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7 Best Low-Cost Passive Income Business Ideas

Who doesn’t want to earn a passive income from a side business? Earning a passive income can be very rewarding and helpful for achieving financial goals faster. In this guide, I have put together the seven best low-cost passive income business ideas so that you can start earning extra cash from your small business without needing to spend tens of thousands of dollars in startup money.



  1. Affiliate Marketing
  2. YouTube
  3. Vending Machine Business
  4. Selling Digital Products
  5. Music Production
  6. Publish a Book
  7. Dropshipping
  8. Bonus: Freelancing


Millennials are more entrepreneurial than ever. Don’t believe me? 90% of new American billionaires are self-made. Also, 85% of people hate their jobs. Why not make passive income to become fully self-employed. With the ever-growing technological advances, the opportunities that present themselves are endless.


Will you ever make $8,000 per month with your current job? Most likely not, according to World Data. The average United States monthly income per person is $5,869. But Shannon Smith is only 24 years old and makes $8,000 per month in passive income. How did she do it?


The point of passive income is in the name itself. To create an automated revenue stream. Once you have one or two automated revenue streams, you can quickly snowball your passive income into other revenue streams to diversify it.


Think of it as diversifying your passive income portfolio like a stock portfolio. The goal is to mitigate losses if one revenue stream fails to continue producing passive income.


A product or service usually provides a solution or entertainment to create an automated revenue stream. Adam Enfroy and Income School are two prime examples of providing a service to snowball their revenues and help bloggers.


Why Low-Cost Passive Income Business Ideas?


Here are some reasons why you should create a small side business and earn passive income.

  • Become debt-free faster
  • Retire early
  • More vacations/free time
  • Invest more
  • Increased savings


Most people don’t have tens of thousands of dollars to buy a startup or the time and resources required to start a more lucrative business. Starting a side business to earn a passive income doesn’t need to be expensive. It doesn’t need to be overly time-consuming either.


When starting a passive income business, you want to be sure that it’s something that you are genuinely interested in. Also, it needs to be something that you can build upon to grow the business. You shouldn’t limit yourself to one thing and become repetitive.


For example, if you start a YouTube video gaming channel, being flexible with the games and content you create can help grow your channel. Limiting yourself to one game could limit your chances of growth.


Here are my seven low-cost passive income business ideas that you should try.


1. Affiliate Marketing


Nothing screams passive income like affiliate marketing. The world is competitive, and businesses are always trying to find ways to gain a competitive advantage and drive-up sales numbers.


One popular way businesses bring in sales is through affiliate marketing. There are 12+ million eCommerce websites across the world. The pandemic saw a 50% increase in e-commerce growth, which doesn’t appear to be slowing. So, why not use that to your advantage. A lot of sales are driven through the eCommerce market already.


The concept of affiliate marketing is that you earn a commission for promoting a company’s products or services by generating sales.


For that reason, I have put affiliate marketing on this list. Affiliate marketing can be done in a variety of ways. The use of social media and access to the world wide web make promoting a product or service painless. Look at how many individuals use TikTok and other platforms for promoting products.


Here are seven steps from ahrefs guide on how to get started with affiliate marketing:

  • Choose a platform
  • Choose your niche
  • Join affiliate programs
  • Create content
  • Drive traffic to the site
  • Affiliate link clicks
  • Clicks to sales


Once your affiliate marketing links are in place, watch the income flow and continue promoting your product or service.


2. YouTube


What’s not to like about YouTube? After all, it ONLY accounts for 35% of mobile traffic. That’s a lot, just saying. Very rarely do you find someone who doesn’t own a mobile device. Even my grandparents use them.


YouTube is a fantastic source for generating passive income. That’s because you can monetize content ranging from sponsorships to ads and even promote your brands if you wish to sell merchandise or services.


What makes YouTube unique is that almost any kind of content you can think of is on YouTube. Everything from gaming, vlogs, education, sports, investing, etc.


While being on such a massive platform is excellent for monetizing, the competition is insane. Therefore, getting traffic to your channel can be difficult for some time. Finding ways to separate yourself from others will go a long way. You must also understand the YouTube algorithm to drive traffic to your channel.


YouTube is number two on this list because the cost to start a YouTube channel is free. However, some essential equipment is needed to start posting videos. The cost of this equipment can still be purchased at reasonable prices.


Lastly, if you enjoy sharing content with the world, YouTube is a great place to showcase it.


3. Vending Machine Business


Believe it or not, vending machine businesses generate $23 billion in annual revenue. Nearly every company has a vending machine for employees, customers, etc. The steps for setting up a vending machine business are straightforward.


