Digital products vs physical products: what is the difference?
Updated
Cost per sale
A physical product costs you money on every single sale: materials, packaging and postage. A digital one costs you almost nothing after the first copy. That difference in cost per sale is the whole reason people move to digital, and it changes delivery, returns and tax with it.
Everything else on this page follows from that one line.
Delivery and returns
Physical means shipping times, lost parcels and return postage. Digital means an instant download and no parcel to lose.
But digital returns are awkward: the buyer keeps the file whatever you decide about the refund.
Tax is different
Many countries tax digital goods by where the buyer lives, not where you live. That can mean registering in places you have never been.
Platforms that act as merchant of record deal with this for you. It is worth asking before you pick one.
Which to choose
Digital if you want to start cheaply and sell worldwide from day one.
Physical if the thing genuinely has to exist in a buyer’s hand. Some do — most of what people sell online does not.