing the absolute top!)
Heh, that is awesome! Nicely done.
One of the things my data has also brought me is friendship. Usually from people many many years my senior. One of them who has really helped me in life and I consider a mentor, also pulled this exact same thing. Getting out in 2007. I was always impressed by that.
I didn't mean to imply you wasted any time- you exhibit the one trait that I find exceedingly valuable: the ability to think for yourself. This is way too rare. And so I wanted to help you with some things that you might find useful. (I'd also recommend Atlas Shrugged, there's a reason it's a popular book, and if it's wrong, there's no harm in reading it, right?)
Economics in One Lesson is so cogent that it will, I think, let you absorb a great deal. And then the Creature from Jekyll Island, which is really a history book that reads like a thriller, will let you see how the departure from economics has had an effect on the country-- an effect the most recent version of which you correctly identified. (Which was impressive, frankly, can't tell you how many times people argued with me about house prices between 1998-2007. Sadly, going back to them in 2008-2010 and saying "See, I was telling you this!" didn't earn any kudos for my having called it correctly... I think their worldview is plastic and easily gets remapped by TV news.)
Anyway, the departure from economics is for very sound reasons-- it profits the people who are peddling the bad stuff. But that also means we can profit from it too.
Anyway, I just wanted to give you the books I thought would be most effective for you. I read a lot of investment books when I needed to learn how to invest (Vick's books on Warren Buffett I found particularly interesting-- now I calculate what my return will be before I make the investment. People assume that buying stocks is really risky, but the reality is risk is quantifiable. I can buy a stock and know that I will be able to sell it for a specific price at a specific time-- you can calculate this!)
Anyway, good luck! I admire your datamining-- there's a lot of opportunity for you out there if you keep that up.
Betting on yourself is ALSO a gamble. Not because of any trait of any particular person, but because things fail sometimes.
IMO, the best approach is to spread your bets. Obviously getting rid of debt is the easiest first step, and 401k plans are less-than-ideal because of the restricted investment options, but you can minimize the gambler's influence by choosing index funds (if you have the option).
The stock market itself is a gamble, of course, but so is just about everything else, so minimizing your exposure to any one risk is the best you can do. I've been in dividend stocks for years and making $500/month or so with minimal exposure.
Betting on yourself isn't always the safest. But I'd be curious to know what you meant by betting on yourself. Like investing part of your savings into a side project?
I'd have to say my two eCommerce businesses. They took a ton of time to setup and market initially, but now they generate a full-time income as I have a team in place to manage operations.
I love to work on them and often do, but I'll frequently take weeks off at a time to travel and everything continues to run smoothly. The entire business is based on the drop shipping model, so I don't have to stock any inventory and can run the business from anywhere. Plus, the initial capital outlay was just $1,500 so I didn't have to take on any risk.
For anyone interested, I blog about running my two businesses and eCommerce in general at:
In California, selling cannibas to a co-op you belong to as a patient could be a nice supplemental income. An Aerogrow makes it easy, and with six legal plants, you can grow at least 1.5 pounds every 90 days. I think it works out that you can make $10-15k/year for not much work.
That is not passive at all. You have to change the res every two weeks, plus be on the look out for any signs of stress (bugs, nutrients, and environment).
Then you have to process it, which a pound can be trimmed by a professional in about 10 hours. BTW you need to supervise them or do it yourself.
Then you get the hassle of dealing with the clubs consignment drama... Not to mention the stress of worrying about being robbed throughout the whole cycle.
I'd say it's probably the most unique idea in this thread, given that most HNers likely wouldn't normally think of dealing/selling drugs as being particularly creative.
I am glad this (and similar) questions gets asked. As a community of makers, we can get very good at making things but just making things is not enough. We need to prove to our customers that we created something of value and then charge them for that value.
Two years ago, when we started Steamclock, we spent our first two months building a niche iPhone app. We've done point releases but not added much, yet today it pays our rent. http://www.steamclocksw.com/weddingdj/
We haven't done any serious research or marketing for it. We simply focused down and built the highest quality app we could build, and it worked.
You're practically giving that app away at $5. Wedding-related businesses are extremely high margin, simply because it's super easy to rip people off when they're really happy (same applies for funerals, except people are too sad to care in that case).
