Autopilot Income: Three ways to make an extra $100k a year.
Getting to $100,000 was the first financial goal I had once I started my first job in New York City, making $48,000 a year.
I'd always thought of earning $100k as the threshold for making it. Or, at least, being on the way to making it.
Living in NYC on less, I realized $100k should be enough money to live anywhere in the world. To buy pretty much whatever I want. And enough to really start saving and investing. At $100k, I figured I wouldn't have to worry about my finances as much.
What I didn't realize, though, is after reaching that goal, there's still a feeling that you're not getting ahead.
Yeah, you can buy whatever you want and live and travel wherever. But, while you're saving more, it's not like you're saving enough to create a real sense of security or freedom.
This makes reaching $100k somewhat unsettling.
Especially if it's all coming from one job. You're comfortable but incredibly dependent. If you lose your job, your ability to do everything you've become accustomed to goes away, and you've got nothing.
And, that doesn't change no matter how much you're making if it's all coming from one place.
An extra $100k changes everything.
Making an extra $100k per year, though, will let you invest aggressively, plan for and execute large purchases, be prepared for unexpected expenses, and most importantly, give you the freedom to do whatever you want without having to sacrifice other things.
No matter what happens, you know you'll be ok.
And this is what I want to figure out how to do.
But, it matters where that extra $100k comes from.
I don't think you want to try and get it from your current job. The reason is, traditionally, if you want to make more at a company, you're going to have to take on more responsibility and give up more of your time to earn it.
That's not what we're after, though, as it makes us even more reliant on one thing for our well-being.
What we want is to make an extra $100k on top of the salary and benefits of our full-time job in a way that doesn't require us to trade more of our time for more money.
Too good to be true, right?
I don't think so, and I'm going to tell you why it’s easier than you think and three ways to get started.
$100k isn't as much as you think it is.
Really, it's not. And if you don't believe me, read on to find out why.
$100k divided by 12 months is $8,333 per month.
Seems like quite a bit.
$100k divided by 52 weeks is $1,923 per week.
Ok, a little more manageable but still kind of hard to think about what you could consistently do every week to make that.
Now, this is where it gets interesting.
$100k divided by 365 days is $274 per day.
And, let's round up to $275.
That's something we can work with.
Doing this math completely changed my perspective. I recheck it all of the time because I still can't believe it. And, even though it adds up to the same amount, figuring out how to make $275 per day is way easier than figuring out what you'd have to do to earn $100k in a year.
Now, it's not too hard to figure out how to make $275 per day when your time isn't already allocated to a current job, and you can do physical labor like cleaning windows, power washing driveways, cutting lawns, general maintenance, or anything like that.
If you were just starting out and only wanted to work for yourself, I'd say start a service business like that doing something you don't mind, but others would rather pay for.
Unfortunately, that's not for us, though, as we already have a job that's paying us well and we don't have extra time we can sell except for hours after work or on the weekends, which we don't want to give up.
So we need to think differently.
What we need is Autopilot Income.
Autopilot Income comes from things you put time into setting up, and then you can let run on their own.
It's kind of like passive income, but not exactly as they're not set it and forget it strategies. You don't have to actively monitor them, but you'll still want to check in every so often to make sure things are still working properly. It is similar to how pilots turn on autopilot except for when they have to take off and land or need to make an adjustment.
Autopilot Income is things that work for you in the background.
Which means it comes from things that don't require you to trade time for money.
And to do that, we need to look for things that:
Require little to no maintenance
Don't need any customer service
Are going into proven markets
Have a clear path to quick profitability
This also means we can't think of it as a startup either, as we're not trying to start a company that will require a significant amount of time and attention. Remember, we're looking for simple things we can do on our own that can make us an extra $275 a day.
Three things that fit these criteria, for me, are:
Digital Products.
These can be information products like eBooks, self-paced courses, or video series you develop based on your own knowledge and experience. They're easily replicable as they exist digitally and don't require any inventory or ongoing costs other than hosting or incremental merchant fees.
Affiliate Marketing.
Instead of developing your own products, you can sell things other people have made and get a commission on the sales you generate. And, rather than actively promote products one-to-one, you can create evergreen content that will always be available to anyone looking for it.
Dividend Investing.
