Passive Income

Ultimate Guide to Freelancing vs. Amazon FBA for Passive Income

By July 23, 2021 No Comments
 

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Explore two different ways to live a boss-free life and the ins and outs of each in this guide to freelancing vs Amazon FBA.

Let’s face it, no one likes their boss. And no one likes making tons of money for someone else. It’s a rat race and countless entrepreneurs escape from it every day.

How? With novel business models that generate passive income like real estate investments, day trading, affiliate marketing, and several others.

Let’s focus on two of the most popular models: freelancing vs. Amazon FBA businesses. This guide covers both avenues and why they do (or don’t) work.

What is freelancing?

In short, a freelancer is their own boss. They partner with large companies, small businesses, and other types of organizations to contract work. Freelancers can:

  • Design
  • Write
  • Compose
  • Consult
  • And more

Freelancing isn’t limited to a single industry or trade — and it’s not usually limited to a single location either. Many freelancers work remotely and can do so from nearly anywhere with a WiFi connection.

The primary difference between a freelancer and an employee is that a freelancer has more freedom and more responsibility. For example, freelancers are self-employed which means they can “hire and fire” clients, set their own hours, and decide what kind of work to take on.

However, they also have to pay business and employment taxes, find new leads, and track time spent on jobs.
Does freelancing “count” as passive income?
Nope, freelancing is active income.

Why? Because freelancers trade time for money, and sometimes even work without pay. Consider all these activities:

  • Finding clients
  • Pitching clients
  • Tracking time
  • Managing finances
  • Administrative tasks

No one pays freelancers to do any of these activities. Instead, freelancers have to envelop those unpaid hours into their billable hours to make up the difference.

This isn’t to say that freelancers can’t generate passive income. In fact, many freelancers do engineer income streams like:

  • Information products
  • Educational courses
  • Digital goods

But usually, freelancers need a social media following or an email list to ensure these passive avenues are successful.

How does an Amazon FBA business work?

Entrepreneurs who own and operate Amazon FBA (Fulfillment by Amazon) businesses are self-employed, like freelancers, and the model looks like this:

  1. Create an Amazon seller account
  2. Choose a competitive product and manufacturer
  3. Develop a brand for that product
  4. Ship finished products in bulk to Amazon (Amazon then fulfills orders as customers purchase that product, and handles customer service inquiries)

Pretty simple. Plus, Amazon takes a percentage of sales to cover the cost of fulfillment and customer service so there’s no back and forth or surprise costs.

Does an Amazon FBA business “count” as passive income?

Yes! Amazon FBA businesses generate passive income because the entrepreneurs who run them don’t trade time for money.

Instead, Amazon FBA business owners generate cash at all hours of the day — even in the middle of the night — in exchange for a few hours of work a month. In other words, the time you spend building an Amazon FBA business isn’t directly correlated with its success.

The profitability of an Amazon FBA business is untethered to location and time. It’s tethered to whether or not you’ve chosen a competitive product, a reasonable price, a reliable supplier, and a relatable brand.

Which one is better? Amazon FBA or freelancing?

The answer to this depends on your goals, and how you answer the following five questions.

Do I want a boss?

Technically, neither freelancers nor Amazon FBA business owners have a boss. But freelancers do have to cater to clients, which can sometimes feel like an employee-boss relationship.

Amazon FBA business owners don’t have to cater to clients. In fact, they don’t even have to answer customer service questions (Amazon does it for them).

Do I want unlimited earning potential?

If your answer is yes, then the Amazon FBA business model is the way to go. Top earners generate up to 7-figures, sometimes even more. On the other hand, plenty of freelancers do indeed make 6-figures and above.

But Amazon FBA business owners have tons of extra time because they aren’t earning as they work — they earn every minute of every day, regardless of their schedule. However, freelancers naturally have a capped income because there’s only so much time in a day to trade for profit.

Do I want to be location-independent?

You can be remote as a freelancer, or as an Amazon FBA entrepreneur. But you might not be time-independent. Things like time zones and internet connectivity can interrupt freelance work, making it hard to schedule meetings with new clients.

Do I want to build a business that I can eventually sell for a profit?

This is a tricky question with a simple answer. If you want to build a business that doubles as an asset you can sell (i.e. more $$$), go with the Amazon FBA model.

It’s a business that someone else will want to buy someday for a large lump sum. You can use this to retire in style or move on to other projects. Either way, it’s a recipe for financial freedom.

Do I want to break the “time for money” cycle?

Freelancers will always trade time for money, there’s no escape because it’s profit in exchange for service.

Instead, the only way to stop trading hours worked for dollars earned is to invest in a business model that’s proven to generate passive income — like Amazon FBA.

Take your first step towards passive income

Are you energized by the idea of a new life without a boss and without limits? Are you tired of making money for someone else, instead of for yourself? Do you want to set yourself free for the rest of your life?

Your journey begins with Amazing.com’s FREE eBook, Change Your Life With Passive Income. It’s packed with valuable information you need to change your life forever.

Inside you’ll discover the power of different passive income streams and the pros and cons of each so you can uncover which one is right for you.

What are you waiting for? Start now!

Get your FREE eBook copy today, sent straight to your inbox — no strings attached.

 

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