You could probably sell this for 5x as much and still make more money - the bride will want everything to be perfect for the wedding and will be willing to spend whatever it takes.
Intuitively, I'd agree. When we release the upcoming major version (iPad support, advanced queueing, etc) I'd like to try $10.
On the other hand, after 1.5 years at $5 we've been trying $2, and revenue has been consistently higher since the change. I suspect this is because it drove us into findable range in the "Top Paid Music" chart, but with no analytics it's frustratingly hard to prove.
> I suspect this is because it drove us into findable range in the "Top Paid Music" chart, but with no analytics it's frustratingly hard to prove.
This is something I hadn't fully considered. One of the biggest expenses in running a wedding-related business is advertising. Unlike other purchases, wedding-related stuff is only purchased once in a lifetime (well, twice or thrice these days in America, but you get the idea).
Thus, brides and grooms rely on the opinions and advice of friends - word-of-mouth promotion is key. But ultimately, heavy advertising is the only way to reliably get information about your product out to the general public. And the App Store is a great form of free advertising (well, not counting the cut Apple takes), especially if you make it into one of the "Top" lists.
Sorry for such a naive question, but is it possible to do A/B testing on the Apple App Store? I don't know what their turnaround time is for changes, but do you just change the price, wait a while, change back, wait a while, etc., or do you do something else?
The price updates within a day, and you get sales reports daily with a delay of a few hours, and a mix of old and new price sales on the first day. So it's possible, but the feedback loop of the charts means that this kind of measurement is hard to analyze. If you do a test that fares poorly, the next test will probably be affected by that.
Actually, I've been considering how to do this for my next app.
Not split testing the sale price though, it will be free. (It's just too hard to get people to buy an app outright) I want to split test in-app purchases. I think this should be fairly straightforward to implement. The only downside is in the app store 2 different items would show as top in-app purchases with different prices. People might be upset about that, but I doubt anyone would notice.
Thought: in-app "pro" version to take advantage of the fact that people pay $$$ for wedding stuff? Keeps you in the top music list because you're cheap, but some of the more advanced features might be worth a premium.
(Note: I had "pro" as much as the next version, but seems better than a multi-hundred dollar DJ)
We're considering entering the wedding business with an app. Would your wife consider telling us what she thinks of it? If yes, let me know (see my profile for email), it would be great!
But a DJ is more than the money; they control the tempo/crowd for the other things like garter toss, cake, parent/child dances.
I could ask why a developer in California is soo much more than a developer overseas - and they answer would also be they are kind of a like, but you get what you pay for.
People are willing to pay a lot for wedding-related /services/. A lot of people that want to save money on a wedding would buy this because they DON'T want to pay for a wedding planner who will ensure that the music is 100% perfect.
If you price this at $25, you'll lose that group of people that were looking to save money, (you could argue that at $25 it's still cheaper than a wedding planner).
Not every bride is foolish enough to think that everything will be perfect. The more money you have the more 'perfect' it can be. Those on a budget will opt for a $5 DJ that can get them as close to perfect as their money will allow.
> you could argue that at $25 it's still cheaper than a wedding planner
That's exactly my point, when your competition isn't even anywhere in the neighborhood, you might as well raise your prices. A bride-to-be isn't going to see a $25 wedding DJ app as being expensive; she's going to see it as being 1/10th of what an actual wedding DJ would cause. You said people are only willing to pay for wedding-related services - well, this is replacing a wedding-related service, and you have to consider the competition when determining pricing.
And I don't think it's only wedding-related services that cost a lot. There are plenty of purchases associated with weddings (clothing, food, etc.) that are way overpriced.
> Not every bride is foolish enough to think that everything will be perfect.
They don't all have to be that foolish, there just has to be a big enough group of them that you have a solid customer base. In this situation, I think that's definitely the case.
Just test it, create three different apps and see which one makes the most money (you could skin them differently or perhaps you might just need to have a different icon).. of course there are other issues such as a reduction in virality (if you depend on it) however you will be in a much better position to estimate once you actually know how much people are willing to pay.
Is there any use of iTunes affiliates in the app? Like you have a 'beautiful wedding songs' chart & then you profit from any songs they download because of your app?
It would also be good to have paid for content - like pre-chosen track listings, affiliate sales would be high for this too!
