You have a skill. Maybe you write code, walk dogs, design logos, or organize closets. You are ready to turn that skill into income, but you are stuck on the most intimidating question of all: “What do I charge?”

Before you can set the right price, you must first understand the logistics of how to turn your hobby into a side hustle without burning out.

Pricing your services is one of the most difficult hurdles for new entrepreneurs and side hustlers. Charge too much, and you worry you will scare away clients. Charge too little, and you risk burning out while barely breaking even. Finding the “Goldilocks” zone—where your price reflects your value and fits the market—is essential for the long-term health of your side hustle.

This guide will walk you through the practical steps of setting your rates, moving beyond guesswork and into a strategy that supports your financial goals.

Transparency: This article may reference financial products, tools, or services. If you sign up through links on this page, we may earn a commission at no extra cost to you. Our recommendations are based on editorial judgment, not compensation.

Audience Scope: This guide is for U.S. residents looking to monetize freelance services or side hustles. If you have complex circumstances such as high-liability industries, international clientele, or corporate tax structures, we recommend consulting with a qualified financial professional or business attorney.

Key Takeaways

• Shift your mindset: You must charge more than an hourly employee wage to cover taxes, insurance, and overhead.
• Know your numbers: Calculate your “survival number” and business expenses before setting a single price.
• Value over time: Whenever possible, move away from hourly billing toward project-based or value-based pricing to maximize earnings.
• Test and iterate: Your price is not a tattoo. You can—and should—adjust your rates as you gain experience and demand increases.
• Account for taxes: Always factor in self-employment taxes when calculating your take-home pay targets.

Breaking the “Employee Wage” Mindset

The most common mistake new freelancers make is equating their rate to a salary. If you earn $30 an hour at your day job, you might think charging $35 an hour for your side hustle is a great deal. It isn’t.

Depending on your personality, you may want to focus on side hustles for introverts that prioritize deep work over constant client negotiation.

When you are an employee, your employer covers a significant portion of your costs. They pay half of your FICA taxes (Social Security and Medicare), provide equipment, subsidize health insurance, and pay you for downtime (like staff meetings or coffee breaks). When you run a side hustle, you are the employer and the employee.

You must adopt a business owner’s mindset. Your rate needs to cover:

• The Self-Employment Tax: You are responsible for the full 15.3% tax for Social Security and Medicare.
• Unbillable Hours: You don’t get paid for the time you spend invoicing, marketing, or answering emails.
• Benefits: There is no paid time off, sick leave, or employer-matched 401(k) in the gig economy unless you build it into your price.

According to Investopedia, understanding your cost of goods sold (COGS) and overhead is critical to determining a profit margin that sustains your business, not just your lifestyle.

Calculating Your True Costs

Before you look at what competitors are charging, you must look inward. You need to know exactly how much it costs you to deliver your service. This is your “floor”—the absolute minimum you can charge without losing money.

Direct Costs

These are expenses tied directly to doing the job. For a dog walker, this might be gas mileage and poop bags. For a graphic designer, it might be stock photo subscriptions or font licenses.

Overhead Expenses

These are the costs you pay regardless of whether you have a client this month. Examples include:

• Website hosting and domain fees.
• Business insurance.
• Accounting or project management software.
• Internet and utility portions (if working from home).

Write these numbers down. If your side hustle costs you $200 a month to operate, and you only plan to work 10 hours a month, your first $20 per hour goes strictly to keeping the lights on. Any profit must come on top of that.

Choosing the Right Pricing Model

How you charge is just as important as how much you charge. Different industries favor different models, but you should choose the one that aligns with your income goals.

1. Hourly Pricing

This is the most straightforward method: You trade time for money. It is easy for clients to understand and good for tasks with undefined scopes.

The Downside: It penalizes efficiency. As you get better and faster at your work, you earn less money for the same output. It also caps your income because there are only so many hours in a day.

2. Project-Based (Flat Rate) Pricing

You quote a single fee for a defined deliverable (e.g., “$500 for a resume rewrite”). This is often superior to hourly billing because the client knows exactly what they will pay, and you are rewarded for working efficiently.

3. Value-Based Pricing

This is the advanced strategy where you price based on the value you provide to the client, not the time it takes you. If you write a sales email that will generate $10,000 for a client, charging $1,000 for it is a bargain, even if it only took you an hour to write.

