How to Price Your Services When You're Just Starting Out

Pricing is one of the hardest parts of starting a side hustle or freelance business. Charge too much, and you worry no one will hire you. Charge too little, and you may find yourself working long hours for very little money, which can quickly lead to burnout and resentment. Many beginners default to the lowest price they can think of, but underpricing is one of the most common and costly mistakes.

A more thoughtful approach to pricing can help you earn fairly for your work while staying competitive.

Start with what you need to earn

Begin by deciding how much you'd like to take home for each hour you work. This is the amount that makes the work worthwhile to you. But remember that not every hour you spend on your side hustle is an hour you can bill to a client.

Finding clients, writing proposals, answering emails, sending invoices, bookkeeping and learning new skills all take time, but clients don't pay you directly for those tasks. Many freelancers find that only a portion of their working hours are actually billable. If you only bill for, say, 70% of the time you spend working, your hourly rate needs to account for that unpaid time.

Add your costs and taxes

Next, account for your business costs. These may include software subscriptions, equipment, supplies, mileage, platform fees, payment processing fees, insurance and marketing. These costs come out of your earnings, so your rates need to cover them.

Then consider taxes. Unlike a regular job, no one withholds taxes from your side hustle income. You'll generally owe income tax plus self-employment tax, which covers Social Security and Medicare. Setting your prices without accounting for taxes can leave you with far less money than you expected.

Check the market

Your costs and goals are only part of the picture. You also need to understand what clients in your market are willing to pay. Research what others with similar skills and experience charge, both in your local area and on reputable freelance platforms. Look at rates for your specific service and niche.

If your rate is far below the typical range, potential clients may actually doubt the quality of your work, assuming that a very low price signals inexperience. If your rate is far above the range, you'll need strong proof of your value, such as an impressive portfolio, specialized expertise or excellent testimonials.

Hourly versus project pricing

There are several ways to structure your pricing. Hourly pricing is simple and transparent, and it protects you when a project grows larger than expected. It's common for work that's hard to estimate in advance.

Project pricing, where you charge a set fee for a defined piece of work, gives clients a clear total cost upfront, which many prefer. It also rewards you for working efficiently. As you get faster at a task, you effectively earn more per hour. The risk is underestimating how long a project will take, so define the scope clearly in writing.

Packages and retainers offer another option. A monthly retainer, where a client pays a set amount each month for ongoing work, creates predictable income for you and a predictable bill for the client. Packages that bundle services together can also make pricing simpler for clients.

Raising your rates

Your rates shouldn't stay the same forever. As you gain experience, skills, reviews and a stronger portfolio, your work becomes more valuable, and your prices should reflect that.

A smooth way to raise rates is to start with new clients, who will simply see your new prices. For existing clients, give advance notice, such as a month or two, before increasing your rates. Many clients understand that prices rise over time, especially if you've delivered great work.

If you're fully booked and turning away work, that's often a sign your prices are too low. Raising your rates can help you earn more while working fewer hours.

Pricing with confidence

Pricing your services isn't just about numbers; it's about valuing your time and skills. Calculate what you need, research the market, choose a pricing structure that fits your work and adjust as you grow. Fair pricing helps you build a sustainable side hustle that rewards your effort rather than exhausting it.

Present your price with confidence

How you communicate your price matters almost as much as the number. State your rate clearly and without apology, and connect it to the result the client wants rather than the hours you’ll spend. Instead of listing tasks, describe the outcome, such as a finished website that brings in inquiries or bookkeeping that keeps their taxes stress-free.

Put every quote in writing with a clear description of what’s included and what costs extra. Many freelancers ask for a deposit, often a portion of the total, before starting work. Deposits protect you from last-minute cancellations and signal that the client is committed.

Expect some people to say no. Not every prospect is the right client, and a few rejections are often a sign your pricing is healthy rather than too high. Track how many proposals you win; if nearly everyone says yes immediately, it may be time to raise your rates.