True, but at $5 (that's what it is now right?) you also get more people that will give it a try (before the wedding) to see if it works well for them. They may think $5 lost if it turns out to be shitty is just "too bad", but $25 may be a tad bigger hurdle for just giving something a quick tryout.
Come on, lets be serious. Hardly anyone is going to pay $25 for an app they will use only once. And it's an app. Most people flinch at any price over $2.99.
Pricing it at $25 would be a disaster. You can bet the barn on that.
Dude, it's a wedding. I don't understand why people pay thousands upon thousands of dollars for everything related to a wedding they will have only once, but the fact is they do.
I suppose this is business common sense, but, man, it sounds awful from a moral perspective when you put it this way... Really, praying on vulnerable. Just my very subjective opinion.
Yep, baby products are another good example. Initially, the parents are happy, but soon enough they become stressed out, for the long haul. Both emotions play in the retailers' favor.
There was a controversy a while back about how Target figured out a teenage girl was pregnant before her dad did (based on her purchases) and started sending her ads for baby products. The reason why they did this is because people don't shop around for the best deals on everyday items, not really. People think they're getting the best deal, but they're actually trapped in their habits.
One of the few times when these habits are reshaped is when a baby is born, because newfound parents suddenly start buying a lot of new stuff, but don't have a lot of free time to research the options. By detecting customers who will become parents in the near future and sending them specially targeted advertising/discounts ahead of time for new products that they'll need, you can snag them as customers for years to come.
>>We haven't done any serious research or marketing for it.
It could be a personal taste question, but why not any marketing? With enough traction to be paying rent based solely off word-of-mouth and organic, you certainly seem to be creating value for people. There are easy/free/cheap ways to market apps, definitely at least some amount of money being left on the table.
Thanks! Icons are huge on the App Store, an excellent one is a must have.
We've done some experimenting with marketing, but couldn't figure out any strategy that could convert a bride or groom for $3.50 (the amount we net after Apple's cut). We tried and abandoned Google ads, Facebook ads, and advertising on wedding blogs. Virtually all app-marketing services focus on free apps, and most of them are grey hat in some way.
For a general-purpose app (like our upcoming Party Monster, a more general music app) you don't need to be targeted, but for a wedding app you need to target engaged people, which is expensive!
You may try to contact zankyou or some other website that manage wedding list. I used them for my wedding and they also promote other products. I think they might be interested into your product. Their users are the perfect fit for you : engaged and with an inclination for technology.
Something specific for the candle lighting ceremony, perhaps? Usually there's a snippet of a song played for each candle - something themed to the party lighting the candle, played just long enough to let them make their way to the front of the room. For this I could see a 'fadeout after X seconds' setting or a 'fadeout when I press a button' setting. Since the snippets are short, I could also see people wanting to cue up a spot in the middle of a track - the chorus, not the opening.
Generally does very well. Way better than other stuff I've tried, like SEO/Marketing etc. The only problems I have is using a crap design, so it pays to know what the audience really wants before I try selling it to them.
I sell posters of a vim cheat sheet I designed (see my profile for link). I ship my inventory to a 3rd-party fulfillment provider who plugs in to Shopify with a custom app, so all I have to do is re-print when the inventory runs out and handle the occasional customer service problem. Digital downloads are a total freebie.
Neat. I've thought of doing things like this before. Do you mind sharing how many figures you make on this? How do you handle the actual printing? Is that also outsourced?
It hit the front page of "Featured Technology" projects and lived there for almost the entire funding run.
I used UPrinting for the printing, who I'm quite happy with. It cost less than a thousand dollars to do the initial run of 500 posters.
Initially, my approach to shipping was to buy 500 poster tubes from Uline (no relation to UPrinting) and ship them myself. This was an unmitigated disaster; a cataclysm; a miserable shit-show of Brobdingnagian proportions. There is simply not sufficient support for the "hobbyist shipper"; USPS doesn't know what to do with you, UPS and Fedex charge too much (especially for international shipping), and the label-printing tools are across-the-board some of the worst software I've ever worked with. After months of Kafkaesque hijinks with USPS, I gave up and shipped my inventory to Fulfillrite, a third-party fulfillment provider. Thank God for those guys.