Probably the closest thing to free money as you can get. Dividends are a percentage of the profits certain companies distribute to their shareholders. The only thing with this one, and we'll see why later, is it truly takes money to make money.
Now, to be fair, I haven't made $100k from any of these yet, but they're all strategies I'm actively working on.
So, just as I broke down what it takes to make an extra $100k per year by making an extra $275 per day, I'll go over the requirements and break down the math to show each of these strategies can get us there. This is everything I wish I'd learned earlier about making money without having to sell my time.
We'll start with the most accessible option, creating digital products.
Digital products.
When I say digital products, I don't mean subscription-based SaaS tools that require long development time or someone else to build them for you.
Instead, I'm thinking about things we can create quickly based on our own knowledge and experience — information products like an ebook, email course, or video series.
Things you make once and can sell infinitely.
Starting here gives us an incredibly low barrier to entry as we can pick whatever format we're most comfortable with.
Getting started.
And while the format is trivial, what makes these products valuable is our unique experience and perspective.
Others might think they don't have anything worth teaching or that no one will care what they have to say. But they're wrong. Everyone wants to learn from someone who's actually done what they're trying to do now. This means there's always an opportunity with these types of products, whether the topic is incredibly broad or super focused.
But where to start?
If you're an ambitious person, think about what you've learned in the last six months. Could you put a guide together to help people get where you are faster by sharing the process you went through, the unexpected things that happened, and the mistakes you made so others can avoid them if they buy your product?
I think so.
So, if this is something you want to do, the best thing to do is start writing. Once you start writing, you'll get a sense of what you're interested in and have a perspective on. What trips most people up is overthinking the process to the point they don't launch something because they think it isn't good enough or has to do too much.
Luckily, that's where the math and pricing strategy can help us.
The math.
The math for getting to $275 a day selling digital products is incredibly simple. All we're going to do is divide $275 by the price of our product to figure out how many we have to sell each day to reach our daily goal.
Revenue Target / Units Sold = Price Per Unit
However, before picking a price at random, we have to think about various considerations as the price changes the perceived value and level of fidelity people expect based on the price alone.
So, let's first break down the math, and then we'll talk about different pricing tiers.
As we'll see in the chart below, sales volume from 1 to 11 gives us some pretty big jumps in price, but there are only incremental changes after that. So, instead of listing each of them, I've curated the list to the ones with round numbers. Obviously, you can do the math for the ones I skipped if you're curious about what they are.
275 / 1 = 275
275 / 2 = 137.50
275 / 3 = 91.66
275 / 4 = 68.75
275 / 5 = 55
275 / 6 = 45.83
275 / 7 = 39.28
275 / 8 = 34.37
275 / 9 = 30.55
275 / 10 = 27.50
275 / 11 = 25
—
275 / 14 = 19.64
275 / 20 = 13.75
275 / 22 = 12.50
275 / 25 = 11
275 / 28 = 9.82
275 / 50 = 5.50
275 / 275 = 1
Now, we're not going to price things at a fraction of a dollar. Instead, it's better to round up where you can, as it gives us a little padding if there are days when we don't sell our target amount. So price points like 275 / 7 = $39.28 should become $40.
Seeing these numbers should act as a guide to show how it doesn't take much to make a compelling offer that can get us a significant amount of autopilot income.
So, when picking a price, we need to ask questions like:
Have I positioned myself as a credible resource on the topic
Am I providing enough value to justify my price point
Have I packaged my product in a way that's not misleading
Are people willing to pay this price for this information
Is selling this product at this price going to be worth it to me
Your pricing strategy will start to become clear as you ask yourself these questions.
When I created The Producer Playbook, I landed on $20 as the price for the book after thinking through these questions.
Sharing the knowledge I'd gained after working as an advertising project manager for five years, I knew I was providing way more value than the cost. I felt too that if I wanted to charge a higher price, I'd have to add more to the offer than just the ebook.
And, as I thought about it, I realized people have different expectations at different price points.
Which means you don't always have to provide incredible value. Rather, all you need to do is justify the price paid. Which can be pretty low, all things considered. If you're able to teach them one thing they didn't know or save someone an hour, that's often worth way more than the 10 to 50 dollars or more they might have paid for your product.
Risks.
