The 7 Levels of Making Money Online (& More Importantly, How to Level Up)
So a tweet I scheduled with Zlappo saw a little bit of traction:
Here are the levels of making money:— ᴊᴀʏ | ᴢʟᴀᴘᴘᴏ 👨💻🔥🚀 (@therealjayber) April 23, 2020
1️⃣ Regular job
2️⃣ Remote (telecommuting)
3️⃣ Freelance (selling time)
4️⃣ Ecom/Affiliate (selling products)
5️⃣ Digital (selling scalable products)
6️⃣ Subscription (selling recurring $$$ products)
Aim for 6 ideally.
It's ze best. 😉
Now. if the tweet above resonated with you, I bet you already understand one thing: how much you make isn't the only factor in considering what your main source of income should be -- how you make that money is just as important, if not more important.
We all dream of decoupling our earning potential from our time and labor, so that we can spend our limited remaining life, youth, and energy to do the things we truly love, like spending time with our family or pursuing our passions.
After all, money is an unlimited renewable resource.
Time is not. Youth is not. Your zest for life is not.
The key question we should all ask ourselves is, "Can I earn more without working more?"
For me personally, if a gig requires me to work more to just to earn more, I become 100% uninterested in that gig and look for something else immediately.
In my view, scalability is non-negotiable, because, if it's not scalable, it defeats the purpose.
A good source of income is supposed to enhance your quality of life, not compromise it.
Surely there's a better way of doing things than giving up your life, youth, freedom, dreams, majority of your waking hours, majority of your best hours, geographical mobility, and all forms of self-actualization whatsoever -- and for what -- just to eke out a meager subsistence?
Do you really want to build your life around your evenings and weekends, live in one place for the rest of your life, and have to ask for permission every time you want to take leave so you can bring your sick child to the clinic or go on vacation, and then, despite your gargantuan sacrifices, still risk getting fired/laid off anytime for no good bloody reason?
How much is your short life on this earth really worth?
Can you really place a monetary value on your life, liberty, and happiness?
Hell, I'm more surprised that this type of asymmetrical bartering of life for money is so normalized.
Have people completely lost their minds?
Surely at some point, they have to ask themselves, "Is it worth it?"
I looked into this a little deeper, and fortunately it seemed like people understood this as early as the 1930s.
In 1934, Simon Kuznets, the Nobel Prize laureate in economics, said:
"Economic welfare cannot be adequately measured unless [it] undertakes the reverse side of income; that is, the intensity and unpleasantness of effort going into the earning of income."
Evidently, how you make that income is just as important as -- probably more than -- how much income you make.
And "rich people" understand this very well, which is why they're rich in the first place.
It's exactly how the rich have been living for centuries owning land that pays them free rent perpetually or businesses that continue to put money in their pockets even as they spend time at home with their children or become sick from an illness.
And then comes the new rich.
Tim Ferriss coined the term "new rich," which refers to people who leverage technology, automation, and the internet to live their best lives.
The new rich have full control of their time, oversee systems that they have built to generate cash flow without manual work or intervention, have a diversified income that's not only 100% accessible internationally but growing perpetually, and are also antifragile to some extent: no economic recession, natural disaster, global pandemic, political instability, or random human factor, like a boss not liking you or some gangsters trashing your store, can threaten their cash flow.
And there's no better time to strive to achieve upward social mobility than today, where the means of production have been democratized and commoditized to virtually nothing, so all that really stops you from achieving "new rich" status is you and your bloody excuses.
It's meritocracy at its finest.
However, if you're making the transition from the "real world" to the online world, you might be confused as to how to make money online at all, and also make more money without necessarily working more hours.
(Because those two aren't mutually exclusive; there are many means of making money online that requires you to work more to earn more.)
Therefore I've taken the liberty to cover the different levels of making money online, and how/if you should move up the ladder, step by step.
Without further ado, here are the 7 levels of making money online, sorted by increasing freedom:
0. Traditional employment
This is shit. I don't care if you're an investment banker, civil servant, or something glamorous like an airline pilot or WWE superstar.
If somebody tells you what to do, when to do it, and how to do it, you're not a free human being.
Your happiness level will always have a cap on it, no matter how much you earn, because the freedom component is missing.
(Including a number 0 here for completeness/contrast)
How to level up: Quit. Seriously.
1. Remote work (telecommuting)
This isn't where you want to be either.
You're still on someone else's leash, and, even though you skip the punishing daily commute, you still have to report at a certain place at a certain time to a certain supervisor, (often enough) obey a dress code, and you're still paid by the hour/salary.
This includes remote jobs, like software engineering gigs and telemarketing positions.
Are you making money online? Yes.
In a good way? No.
How to level up: Start a business on the side, quit when business income > job income.