I haven't run the numbers to determine my exact profit & loss, but I make more than just beer money. I don't know if I'll ever sell enough to come even close to what the Kickstarter originally made, but the web store has been bringing in around $750/mo in revenue, which translates to something in the range of $350 - $500 of profit.
I tend to make money to the extent that more eyeballs hit the site. Last month, someone mentioned the poster in passing in the comment of a blog I'd never heard of, and I made $300 in six hours. I have no idea how to advertise, though, so that kind of thing is usually just lucky happenstance for me.
I'll probably do another couple of poster projects (bash, emacs, etc.); if they are even nearly as successful as this one, I might eventually be able to live exclusively off the profits! An exciting prospect, but one that is quite far off.
Feel free to drop me a line if you have any other questions. I really ought to condense this stuff into a blog post some time.
This is probably not your ordinary type of passive income, but it's income for work I would otherwise be doing anyway, so hopefully it counts.
I run Correlated (http://www.correlated.org), a site that publishes one surprising correlation a day, using data generated by readers.
It was never really intended to be a money-making project, although I did give display ads and affiliate links a try, with very little success.
And then ... a book deal fell into my lap.
I had been shopping around a book proposal for "Experiments on Babies" (http://www.experimentsonbabies.com), and one of the publishers that was interested in that book also happened to note that I was the creator of Correlated, and asked if I would be interested in a separate deal to turn Correlated into a book.
I got a very nice advance for the two book deals, and in the case of Correlated, the writing involved is, for the most part, what I'd be doing anyway, deal or no deal.
Two friends and I started http://repeaterstore.com straight out of college. Within a year it was profitable, and within 3 it was doing $3 million in revenue (and about a 15% profit margin). It's pretty much stabilized since then, and we hired a manager to monitor the operation. Most stock is shipped through drop shoppers, we just have 2 customer support people to handle phone calls and emails. Forthe last 2 years we've been working on new, more interesting startups - but having a stable source of income has been incredibly valuable in letting us bootstrap until we could raise funds from VCs. Niche eCommerce can be awesome.
I really like building developer tools and kind of miss doing it full time. I built a tool for testing/playing with REST services last year and sell it on the OS X app store:
I'm not getting rich off it, but it usually brings in a few hundred bucks per month and I like hearing from fellow developers who benefit from using it.
That's pretty cool, actually. I would never have thought of selling an app for that, as most everybody I know uses Advanced REST Client ( https://chrome.google.com/webstore/detail/advanced-rest-clie... ). It must be really neat to know people are choosing to pay you for your product over using a similar free app.
The browser-based ones have improved quite a bit recently. I use Advanced REST Client whenever I'm on a Windows machine - it is quite good.
There are a few features that my tool has that make it worth a few bucks for some people, I think, most notably being able to save requests and share them with other members of your team. I've heard from a few folks who have them checked into source control as part of manual testing scripts (there are some interesting opportunities to automate this kind of testing, too, but I haven't had time to focus on it).
And I'm releasing a feature soon that will let you paste in cURL commands and turn them into requests, which is handy when you're working with a webservice that has examples of requests given in the form of cURL commands (which is a lot of them).
Even if you're competing against free apps that match and even exceed what you can offer in some areas (which is frankly going to be more and more common), you can still find little features that might be fairly simple but add a ton of value for a certain subset of people.
It was just something I needed at the time - I was doing a lot with REST services at the time and thought a simple tool for interacting with them would be handy.
Our highest selling app (a hiking app) makes 15-30K/month, depending on the season. Our other navigation apps don't make quite as much yet, but some are getting there. You can figure out from my profile which it is, but I didn't want to name it in the thread and have this be something that turned up in searches.
I wouldn't call it totally passive, but if we ignored it, it wouldn't stop making money. We have consistently grown the sales over the last couple of years, and we are about to introduce a premium in-app purchase.
I have always thought making iPhone apps was a good business, despite what you hear on this forum.
Congratulation, good work! Anyway, the question was about passive income...I suppose you have to do a bit of marketing, user support, thinking about new features, etc...isn't it then just a business?
Perhaps, though it seems like a lot of these responses fall in that category.
I'll say this - I used to work on this app day and night, and now I try and just do the part I enjoy the most, and leave most of it to expert developers and friendly support people. My focus is now on growing the platform, business development, and design work.