The risk with digital products like these is that the market could change. You could pick a topic with a small target audience. Someone could come along and create a better product. Or the information becomes outdated. These are things you should watch out for, but they shouldn't stop you from creating a digital information product if you're looking for a way to start making extra money.
And, if you're not ready to create your own thing just yet, you might consider another path that doesn't require you to create a product at all.
Affiliate marketing.
Another way to sell things online is to sell other people's products.
With affiliate marketing, you create content to promote things other people have made and get a commission from the sales you generate. Of course, you still have to create content, but it doesn't have to be as involved as creating a digital product as it's not the content you're selling. Instead, you're sharing your experience with a product and using your credibility to help persuade others to buy it based on your recommendation.
You can do this with text, audio, and video, but it's likely easiest to start with text-based content like articles and blog posts.
Getting started.
Figuring out how to work with brands like this might sound complicated, but you can usually find out pretty quickly if a company has an affiliate program and its requirements by searching "company name + affiliate program."
Most larger companies have their own thing set up for you to work with them directly. Or, if they don't, they might work with a third-party aggregator. And, if they don't have either of those things, you can always become an Amazon Partner and sell whatever's on Amazon.
This is the best part of affiliate marketing. You don't have to hold any inventory because you're working as an extension of the company. The company manages its inventory, and all you're doing is marketing and promotion. It's a win-win as long as you're getting a meaningful commission.
The math.
Affiliate commission rates usually start around 5% and can be up to 30%, depending on the company and product you're selling. Sometimes, though, it might be a credit to their store or something else of relatively low value. These lower offers aren't worthless, though, so long as you're benefiting from them.
Another key metric to know before getting into this is the average conversion rate for affiliate links is between .5 to 1%. Of course, your conversion rate could be higher or lower depending on your specific audience and the products you're selling, but it's good to know the baseline as we're getting started.
So, while there are several variables, getting to $275 per day with affiliate marketing ultimately comes down to the amount of traffic you're able to generate.
The formula we'll use to figure out how much traffic we need is:
Price Target / (Product Price * Commission Rate) / Conversion Rate = Required Traffic
For example, if we promote a $50 product with a 1% conversion rate, here's how much traffic we would need to generate to make $275 a day at various commission rates:
1% Commission = 55,000 Page Views
5% Commission = 11,000 Page Views
10% Commission = 5,500 Page Views
15% Commission = 3,666 Page Views
20% Commission = 2,750 Page Views
25% Commission = 2,200 Page Views
30% Commission = 1,833 Page Views
Anything above 30% isn't common, but you could negotiate higher rates with niche sellers you have relationships with.
Now, these numbers are probably a bit intimidating.
Figuring out how to get to 1,000 page views a day, let alone 50k can seem almost impossible, especially if you're just getting started.
But, seeing these numbers should also be a bit inspiring as it shows it's not impossible.
All it means is we have to play the long game. We can't expect to create content and get this amount of traffic at the start. Instead, we need to make sure our content is written and set up to grow organically from SEO and referral traffic. And, if we're able to do that, then affiliate marketing can be one of those things you can set up once and passively monitor as it works for you in the background.
But, before we start creating content to promote various products, we're going to want to ask ourselves a few questions like:
Am I interested in promoting this product, and do I have something to say about it
Do I have enough credibility in this space for people to trust my recommendation
Are there enough people interested in this topic to generate the traffic I need
What other content am I going to be competing with
Does the commission structure make it worth it to me
I haven't done too much of this yet, but I have ideas of how to implement it more in future articles. Like the draft I have on living my perfect day, I'll include how I take Athletic Greens every morning as an all-in-one supplement (get five free travel packs when you click that link and sign up). Or, in the one about investing, I'll share Titan as a way I automatically invest some of my money in top-tier stocks every month without having to do in-depth research (we'll both get 25% off our management fees if you click the link and sign up).
The way I like to think about it is if I'm already creating content and there's an opportunity to include a relevant affiliate link, then I absolutely should. But, I'm not going to create content just to have affiliate links. I think it would come off as disingenuous, and my heart wouldn't be in it.
That's not to say you can't create entire businesses from affiliate marketing. Wirecutter and NerdWallet, are examples of how people have built phenomenal companies with affiliate marketing. It's just not my strategy for my personal site.
Risks.