2. Selling services
Now we're starting to get somewhere.
Selling services is truly your first gateway gig to being your own boss; a lot of us started out here.
(I definitely started out here, being a freelance developer in college at $15/hr.)
And many more of us stay here and own it, and that's absolutely fine.
This includes freelancing, consulting, coaching, tutoring, being a VA, being a PA, and completing all forms and manners of online tasks, like on Fiverr or Amazon Mechanical Turk.
It's cool, and successful bloggers like Adam Enfroy would suggest that most newbies start out here too.
Its biggest weakness is that you have to work more to earn more, and how many hours, attention, and energy do you have in a day?
While you can charge a high price for your time, it's really another glorified job with multiple employers.
However. HUGE however. If you can build a thriving personal brand out of your consultancy/coaching company and be seen as a respected authority figure, you'll be running laps around the others who're on a so-called "higher level," making more while working less than the rest.
My friend, Seth (@srowlands) is one who does just that:
You should follow Seth if you want to learn how to build a thriving coaching company.
Korey (@CoachKorey3) is another amazing coach and a friend, who very successfully leverages his personal coaching brand to spawn a whole host of products, including his Power Lead System and Done-4-U Tweets, among others:
I've not seriously seen a more prolific marketer than Korey in terms of building and diversifying his product catalogue.
How to level up: Start monetizing your existing client/lead list with products or affiliate links. Easy peasy!
3. Selling physical products
This is actually a great gig.
Whether you sell your own products on Etsy or other people's products on Shopify, you know that you can make a tremendous amount of revenue if you get the marketing right.
Flipping items for profit also falls under this category.
The main weakness is that fulfillment is done manually.
You have to handle, package, and deliver the products yourself or hire someone else to do it.
So while to an extent, you're decoupling your labor from your earnings (i.e. your earnings don't scale linearly with your labor), it's not enough.
How to level up: Outsource your fulfillment. Now. Focus your energy on your funnel itself.
4. Selling physical products, but fulfilled by 3rd party
This is where the Amazon FBA sellers reside, and many of them make a lucrative full-time living off of it.
This includes dropshipping, Amazon FBA, and affiliating for brands selling physical products.
The only weakness here, compared to level 5, is that physical products tend to be of a lower profit margin.
After all, it does cost something to produce the product, unlike the digital 1s and 0s of level 5.
How to level up: Diversify into digital products, be they your own or other people's. Doesn't matter which, yet.
5. Selling other people's digital products (dropshipping/affiliate)
This is such a popular route, because it really doesn't require a lot of upfront capital or time to get started.
You basically build an asset, like a blog, email list, YouTube channel, Twitter following, etc., and you promote your affiliate links for products/services that you truly believe in.
Three people I know who are absolutely killing it with this business model:
a. Scholar of Life (@ScholarofLife)
Scholar's email list (The Twitter Content Alchemy series) is truly an absolute pleasure to subscribe to.
There's no new email that I look forward to opening more than his.
His style of writing is brief, easily-digestible, and I'm constantly impressed how he can say so much wisdom with so few words.
I highly recommend Twitter Content Alchemy:
🔥Twitter Content Alchemy🔥— Scholar of Life📚🧠 💰 (@ScholarofLife1) April 16, 2020
Do you want to know how to create a massive collection of high-quality content that will leave your audience starving for more? ✅
Sign up for my free, unique seven-part email serieshttps://t.co/ES5tzqos2C
No affiliate link, no paid placement, just one happy subscriber recommending what he found useful and valuable to you.
b. Five Star Funnel (@FiveStarFunnel)
Sam has not only been a great friend to me, an A+ human being, but his blog, Five Star Funnel, is one of the very few blogs whose URL I manually type by hand into my browser almost every day just to see what great content he has put out.
You can pick any random blog article of his, and it's astonishing how consistently valuable they are despite how prolific he is as a blogger, like this one on keyword research, for instance:
How To Do Keyword research for blog posts.— Five Star Funnel (@FiveStarFunnel) April 23, 2020
How to steal your competitors keywords AND backlinks.
All explained here: https://t.co/Onk1QHCKzW
Despite only starting his blog for 5 months, his blog has steadily grown in following, and he has earned a respectable reputation for being an authority figure on all things affiliate marketing.
(He used to publish daily, but he's lately focusing on outreach, but his existing articles are a gold mine you must now miss out on.)
c. Jake Schmelzer (@InfoProductJake)
If you think you need a blog with 1,000s of unique visits or huge email list to monetize, well there's no other way to put it: you're dead wrong.
Jake, who has about 3k followers on Twitter, is absolutely killing it with affiliate marketing and is an efficient machine at converting his following into loyal happy customers.