We pay for use of some map servers, and use free servers. If you have GIS server skills and soe capital, you can tile and serve the maps yourself... Lots of good free data out there.
Real estate - I used to own two flats, and get $200-$300 from each one of them. I recently sold one though - I think I can make a better use of the money by other means.
iPhone/iPad apps - I did two or three successful apps, right now they bring in $20-$40 daily. The last time I touched/promoted any one of them was last December, and the sales are quite steady now.
I bought some S.DICE shares ( http://polimedia.us/bitcoin/mpex.php?mpsic=S.DICE ) @0.0032, spent 800 BTC on them I think. Got ~20BTC from dividends first month, ~5BTC dividends the second. It's very risky, but there is some potential for growth there.
All in all I get ~1200 USD of passive income which would be considered an average pay in Poland. I've got a startup on top of that which brings a lot more though.
I make (well, past-tense at the moment) almost $2k/month on a vBulletin play-by-post gaming forum I started back in 2007. One single adsense banner below the navbar.
I actually burned out within 6 months of trying to bootstrap the fledgling forum with fake activity, clever backlinks, and entertaining the trickle of registrants.
Burned out enough to take a a break for a while. Came back months later and it was a bustling forum of activity. Apparently I'd just reached that critical mass necessary for the community to be autonomous (able to entertain itself and cajole newbies to stay) before I took that break. Nowadays, I do very little beyond pay the server bill. It's staggering the amount of work volunteers (moderators) will put into maintaining a community and I'm grateful.
Recently had adsense disabled on my website after some automated process decided my website was "mature/adult-themed". The automated email cited a post in our forum's off-topic spammy section where some user copy and pasted the phrase "sexual intercourse" over and over again in Mandarin. Just some non-Mandarin-speaking teenagers being silly for a moment. Now I'm working on getting adsense reactivated.
As well as the risk of dependence on a single revenue stream subject to being shut off by automated algorithms flagging your site based on UGC from teenagers.
Airbnb. High value customers and very little overhead on my part. Not totally passive, I guess, but takes up very little time and makes us a decent bit of money on the side.
Depends on your location. Do an airbnb search in your area to get an idea. I just made up a price for mine, and when I was getting tons of requests for it, raised the prices to slow them to a manageable rate. Living in SF doesn't hurt.
In SF you could easily rent out a spare room in a 2br apartment for $65-120 per night depending on the quality. I typically do 10 days a month at $100 per night. Sometimes I hire a cleaner, and buy some wine/snacks/breakfast for guests but it's been very easy and I love doing it. Disclaimer: I work for Airbnb.
Not 100% passive, but fantasy sports has been a nice side income for me this year. I used to play a lot for almost nothing, but then found daily fantasy games (pick a new team every game day, play against other people) and have made a decent return on my investment.
I play on fanduel.com almost exclusively. If you have any questions or want some help getting started, send me an email (in profile). My referral link if you're so inclined: http://www.fanduel.com/?invitedby=yudarvish&cnl=da
I'm about to write a book on precisely this topic. I have been looking hard at addressing this issue over the past 10 years so that I can focus on what's important (Startups!). And I believe that I have finally found the best passive income source, given the limitations that people like ourselves are working with.
I'm still in the process of experimenting with my method to see how far I can take it, but the basics of it work already.
A lot of what people define as "passive income" is questionable. Most, if not all, passive income investment strategies require you to hold down a job, or other income, while financing assets that some day, HOPEFULLY, will be paid off enough that you don't have to work ever again.
Most of those plans take too long for my satisfaction. There are other means and methods if you learn and apply yourself. My book will hopefully detail and compare my method with a majority of others.
The obvious ones to look at, if you can invest time and/or money -
All of them have varying degrees of learning curve and time commitment to make happen. Few people will tell you how much commitment you need to make, they just focus on dangling the carrot.
I always question people who write books, produce DVDs, hold seminars or sell any kind of knowledge concerning how to get rich or make extra money.
If you or any of these people are so good and know all these 'secrets' to success and money - Why don't you just get rich off of it and retire? why would you let everyone know you secrets? Won't this just crowd your space? Why do you need to sell this product to make money? Some of you claim that you just want to give back or help others and you have such success, then why are you charging me $20-$500+ ?
