We have compared several forms of passive income so that you can evaluate them side by side. Of course, you can make many different comparisons, but we have chosen the criteria that we find most important.
Since we at Ferdy.com primarily focus on Online Business, we have given that the most attention. Below the table, we explain what we mean by the criteria.
1 = Low
3 = Medium
5 = High
| Criteria | Dropshipping | Content Creation | Royalties | Affiliate Marketing | E-Commerce |
|---|---|---|---|---|---|
| Investment in Money | 3 | 1 | 1 | 1 | 5 |
| Investment in Time | 3 | 5 | 5 | 3 | 5 |
| Risk | 3 | 1 | 1 | 3 | 5 |
| Scalability | 5 | 3 | 5 | 5 | 5 |
Table: How does each type of Online Business score on the four criteria?
Investment in Money
With the criterion “Investment in Money,” we aim to demonstrate whether you need a lot or a little money to start an Online Business.
| Business Type | Score | Explanation |
|---|---|---|
| Dropshipping | 3 | With the right tools, you don’t need to invest in products. However, you will need a website or online store, which requires a small investment. If you enter a market with many active competitors, such as reselling items from AliBaba, it can be difficult to stand out unless you spend money on ads. So, keep in mind that some investment is needed for dropshipping. |
| Content Creation | 1 | Many platforms can generate income if you bring people to them by creating good content, so it’s often free to start on these platforms. On platforms like YouTube, TikTok, or Blogspot, you can create content on topics you know about. The people viewing your content are also exposed to ads placed by the platform. You can start with just a free email address and a free account on a website. |
| Royalties | 1 | With royalties, you want others to bear the costs of distributing what you have created. For example, a publisher might pay you a few euros per book sold, but they cover the costs of publishing. If you design a cool t-shirt, you can have it printed on demand via Shopify. The shirt is made and shipped only when someone buys your design, and you receive a portion of the revenue without needing to invest. |
| Affiliate Marketing | 1 | Affiliate Marketing generally doesn’t require investment. If you have your own website with a blog, you can place affiliate links, with only small yearly costs for the website. However, you can also invest more heavily. There was a time when investing a few cents could put your link at the top of Google’s search results. If you make a few euros from a small investment, that’s a good profit. But if no one clicks on your ad, it can cost you a lot and yield little. |
| E-Commerce | 5 | E-Commerce refers to a real online store where you purchase and then sell products via your website or a platform like Bol.com. You need to invest in creating, purchasing, and storing your products before you can start. |
Table: Explanation of Investment per type of Online Business
Investment in Time
With the criterion “Investment in Time,” we aim to show whether you need a lot or a little time to start the Online Business, and also how much time is needed to become successful.
| Business Type | Score | Explanation |
|---|---|---|
| Dropshipping | 3 | At the start, you’ll spend a lot of time researching products. Research takes time and is necessary—you don’t want to put in a lot of effort only to find out that the products you want to sell are already available everywhere for less. Once you have a good product, you’ll need to spend less time, but you will still need to invest time in keeping up with market changes. For example, if you sell a cool charger for PlayStation controllers that uses mini-USB, but everything now uses USB-C, you have a challenge. |
| Content Creation | 5 | You are the one creating the content. Every image, sound, or text you create takes time. Therefore, the time investment in content creation is high. Especially at the beginning, you’ll have to do a lot yourself unless you have a savings fund to pay others to do things for you. Many YouTubers pay people in India to edit their videos. With AI, things have become easier, but be aware that AI-generated content can sometimes be disappointing. |
| Royalties | 5 | Again, your design requires your time. Writing a book is time-consuming, and even with a lot of talent and help from AI, it’s still necessary to check and improve your work. If you want to design a t-shirt that many people like, it can be a process of trial and error. The royalties market is therefore quite time-intensive. |
| Affiliate Marketing | 3 | Depending on the platform you choose, you’ll need to invest time. If you have a website that people visit for skin improvement tips, you’ll need to ensure that it doesn’t have outdated information. At the same time, it’s possible to start an affiliate marketing campaign that remains profitable for a while without requiring much of your time. |
| E-Commerce | 5 | E-Commerce is time-intensive. Buying, selling, shipping, collecting, paying, storing, moving, etc. Only when you have good profit margins can you hire someone to do (part of) the work for you. |
Table: Explanation of Time Investment per type of Online Business
Important to Remember:
Time = Emotion
When you’re standing in a long line for a toilet at a festival, time seems to move slowly. When you’re engaged in your hobby, time seems to fly by.
If you think you can quickly make money with an Online Business, it can be quite disappointing if you’re doing something you don’t enjoy. That’s why it’s always recommended to do something you like. Then you’ll have fun and won’t mind investing time.
Risk
With the criterion “Risk,” we aim to demonstrate whether you face a lot or little risk when starting an Online Business.
Scalability
With the criterion “Scalability,” we aim to demonstrate whether the online business can grow quickly without immediately hitting a growth limitation. This score also reflects how easy it is to scale up your business.