4. Retainer Model

A retainer involves a client paying a set monthly fee for a guaranteed amount of work or availability. This provides stability, allowing you to budget better. Forbes Advisor notes that recurring revenue models like retainers are excellent for stabilizing cash flow in small businesses.

Researching Your Market Rates

Once you understand your costs and have chosen a model, you need to gauge the market. However, be careful not to fall into the “race to the bottom” trap found on many gig platforms.

If your business model involves products, selling online through Etsy, eBay, or Amazon often dictates specific pricing structures based on platform fees.

Where to Look

• Industry Reports: Search for “[Your Industry] rate sheet [Current Year].” Many professional associations publish annual salary and freelance guides.
• Networking Groups: Join Facebook groups or LinkedIn communities for your specific trade. People are often willing to share rate ranges anonymously.
• Competitor Websites: Look at the websites of other freelancers who are slightly ahead of you in their journey. See how they package their services.

Warning: Avoid basing your prices solely on the lowest bidder on platforms like Upwork or Fiverr. Those marketplaces are global, meaning you may be competing with individuals whose cost of living is significantly lower than yours. Compete on quality and reliability, not just price.

The Simple Math of Setting Your Rate

If you need a concrete starting point, use this reverse-engineering formula. This helps you calculate a target hourly rate, which you can then use to estimate flat-rate projects.

Let’s break down the logic from the diagram above:

1. Determine your desired annual side hustle income. (e.g., $20,000)
2. Add your estimated annual expenses. (e.g., $2,000)
3. Add a buffer for taxes (approx. 25-30%). (e.g., $6,000)
4. Total Revenue Goal: $28,000.
5. Estimate Billable Hours: Be realistic. If you work 10 hours a week, only about 6 or 7 might be billable. (e.g., 300 billable hours per year).
6. The Math: $28,000 ÷ 300 hours = $93.33 per hour.

This number might shock you. However, this is the reality of running a profitable business. If the market won’t bear that price, you either need to lower your expenses, increase your billable hours, or target higher-value clients.

Creating Pricing Tiers and Packages

One of the most effective psychological strategies in pricing is “anchoring.” By offering three tiers of service, you can guide clients toward the middle option—which is usually the one you want to sell.

This strategy also prevents a binary “yes/no” decision. Instead, the client asks, “Which level can I afford?” Here is an example of how a Social Media Manager might structure packages:

By placing the Premium package at $2,200, the $1,000 Standard package feels like a safe, high-value choice. If you only offered the $1,000 option, it might feel expensive in isolation.

Handling Taxes and Overhead

We touched on this earlier, but it deserves deeper focus. The Internal Revenue Service (IRS) requires you to pay taxes on your earnings as you go. Unlike a traditional job where taxes are withheld automatically, you must save and pay these yourself.

The 30% Rule

A practical rule of thumb is to set aside 30% of every payment you receive into a separate savings account. This covers:

• Federal Income Tax
• State Income Tax (if applicable)
• Self-Employment Tax (15.3% for Social Security and Medicare)

If you price your services without accounting for this slice, you will effectively be earning 30% less than you think. According to NerdWallet, keeping your business finances separate from your personal finances is one of the best ways to simplify tax season and track your actual profitability.

Negotiating and Presenting Your Price

Once you have set your price, you have to communicate it. Confidence is key. If you sound unsure about your rate, the client will be unsure about paying it.

Learning how to negotiate prices effectively can help you land the rate you deserve without appearing desperate for work.

Don’t Over-Explain: When a client asks for a quote, simply state it. “For this project, the investment is $1,500.” Stop talking. Do not rush to add, “But I can lower it if that’s too high.”

Focus on ROI: Shift the conversation from cost to investment. Instead of saying, “I charge $50 an hour for organizing,” say, “My organization service saves you roughly 5 hours a week in lost productivity and reduces household stress.”

Signs It Is Time to Raise Your Rates

Your pricing is dynamic. As you grow, your prices should grow with you. Here are three clear indicators it is time for a raise:

1. You are fully booked: If you are turning away work because you don’t have time, your demand exceeds your supply. This is the classic economic signal to raise prices.
2. No one says “no”: If every single potential client accepts your quote immediately without negotiation, you are likely underpriced. A healthy rejection rate is actually around 20-30%.
3. Your skills have improved: If you have completed a certification, invested in better equipment, or simply have a stronger portfolio than last year, your value has increased.