So I am always skeptical. I think that this is generally snake oil.
It's good to be skeptical. I have seen people get fleeced by get rich quick schemes, and have concentrated on not being one of those victims.
Just to be clear - the strategy I'm proposing is NOT a get rich quick scheme. It's "create a passive income stream", with the focus on "passive". The definition of passive income is simply "I don't have to work for this money."
There are several reasons why I'm writing a book. 1. because it's not a simple strategy - it requires explanation and details. 2. I know that a lot of people here would be looking for the same solution that I have found, and they shouldn't have to go through 10 years of exploration and experimentation to find it, like I did. 3. My knowledge and time is worth money. People who recognise that are willing to pay money to access it.
But the key reason why someone like yourself might pay someone like me money to learn from my book is the same reason that I have done the same for others. Without paying for that knowledge, I would not have this opportunity to earn passive income.
I used to question most of those people too (and still do), but someone explained it fairly well in response to why patio11 did this with his drip marketing class: it's simply a scale out strategy. Given the available time an expert has, one could make $X as one person just doing it; with consulting and teaching others, you might reach 5 people in a year; but by turning that learning into intellectual property that can be distributed (as a class, a video, a book) you might be able to reach 100x the people.
That said, there are certainly gurus who are merely selling hope, often because the easy money has been made and they can wind down what they've learned because the edge no longer exists.
You know what I can't figure out though? Why is Mark Cuban shooting a commercial to pimp lame shoes?
Facebook was definitely my biggest earner until they decided to crack down on everything at the end of last year and basically screwed everyone over.
It's the same deal for SEO, used to be a easy way to promote Adsense, CPA offers and what not, but the penguin change just makes it harder and harder to rank for keywords.
2012 has been definitely a slow year for Internet marketing, the worst I've faced since I started in 2006.
The Mac App Store. Consistent sales of my $8 app EdgeCase and the $3 Reddit Notifier. Plus the more expensive One-Hand Keyboard.
In my experience it's much easier to price higher on the Mac App Store compared to iOS. Especially when you're selling a constantly-running notifier/utility. Feels more worth it when the app is passively used every time you use your Mac, as opposed to whenever you happen to find and use the random app on your 3rd home screen in iOS.
Bunker is my SaaS solution which I market to freelancers and consultants who are looking for a complete solution for their small business (from creating quotes and proposals over project management and time-tracking to invoicing and payments).
Most other services specialize on a subset of what's needed (e.g. they're only doing invoicing, or only time-tracking, or only project management) and you have to go shopping for multiple solutions (and cross fingers that all of them integrate well with each other!). With Bunker my focus is on providing a complete, well-integrated experience.
So you could say my niche is "covering multiple niches" ;-)
I'd say that Bunker provides me passive income because my support burden is negligible and my churn-rate less then my conversion-rate. So if I wanted to I could go completely passive, but I'm committed to improve the app further and grow it.
Compared to my book, which fizzles out when I'm not actively marketing it, building a B2B subscription product is the best, most turnkey income source I've ever had.
Looks great. But is this passive income? It looks like you've invested a lot to get this off the ground, correct? How much time do you spend on this, let's say per week?
Passive income generally means that hours spent don't directly translate to dollars. All passive income solutions (that I know of) require some initial investment. Maybe "time-scalable income" would be a better term?
I understand that. But if you spend 80 hours per week on it, is it still "passive" or do you simply have two jobs?
To me the idea of "passive" income is that you might spend a certain amount upfront but after that initial push it doesn't require a lot of attention, i.e. passive.
Well if he's spending that much time on it, then yeah I'd agree, not passive. In the interest of naming arbitrary cutoff points I'd call anything more than 10 hours a week not passive.
Brilliant. What was your major set back from day 0 till now and how did you overcome it? I am asking you because I need some inspiration here. When I usually hit couple of set backs I tend to demoralize and give up.
Content marketing mostly, and over delivering awesome, awesome support that gets customers to refer others.
You can also do really well by just optimizing the hell out of the visitors/expired trials you already have. SO MUCH EASIER than attracting more eyeballs.
Doesn't all of the above take this out of the realm of "passive"? Or are you able to magically get all of that done in such a short time that you consider it negligible?
