What is a Digital Product?

A digital product refers to a product or service that is primarily based on digital technology, existing in a non-physical or intangible form. Unlike traditional physical products, which are tangible and occupy physical space, digital products are created, distributed, and consumed in a digital environment. This category encompasses a vast array of offerings, ranging from software applications and online platforms to multimedia content and digital services. To understand the nature of digital products, it’s essential to delve into their characteristics, advantages, and how they compare to traditional physical products.

Google Search, Facebook, Uber app, and Sonos speaker app are good examples of digital products. Some exists independently while others are a digitized form or part of a physical product or business.

Types of Digital product

  • Software Applications – This category includes a wide range of applications, from productivity tools like word processors and design software to entertainment applications like games and streaming services.
  • Digital Content – Digital content encompasses various forms, including e-books, music, videos, and podcasts. Users can access and consume this content on digital platforms.
  • Online Platforms – Social media platforms, e-commerce websites, and online marketplaces are examples of digital platforms that facilitate interaction, transactions, and content sharing.
  • SaaS (Software as a Service) – SaaS products deliver software solutions over the internet, eliminating the need for users to install, maintain, and update the software locally. Examples include cloud-based collaboration tools and customer relationship management (CRM) systems.
  • Digital Services – Services provided over the internet, such as online education, telemedicine, and digital marketing services, fall into this category.

Characteristics of Digital Products

  • Intangibility – Perhaps the most defining characteristic of digital products is their intangibility. They lack a physical presence and are experienced through electronic devices such as computers, smartphones, or other digital interfaces.
  • Interactivity – Digital products often provide a high degree of interactivity. Users can engage with the product, customize settings, and receive real-time feedback. This interactive nature distinguishes them from many traditional products.
  • Instant Distribution – Digital products can be distributed instantly over the internet. Users can download software, access digital content, or subscribe to services without the constraints of physical distribution channels.
  • Scalability – Digital products can be easily scaled to accommodate a growing user base. Once developed, additional users often incur minimal incremental costs, making scalability a notable advantage.
  • Upgradability – Updates and improvements to digital products can be seamlessly delivered to users. This contrasts with physical products, where updates may require replacement or additional components.

Advantages of Digital Products

  • Global Accessibility – Digital products can be accessed globally, breaking down geographical barriers. Users from different parts of the world can use the same product simultaneously.
  • Cost-Efficiency – Once developed, digital products often have lower distribution and replication costs compared to physical products. Digital distribution, updates, and maintenance are generally more cost-efficient.
  • Rapid Prototyping and Iteration – The digital environment allows for rapid prototyping and iteration. Developers can quickly create, test, and refine digital products based on user feedback.
  • Real-Time Updates – Digital products can receive real-time updates, ensuring that users always have access to the latest features, security patches, and improvements.
  • Distribution: Physical products require manufacturing, packaging, and distribution, involving logistics and supply chain considerations. Digital products, on the other hand, can be distributed instantly over the internet without the need for physical infrastructure.
  • Scalability: While physical products may face constraints related to manufacturing and distribution capacity, digital products can often scale effortlessly to accommodate a growing user base.
  • Environmental Impact: Physical products contribute to environmental considerations, including resource extraction, manufacturing waste, and transportation emissions. Digital products, although not without environmental impact, have a potentially lower carbon footprint.

Digital Product Lifecycle

Product managers must bear in mind when working on digital offerings that they are not anywhere as static as physical products. Failure to pay adequate attention to this is a major reason these products can fail. You don’t approach digital products with the mindset of creating a “finished product.” That is a thing for physical products and not even in every case of such. Your work is not done when you ship a product.

Digital products evolve continuously. You continue working to fine-tune what they offer as you learn new things about customer behavior and needs. The products make possible customized offers that you can tailor based on the data you’re getting. Fresh releases of code bring something new. Physical products, on the other hand, don’t evolve in the same way. They typically become obsolete with time and are then replaced.


In simple terms, a digital product is one that exists only in digital form. Some people might also describe it as a product lacking a physical form that you sell online. These simple definitions, however, do not give a full idea of what a product of this nature is. You don’t necessarily have to sell an intangible product before it can be viewed in this light. For example, a website from which you get useful information that you don’t have to pay for is a digital product.