What Is the Difference in Active and Passive Income?

A passive income is when you sell a product/service that requires very little from you to fulfill the order after it is placed. For instance dropshipping, affiliate marketing and print and demand merchandising are counted as passive income because other brands complete the order for you.

Selling digital products can also be considered passive income because digital products can be automatically delivered to customers.

Passive and active income have different earning potentials. When you have active incomes from your website on Shopify, then you are limited by the amount that you can process. For instance, if it takes you one hour to fulfill an order and you work 40 hours per week, at most you can fulfill 40 orders and the revenue generated can only be from those 40 orders per week.

If you want to sell more on your website, then you will need to build your team up. Hiring staff can be costly and there are lots of mistakes that some brands make when hiring. Also if a staff member leaves or is ill, you can end up not having enough work hours to complete the work.

In contrast, passive income has no limit. You can take as many orders as you can. Then there is no need to add more staff to your team. Therefore, adding more revenue requires no additional investment other than perhaps marketing on Facebook or other platforms.

Therefore, passive income has no barriers to earning potential. Whereas there are earning barriers to active income and that is why some brands do look at passive income as a way to supplement some of their active income.