I spend about 2 hours a week total, so right - it's not totally passive... But I'm at the point now where I could outsource first tier support and maybe get away with no weekly involvement.
But I want more growth, so I'm still actively working on promoting Planscope.
Good timing with this thread. My attempt is with making iOS games. Trying to mix pleasure and profit. First attempt is http://clumsyandthestars.com/. Working on a second one now...
Good luck! I'm trying the same thing myself with http://yata.ca. It's more of a party game played with the iOS device, and thought the interactivity with people in the same room would add to the fun. Hope all's well with the second one!
I don't understand that site. Is it just the table with the teams on the right? No links, nothing? Or am I missing some plugin? Really amazed that a page like that could attract any useful traffic.
I guess people are lured onto the site by your meta description and then, searching for links, click on the ads. Evil!
I started a site 13 years ago and it is one of the largest sites in it's niche right now. Very very popular. I do work on it many hours a week (can range from 0 to 100 hours/week) but I don't really have to. I just love working on it, adding new features, etc. I would definitely call the work passive or hobbyist - even though sometimes I'm up till 4 in the morning working on X new feature.
Income is in the early 5 digits per month range (USD). Traffic dropped a bit from August to September so I've been working more on it lately :)
You're right. And maybe average number of hours per month is more appropriate. Or lets, say average number of hours per week. Usually the top end goes to 100 when I'm working on some new feature and am completely obsessed with it. However, following that there is definitely burn-out which causes me to go down to the 0-20 per week range.
Also, considering that I've been working on this since high school, I used to have a lot more time for it back then ;)
In a regular month I probably average around 20 hours per week. However, during a particularly overzealous month I may go to 35 or higher. I think at 20 it still falls under passive income.
Just to give you an idea of how my commitment varies. A year ago I had a full time job and I would sometimes work only 5-10 hours per week on it. Also, I completely neglected it in my first year of college (yet it paid for my college) and by my 3rd year there were enough problems that I had to again spend considerable time bringing it up to spec :)
I'd love to call it a hobby - because that's how I feel about it - but when 24 hours of downtime can cause more than a few hundred dollars of losses - it becomes tough not to take things a bit more seriously =/
Well the way you talk about it, it sounds like you are conflicted in how to describe it. Your word choice seems to acknowledge that its a job to an extent, while the intentions behind it are insistent that its your hobby.
For a long time I refused to sign up for Amazon Prime, and I'd order things that cost $19 or $23, and I'd hunt around for something that would bring in that additional $6 or $3 to meet the minimum price for free Super Saver Shipping (USD $25). I got tired of hunting around for that, so I built http://finishmyorder.com/.
I get like $6/mo in affiliate fees, but I don't really advertise it so I'm lucky I get even that.
Very low ones, the first one is selling a set of shutterstock pictures, aprox 100 bucks a month. And the lowest one, 30-40 bucks a month with adsense clicks. Basically a list of powerpoint presenations (chain letters) for the spanish speaking. I spend 30 min a week. I get the PPS files, convert a couple of them to html and put them on a wordpress blog. edit: forgot to put a url http://powerpointz.com
It's effectively an online desktop publishing system aimed at making it easy for HR teams to deliver TRS (Total Reward Statements) in 10% of the time, at 10% of the cost, and with fewer errors.
It took a couple years to write, so I wouldn't say it was an easy investment, but it was fun to write. These days it ticks over and I don't spend much time on it at all.
I was making a few thousand dollars a month from a coupon site. The Panda update completely knocked me out of the rankings for the past 4 months, but I've been slowly climbing back up on my top keywords. It was literally no work whatsoever - I wrote a script to aggregate coupons automagically and outsourced SEO. Turns out the latter wound up killing me. (If you're an SEO master, please reach out to me on Twitter) :)
How timely. I'm actually starting a challenge for myself to see if I can bootstrap something to at least $5,000 in revenue a month. I've tried and failed many times, but this time, I'm going to force myself to only live off what I can make with this product.
I have two sites that I built 3 years ago that still rank well for a few valuable keywords. Each site has hundreds of pages of content but one page on each site is number 1 on Google for keywords that pay $5-10 per click. Not a lot of traffic, but enough for a few hundred a month from adsense and affiliate links.
