The Hidden Costs of Running a Digital Product Business
“ Selling digital products can be profitable, but it is not a get-rich-quick scheme. “
Selling digital products sounds like a dream, doesn’t it? No inventory, no packaging, no worrying about lost parcels. Just create once, upload, and watch the sales roll in.
Except… that’s not quite how it works.
While digital products do eliminate some traditional business costs, they come with their own set of expenses, many of which aren’t obvious at first. If you’ve ever wondered why your Etsy earnings don’t quite match what’s in your bank account, this post is for you. Let’s break down the hidden (and not-so-hidden) costs of running a digital product business.
1. Software & Tools: The Non-Negotiables
Unless you’re designing mockups in MS Paint (please don’t), you’ll need professional tools to create and manage your products. Here’s where some of your money disappears each month.
Design Software:
Adobe Photoshop costs between £20 and £50 per month, depending on your plan. Essential for mockups, templates, and anything requiring pro-level editing.
Illustrator and InDesign add more monthly fees if you design logos, branding kits, or printables.
Affinity Suite is a one-time purchase alternative, but still a cost upfront.
File Hosting & Cloud Storage:
Dropbox or Google Drive offer free versions, but once you hit the storage limit, upgrades can cost between £8 and £20 per month.
Creative Market, Gumroad, and Other Platforms take a cut or charge listing fees if you sell outside Etsy.
Licenses:
Fonts and Graphic Assets can be expensive. Just because a font is on Canva doesn’t mean you can sell a design using it. Quality fonts can cost between £10 and £100 or more.
2. Selling on Etsy: The Annoying Platform Fees
Etsy loves to take its cut, sometimes in ways that make your pricing feel like a maths problem.
Listing Fees cost £0.16 per item. It sounds small until you have hundreds of listings.
Transaction Fees take 6.5 percent of every sale.
Payment Processing Fees are around 4 percent plus £0.20 per transaction, varying by country.
Offsite Ads Fee means that if Etsy’s offsite ads lead to a sale, they take an extra 12 to 15 percent. You cannot opt out if you make over £10,000 per year.
By the time Etsy is done with you, you are losing around 15 to 25 percent per sale in fees alone.
3. Ad Spending: Etsy, Pinterest, and Social Media Black Holes
Ads are supposed to help boost your visibility, but they can also drain your profits if you’re not careful.
Etsy Ads costs vary wildly. You can spend £1 a day and get nothing, or £5 a day and make steady sales.
Pinterest Ads are great for long-term visibility, but not cheap. A decent campaign can cost between £100 and £300 per month.
Instagram and Facebook Ads are necessary because organic reach has nearly died due to algorithm changes.
A well-planned ad strategy can pay off, but throwing money at ads without tracking results is a fast way to watch your profit margin disappear.
4. Time & Labour: The “Free” Cost No One Talks About
Your time isn’t free.
Customer Service means answering messages, explaining why your Photoshop files don’t work in Canva again, and dealing with refund requests. This takes hours each week.
Updating Listings involves refreshing thumbnails, tweaking descriptions, and redoing SEO. It never ends.
Testing Files and Quality Control ensures files work across devices, but takes time.
If you calculate your hourly wage based on time spent running the shop versus actual earnings, you might find you are working for less than minimum wage some months.
5. The "Optional" Expenses That Sneak Up on You
These are not technically required, but they definitely make a difference.
A Good Website costs between £5 and £30 per month and helps build credibility while directing sales away from Etsy’s fees.
Email Marketing tools like Flodesk or Mailchimp are free at first, but when your list grows, they can cost between £10 and £50 per month.
Courses and Resources help you keep up with trends and improve your skills. They can cost between £50 and £500 per year.
So… Is Selling Digital Products Worth It?
Absolutely.
But only if you go in knowing that digital does not mean "zero costs." Between software, fees, ads, and your own time, those £10 Etsy sales do not translate to £10 in your pocket.
The trick is to price accordingly, keep track of expenses, and know where to cut back. If you are spending £100 a month on ads but not making a return, it is time to rethink your strategy. If you are undervaluing your mockups, it might be time for a price increase.
Selling digital products can be profitable, but it is not a get-rich-quick scheme.