When raising rates for existing clients, give them notice (usually 30 days) and explain that the increase allows you to maintain the high quality of service they expect. Most reasonable clients will understand.

Common Pricing Pitfalls to Avoid

Even seasoned side hustlers make mistakes. Watch out for these traps:

If you find that setting your own rates is too complex, you might consider pre-set platforms, though it is wise to research how much you can really make with food delivery apps before committing.

• Scope Creep: This happens when a client adds “just one more small thing” until the project doubles in size but the price stays the same. Always have a contract that defines exactly what is included and what costs extra.
• Forgetting “Invisible” Time: Did you charge for the 2 hours you spent driving to the location? Did you charge for the research phase? Ensure your flat rates account for the entire process.
• Copying Competitors Blindly: You don’t know your competitor’s financial situation. They might be independently wealthy, living with parents, or—more likely—running their business into the ground because they don’t know how to price either. Run your own race.

When to Consult a Financial Professional

While many side hustlers can manage their own pricing and basic finances, there are specific scenarios where professional guidance is not just helpful, but necessary to protect your assets and future.

• Rapid Growth: If your side hustle income approaches or exceeds your full-time salary, consult a CPA to discuss S-Corp elections or other tax structures that could save you thousands.
• Liability Concerns: If your service involves high risk (e.g., physical training, financial advice, childcare), consult an attorney and an insurance broker to ensure your pricing covers adequate liability protection.
• Retirement Planning: For guidance on how to use side hustle income for Solo 401(k)s or SEP IRAs, check resources from the Consumer Financial Protection Bureau (CFPB) or speak with a Certified Financial Planner (CFP).

You can find qualified professionals through organizations like the Certified Financial Planner Board or the National Foundation for Credit Counseling.

Frequently Asked Questions

Should I put my prices on my website?

It depends on your business model. Displaying prices filters out clients who cannot afford you, saving you time on discovery calls. However, for complex, high-ticket services (like consulting or custom construction), it is often better to list “Starting at…” prices or require a consultation to provide a custom quote based on value.

How do I charge friends and family?

This is tricky. If you want to offer a discount, make it official. Invoice them the full amount, then apply a “Family & Friends Discount” line item so they see the true value of your work. This prevents them from referring others to you with the expectation of the same low rate. If you cannot afford to discount, be honest: “I’d love to help, but this is my business and I have to stick to my standard rates.”

What if a client says I am too expensive?

Do not immediately lower your price. Instead, offer to remove scope. Say, “I understand you have a budget cap. We can hit that number if we remove X and Y features from the package.” This maintains the integrity of your value while being helpful. If they still refuse, they may not be your ideal client.

What are the risks of undercharging?

Beyond the obvious financial loss, undercharging can damage your reputation. In many industries, a price that is too low signals low quality or desperation. It also attracts “high-maintenance, low-paying” clients who tend to be more demanding than clients who pay premium rates.

When should I consult a professional about my pricing?

You should consult a business coach or mentor if you are consistently working but not making a profit. From a financial/legal standpoint, consult a CPA if your pricing needs to account for complex sales tax nexus issues (selling digital goods across state lines) or significant inventory costs.

How often should I review my pricing?

Review your pricing at least once a year. The end of the year is a natural time to assess your profitability, inflation rates, and skill growth to set new rates for the upcoming year.

Last updated: January 2026. Information accurate as of publication date. Financial regulations, rates, and programs change frequently—verify current details with official sources.

This article was reviewed for accuracy by our editorial team.

For trusted financial guidance, visit Forbes Advisor, Money.com and Consumer Financial Protection Bureau (CFPB).

Important: EasyMoneyPlace.com provides educational content only. We are not licensed financial advisors, tax professionals, or registered investment advisers. This content does not constitute personalized financial, tax, or legal advice. Laws and regulations change frequently—verify current information with official sources.

Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Individual financial situations vary, and we encourage readers to consult with qualified professionals for personalized guidance. For those experiencing financial hardship, free counseling is available through the National Foundation for Credit Counseling.

Once you understand the financial shift, it becomes easier to how to balance a side hustle with a full-time job without burning out.