I have built http://search-logs.com back in 2006 in a couple of days and ad revenue still lets me work on interesting projects, not worrying about getting a "real" job.
I make about $80-100 per month in Adsense from a 'scratch your own itch' website I made to help calculate battle outcomes in a game. Did it over a weekend. I don't actually play the game anymore, was taking up too much of my life. Working on a new version though as the code is a shambles and it isn't responsive and most visitors come from iOS, I didn't know much about JavaScript or responsive design at the time I wrote it so a horror show underneath. http://battlecalc.net
It makes ~2 dollars a day from adsense. Breadcrumbs, but I haven't spend any time on it for like half a year. Amazon affiliate adds almost nothing to this. Being in the Chrome Webstore seems to have helped a lot in page visits.
I still wonder from time to time if I should put some effort in upping this a bit. But my time is limited and the app doesn't fit my current strategy (mobile, mhealth specifically).
I spent 2 weeks on a Themeforest xhtml/css theme about 3 years ago. It still gives me a 40$ every month. Nothing to brag about but it takes care of my hosting bill :)
Launched in 2007 as a free service, got covered in CNBC India. Got loads of requests overnight so had to make it paid afterwards.
Around USD 2-3k income without doing lot of efforts.
It is one of the most unique ideas you can ever come across. Requires no paid marketing. You get extremely happy when Olympians, photographers use signatures designed by you on their websites and photographs as autographs.
Last February I started a small YouTube channel surrounding eSports called DrZealotTV. http://youtube.com/DrZealotTV
Although it hasn't even broken even, I'm now equipped with a ton of expertise and I have a few efforts I'm working on that I think will be quite popular. :)
A site that I've recently stumbled across and been reading through voraciously is smartpassiveincome.com. It has some pretty solid tips and in 3 episodes of his free podcast, he goes over 8 potential types of "passive" income business models.
I've learned that my passive income sources have become nonexistent and going into the biz. That's to be expected in the early years of a startup. If anyone has other advice if I were to have pennies to save, do share.
Whoever is offering stock as an income opportunity is not smart. And if you think stock is a passive income opportunity, you are dumb. Go read James Altucher.
All passive income comes from something with value, and hence carries inherent risk. I'd argue real estate is even riskier, yet you aren't criticizing people in this thread who make money from renting/airbnb.
State and municipality bonds are sort of like U.S. Treasury bonds, except they're issued by a state or local government. They pay a fixed interest rate, but your interest is usually tax-free.
Of course, they pay a lower interest rate than taxable bonds. Thus, the only reason these tax-free bonds would be better than taxable bonds is if you are in a high enough marginal tax bracket to compensate for the difference in interest between these tax-free bonds and taxable bonds.
An example should make this all clear. Assume you have a marginal tax rate of 40%. (You earn a lot of money.) If you invest $100,000 in a typical taxable bond that pays 10%, each year you will get $10,000. But subtract out the 40% tax, and you are left with only $6,000 after-tax.
Compare this with what would happen if you invested that same $100,000 in a tax-free state bond. This bond only pays 8%, being tax-free and all. Each year you get $8,000. But you pay no tax, so you are in fact better off than if you had bought the taxable bonds!
Now, lets change your marginal tax bracket to 10%--you don't earn much money, so your marginal rate is low. You invest that same $100,000 in the taxable bond that pays 10%, you will get $10,000 pre-tax but only pay your marginal rate, 10%, on that sum, so you are left with $9,000.
With the tax-free state bond at 8%, you only get $8,000, though you don't pay any tax on it. So at your low marginal rate, you would have been better off buying the taxable bond.
My point is, tax-free bonds are probably only useful if you earn a lot of income each year to put you in a high marginal rate.
Source: I'm a law student and we learned about tax-exempt state/municipal bonds today in Tax!
Municipal bonds, loans to your local government are free of taxes (both state and fed). I have excess cash that would normally be in certificate of deposit in muni bonds currently making 3% tax free. There are risks, best to consult with a money manager if you are uncertain on how to gauge the associated risks.
Unlike tech, you will not have a giant windfall with real estate; but also unlike tech, it's very easy to price your product, find customers, and figure out what your cashflow will be for years to come.