You’re starting a side hustle, and you have no idea what to charge. You don’t want to scare people away with high prices, but you also don’t want to work for pennies. You see others charging wildly different amounts for similar services. You pick a number that “feels right” and hope for the best—usually pricing too low and regretting it later.
Pricing isn’t arbitrary. It’s strategy. Here’s how to price your side hustle for profitability, not just to make a sale.
Why Most People Underprice
The common pricing mistakes:
Imposter syndrome:
You think “I’m not experienced enough to charge that much.” But clients pay for results, not years of experience. If you solve their problem, you deserve fair compensation regardless of how long you’ve been doing it.
Fear of rejection:
You’d rather charge $25 and get every client than charge $75 and lose some. But attracting price-sensitive customers who’ll leave for someone $5 cheaper isn’t a winning strategy. Better to charge fairly and attract clients who value quality.
Not calculating real costs:
You price based on what sounds reasonable without calculating actual costs. Then discover you’re working for $8/hour after expenses. You forgot to account for your time, taxes, tools, marketing, and profit margin.
The True Cost Calculation
Calculate your minimum viable rate:
Step 1: Determine your desired hourly rate
What’s your time worth? If you earn $60,000 annually at your day job, that’s roughly $30/hour. Your side hustle should pay at least that, probably more since it’s your limited free time. Aim for $40-80/hour minimum.
Step 2: Add direct costs
Materials, software subscriptions, tools, equipment costs. If you spend $100 on supplies for a project that takes 5 hours, add $20/hour to your rate ($100 ÷ 5 hours).
Step 3: Factor in unbillable time
For every billable hour, you spend time on: marketing, admin, proposals, invoicing, learning. Multiply your billable hours by 1.5-2x to account for this. If a project takes 10 billable hours, you’ll actually work 15-20 hours total.
Step 4: Add taxes and profit
Self-employment tax is roughly 15% plus income tax. Add 30-40% to your rate for taxes. Then add 20-30% profit margin. You’re building a business, not just replacing your salary.
Example calculation:
- Desired rate: $50/hour
- Direct costs: $10/hour
- Unbillable time adjustment (×1.5): $90/hour effective rate
- Tax buffer (35%): +$31.50
- Profit margin (25%): +$30
- Minimum rate: $150/hour or project equivalent
Project vs. Hourly Pricing
When to use each model:
Hourly pricing works when:
- Scope is unpredictable or changes frequently
- Client wants ongoing support or retainer arrangement
- You’re new and still learning how long tasks take
- Industry standard is hourly (consulting, tutoring)
Pros: Protected if project balloons. Simple to calculate. Clear expectations.
Cons: Clients watch the clock. You’re penalized for efficiency. Income caps at available hours.
Project pricing works when:
- Scope is clearly defined with specific deliverables
- You can accurately estimate time required
- Client values outcome over time spent
- You want to be rewarded for efficiency
Pros: Earn more as you get faster. Client knows total cost upfront. Removes time-tracking burden.
Cons: Risk if project expands. Need solid scope definition. Requires experience to estimate accurately.
Value-Based Pricing
Charge based on value delivered, not time spent:
The concept:
If you help a business generate $100,000 in new revenue, charging $10,000 is reasonable—even if it only takes you 20 hours. You’re paid for the value created, not the time invested. This is how consultants and agencies make real money.
When to use value-based pricing:
- You can directly impact client’s revenue or cost savings
- Client understands and can quantify the value
- Your expertise lets you deliver results efficiently
- Results are measurable (increased sales, reduced costs, time saved)
How to calculate value-based prices:
Ask the client what success looks like. Quantify it. If your work generates $50,000 in value, charge 10-30% of that value ($5,000-15,000). Your price should feel like a bargain compared to the value delivered.
Researching Market Rates
Anchor your pricing in reality:
Check platforms:
Upwork, Fiverr, Thumbtack show what others charge for similar services. Sort by price high-to-low to see what top performers charge. Don’t anchor on the cheapest—anchor on what experienced providers charge.
Ask your network:
Reach out to people doing similar work. Most will share their rates if you’re not direct competition. Join industry Facebook groups or Slack communities and search for pricing discussions.
Consider your positioning:
Are you the budget option, mid-tier, or premium provider? Budget: bottom 25% of market. Mid-tier: market average. Premium: top 25%. Most side hustlers should target mid-tier minimum. Don’t be the cheapest—be worth the price.
Raising Your Rates
When and how to increase prices:
When to raise rates:
- You’re consistently booked at capacity
- You’re turning away clients
- You’ve gained expertise or credentials
- Annually (cost of living increases)
- You realize you underpriced initially
How to implement increases:
Existing clients: Give 30-60 days notice. “Starting March 1st, my rate increases to $X. Your current rate stays in effect through February.” Most clients accept modest increases (10-15%). If they don’t, you’re better off without undervaluing clients.
New clients: Implement immediately. No need to announce it—just quote the new rate. If asked why it’s higher than what someone else heard, explain you’ve raised rates due to demand or increased expertise.
How much to raise:
5-10% for annual adjustments. 15-30% if you’re seriously underpriced. 50%+ if you’re moving from beginner to experienced positioning. Raise gradually if nervous—but don’t stay underpriced out of fear.
Handling Price Objections
When clients say you’re too expensive:
Don’t immediately discount:
Ask: “What were you expecting to invest?” Sometimes they have a number in mind and you can adjust scope to fit budget. Other times they’re fishing for a discount. Stand firm on your rate but offer flexibility on scope.
Reframe value:
“This investment of $2,000 will generate $10,000 in additional sales based on similar client results.” Help them see ROI, not just cost. If they still balk, they’re not your ideal client.
Offer payment plans:
“I can structure this as three monthly payments of $667 instead of $2,000 upfront.” This makes larger projects accessible without discounting. Get first payment before starting work.
The Bottom Line
Pricing your side hustle isn’t about guessing—it’s about calculation and strategy. Calculate your true costs including time, expenses, taxes, and profit. Research market rates to anchor your pricing. Choose hourly, project, or value-based pricing based on your service and experience level.
The biggest mistake isn’t charging too much—it’s charging too little. Underpricing attracts the wrong clients, undervalues your work, and makes your side hustle unsustainable. You can’t build a meaningful business on razor-thin margins.
Calculate your minimum viable rate today. Compare it to what you’re currently charging or planning to charge. If there’s a gap, adjust. You deserve to be paid fairly for the value you provide. Price like a professional, not a desperate beginner.