I'd much rather have his 3k followers than some others' 30k followers, no offense to anyone else.
His typical tweets get upwards 100 retweets/likes, even though they often just spell out simple truths, e.g.:
Most people spend more time wishing for success than working for it.— Jake Schmelzer (@InfoProductJake) April 21, 2020
The point is his tweets resonate. And on Twitter, that's all that counts.
If follow Jake and his progress reports, you'll also know he's very generous in sharing his strategies and tactics that have worked for him to build an affiliate income based on your existing following.
6. Selling your own digital products
This is where you're truly starting to come into your own.
First, for once, you get to keep majority of the margins.
Next, you get to mobilize others to sell your product for you (this is important).
Most importantly, it costs you nothing to make, because it's a digital product that only requires the sweat of your brow to be brought into existence, the cost of which you already paid upfront by writing the ebook or designing the Wordpress theme.
If you can identify the right in-demand niche with fewer competitors, that leverages specialized knowledge, experience, and insight that you have, you win.
Such Feedbacks are Always special. I am thinking to increase my price a bit after this.— Tejas Rane 💹 (@tejas3732) April 22, 2020
Well I haven't yet though 😁
I will do it Next Week, maybe!
Want some amazing value & Ton of Actionable steps to Grow on Quora?
Get here-> https://t.co/tMXgCq4b0F pic.twitter.com/xN1Pg1cSEL
It doesn't really take that much to sell your own digital product, but, if you have specific domain knowledge or actionable insights that very few people have, this is the ultimate route to go.
Ty (@moodyasamother) is another friend who tweets highly-engaging content, and one of the very few who actually sounds human (you know, with opinions and stuff) instead of a marketing parrot (can't overstate this enough).
She also isn't afraid to offend.
Just take this tweet for example, you simply can't be more genuine and candid:
Ideally, you want to have your stuff together BEFORE you start having kids.— Ty | Moody As A Mother 💘👑💰 (@moodyasamother) April 23, 2020
It doesn't always happen, I get it.
But if you use your kids as an excuse for why you can't do better NOW,
I have no respect for you.
(God damn right, how dare people use their kids as a reason not to succeed instead of fuel to succeed!? Anyway I digress.)
Her site (Moody as a Mother) is like a giant megafunnel that sucks in leads and churns out happy customers, with a high-converting landing page that makes even professional designers jealous.
With a respectable product catalogue that covers a vast range of topics, from flipping free finds to building healthy relationships in your personal life, she's definitely earned her reputation as a professional marketer who knows how to engage and convert her audience into a loyal tribe who happily purchases and shares her products.
How to level up: Unfortunately, one-time sales dry up after a while, as products fall in and out of fashion. Very few books are evergreen, so, if you want to level up from here, which is already a fantastic place to be, you need to sell something evergreen in value that you can charge for over and over again.
7. Selling subscription products (membership site, community access, apps)
The big boys all play here, from consumer apps like Netflix and Tinder to B2B apps like Zoom and Salesforce.
If you do this, you're basically selling access, very much like a landlord or government.
Meaning you're not selling anything you don't already own and can readily provide access to without additional work (which is where your freedom comes from).
The trick is to have something that's so valuable and evergreen in its value that you can justify charging a monthly fee for it.
This includes access to a thriving niche community (paid forums like IGN.com), a specialized network (like Andy's (@andyisom100k) The Affiliates Club), a specialized business course (e.g. SalesProcess.io), and of course SaaS apps.
Hell, in Andy's case, he even systematized the marketing of TAC by utilizing an ever-growing network of affiliates to bring in new business for him, so he can just focus on improving the platform itself:
You know what they say. You want to learn, you learn from the best.
Instead of focusing on affiliating for others, focus on helping others affiliate for you and your own product.
You're still making money when they make money, with this underrated added benefit: they have to talk you up like a God to sell your product on your behalf.
How to level up: Either build up your MRR to a point where you can hire people, or take VC/angel investment. Scale it into a real company. Note that your freedom will go down, but your earning potential will skyrocket.
If you don't belong to level 6/7, don't think that you're doing something wrong -- you're not.
(Well, not unless you belong to level 0/1, in which case get your shit together, bucko.)
Since your freedom (or lack thereof) is very highly-correlated with your happiness, well-being, and quality of life, it would make sense to strive for more freedom over time, which is what this list covers.
It's a fact that certain ways of making money online will afford you more freedom than the others.
And beyond a certain level of income (I dare say it's on the low end of 6 figures), how you make that money will become way more important than how much money you make.
Most importantly, the ways to make money online with the highest freedom index are also the ways to make money online with the highest earning potential.
Don't believe me?
Name one billionaire SaaS founder. Plenty. I can name 20 off the top of my head.
Name one billionaire freelancer?
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