The risks with affiliate marketing are somewhat similar to creating digital products in that the products and content you create might become outdated. The companies could change their commission structures. And, you have to make sure you're compliant with their affiliate policies. Mostly it's all pretty straightforward, but they are things you need to be aware of if this is something you want to do.
But, if you aren't interested in creating any content at all, this next one is probably the easiest way of generating income without having to do much of anything.
Dividend investing.
While a bit more technical than selling Digital Products or Affiliate Marketing, Dividend Investing is likely the easiest way to generate autopilot income.
The only thing is, you won't be able to do this unless you have money to invest.
That's because dividends are only distributed to shareholders.
And, since dividend investing is an investment strategy, and this isn't investment advice, I'm not going to get into all of the details of what to look for and instead cover the math of how dividends can get us to our $275 per day goal.
Getting started.
Essentially, dividends are a percentage of a company's profits paid out to shareholders on a predetermined timeline. This percentage is known as the Annual Yield, which is often paid out quarterly or in some cases semi-annually or even monthly. The timing and amount vary per stock and can fluctuate over time depending on a company's overall performance.
With this in mind, when we're thinking about adding stocks to a dividend portfolio, we're looking for stocks that have been consistently making increased distributions over time. A search for the "Dividend Aristocrats" will give you a list of them. The reason for this is we want to make sure, at the very least, we're keeping up with inflation but, more importantly, outpacing it.
The math.
While it's likely a bit lower now, the commonly held amount you should be able to draw from a portfolio without reducing the principle is 4%. So, we'll use that as our baseline to determine the amount we need in our portfolio to generate $275 a day.
The equation to figure out our recommended portfolio amount is:
Target Income / Average Yield = Portfolio Amount
So, to make $275 a day, or $100,000 a year since we're talking about this annually, we'll need to have a portfolio of $2,500,000 considering an average annual yield of 4%.
A lot, but not impossible. And, while we're at it, here's a progression from 50k to one million to give you an idea of the size a portfolio needs to be to generate these additional income levels.
50,000 / 4% = 1,250,000
75,000 / 4% = 1,875,000
100,000 / 4% = 2,500,000
250,000 / 4% = 6,250,000
500,000 / 4% = 12,500,000
1,000,000 / 4% = 25,000,000
Clearly, it takes money to make money with this strategy.
But, it's not all or nothing. You can start with whatever amount you have and keep adding to it. And, instead of taking the dividends as distributions, you can automatically reinvest them into buying more dividend stocks so you can grow your capital base and increase future distribution amounts.
This automation makes it as close to set-it and forget-it as it gets when it comes to "free money."
Risks.
Of course, there are risks and things to consider with Dividend Investing, too.
The simple one is that you'll want to keep an eye on the market to watch out for any trends, events, or changing sentiments that might negatively affect your portfolio and adjust accordingly.
The more complicated one, though, and why it might be a good idea to get professional advice, is you'll have to consider the possibility there might be better opportunities to grow your money than with dividend stocks.
In the end, it comes down to whether or not you're willing to trade a somewhat certain dividend yield for what could be a riskier, though maybe more lucrative, bet.
But, the thing is, nothing says you have to pick one or the other.
The portfolio approach.
I wrote about each strategy as if you could only focus on one of them to reach our goal of making an extra $100k per year as it was the best way to break down the math.
However, that's not how we should be thinking about it.
Instead, we should take a portfolio approach.
For example, you don't have to create one thing and pick one price point with digital products. Rather, you can create multiple products at different fidelities with related prices for each. And, they don't have to be interconnected or about the same topic either. This way, you're not relying on one product selling consistently every day to reach your goal. Instead, the revenue from all of your products will blend together and create your gross income.
Same with affiliate marketing and dividend investing. You don't pick just one product to promote or one dividend stock to invest in. You create a portfolio of assets that all contribute to your overall goal.
Doing it this way reduces our risk significantly as we're not reliant on one thing or one strategy.
This is why it's so important to do these in addition to our full-time job. By stacking our full-time job with these autopilot income strategies, we become invincible. If something goes wrong or stops performing like it once did, we still have everything else working for us.
The sense of security that comes with knowing we're likely not ever going to have any financial risk is really what we're after when we say we want to make an extra $100k per year. Not so we can frivolously spend it all. Though, spending some of it shouldn't be a problem as we know it's money we can easily replace.
And, now we know all it takes is $275 per day.