These five easy steps will help you get started:

  • Choose products
  • Find location
  • Choose machine
  • Find market
  • Stocking product


While a vending machine isn’t the cheapest option for passive income, it still has a low cost to barrier entry. It also doesn’t take several years to start earning money from it.


The first vending machine you purchase doesn’t even need to be brand new. There are plenty of refurbished vending machines that you can buy at low prices.


Vending machine businesses are a fantastic way to generate passive income without significant work. Before you know it, the vending machine will pay for itself, and you will be making a profit.


4. Selling Digital Products


As mentioned earlier in this article, eCommerce sales saw a 50% increase due to the pandemic—what a perfect time to make passive income from selling digital products. Before you can sell digital products, you must determine what you will sell.


Here are six ideas for you. Here are 101 additional ones.

  • Educational
  • Digital assets
  • Memberships
  • Online tools
  • Music or art
  • Services


Other requirements need to be addressed before you can sell digital products.


These include, but are not limited to:

  • Establishing a plan on how to sell the product.
  • Building your online store.
  • Marketing your product.


A great place to start your online digital product business is Shopify. Plans start as low as $29/month.


Pros of Shopify:

  • Simplicity
  • Theme variety
  • App store
  • 24/7 support
  • Marketing and discounts


Cons of Shopify:

  • Not the cheapest option
  • Competitive


A cost-effective alternative to selling digital products is Amazon. You can sell everything from music, art, books, etc.


Pros of Amazon:

  • Website traffic
  • Lower cost
  • Marketing


Cons of Amazon:

  • Competitive
  • Lower margins


Shopify and Amazon are the recommended starting places for selling your digital products and generating a passive income.


5. Music Production


Do you have a background in music? Are you interested in producing music? It will surprise you how many ways you can make income through music.


Whether selling the music as an asset to earn passive income or making ad money through streaming platforms, there are several great ways to earn money from your music.


Here are some ideas:

  • Selling music to streaming platforms.
  • Ghost producing (producing for other artists).
  • Royalties from video games, movies, etc.
  • Ad revenue from YouTube, etc.
  • Creating a label.
  • Sample packs.
  • Selling courses online.


The cost to start music production is surprisingly low. You don’t need guitars, drums, and every instrument you can think of. It would help if you had a digital audio workstation (DAW) and a few other accessories to start.


Even if you create music for fun in your free time, why not try turning that into some passive income. Maybe you can find that next nostalgic tune used in every commercial or ad and be remembered for decades. You could make some serious money if that were to happen.


6. Publish A Book


Have you ever dreamed of writing a book? If you enjoy writing or have ideas for a novel, you can make passive income from a published book.


What makes publishing a book more appealing today is Amazon’s self-publishing services. You can post a book for FREE. You can earn a sustainable income of $5,000 or more per month.


The steps are simple:

  • Setup a KDP account.
  • Create a title.
  • Enter book description.
  • Choose keywords and categories.
  • Upload your book.
  • Set price
  • Optional: Enroll in KDP Select.


The highest cost of writing a novel is time. You aren’t going to publish books rapidly if your time is limited. It will take time and patience but can be rewarding once the passive income rolls in.


7. Dropshipping


The final low-cost passive income business idea is dropshipping. This is one of the get-rich-quick schemes that is becoming popular. Two great places you can start your dropshipping business are Amazon and Shopify.


This is the final one on my list because it has minimal costs to get started but has some risks. The chances of becoming rich quickly are slim. That doesn’t mean you still can’t earn a passive income.


Dropshipping is the middleman between the merchant and the customer. You keep no inventory and get the products to fulfill orders from wholesalers and manufacturers.


Some benefits of a dropshipping business are:

  • Minimal inventory costs to start.
  • Easy to start.
  • Low overhead.
  • Can be done anywhere.
  • Plenty of product selections.


Some cons to dropshipping include:

  • Minimal margins
  • Inventory
  • Supply chain issues
  • Limited custom branding/labeling


Regardless of the platform or location you run a dropshipping business, be sure to do a thorough job researching to avoid running into legal issues.


8. Bonus: Freelancing


A bonus low-cost passive income idea is to do freelancing in your free time. The massive freelancing market makes freelancing a great way to earn passive income.


Since the start of Covid, many employers now allow employees to work from home full time or a hybrid schedule. Take advantage of the growing freelancer market. There are freelancers for almost any type of company you can think of.


Nick Miller

Website Founder

Nick Miller

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