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Being your own boss is a wonderful feeling, but it also comes with the responsibility of knowing how much to charge for your services. You may enjoy the freedom to take your career in whatever direction most interests you and to decide your own work schedule, dress code, and daily routine. But you also have to earn a salary that supports your lifestyle.
If you’re struggling to figure out what your skills are worth, the following steps will help you set your price.
Key Takeaways
- Between 16 million and 30 million U.S. workers are self-employed, according to data from the U.S. Bureau of Labor Statistics and the Internal Revenue Service (IRS).
- To figure out what your skills are worth, start by finding out what others in the same profession charge to get an idea of the average for your field.
- Next, investigate the market for your offerings in your local area and determine what sets you apart from your competition.
- It’s essential to tally up the cost of running your business. You need to consider overhead expenses such as health care, office supplies, and self-employment taxes in deciding your salary.
- Don’t undervalue your time and expertise. Set a salary commensurate with your skill set.
A Portrait of the Self-Employed
Let’s first take a look at who in the U.S. is self-employed. The exact number is hard to pinpoint. According to the Bureau of Labor Statistics (BLS), approximately 16 million people living in America are self-employed workers as of August 2025. The BLS figure, which is derived from household surveys, may undercount total self-employed numbers. One reason: Individuals who work a job for an employer in addition to having a self-employment gig may self-identify as working for an employer if given only one option.
According to the Internal Revenue Service (IRS), there were 30.98 million nonfarm sole proprietorships (unincorporated self-employment businesses) in tax year 2022, based on the number of taxpayers filing a Schedule C.
Additionally, the Gig Economy and Self-Employment Report, commissioned by Intuit QuickBooks with research by Gallup and conducted in 2019 (prior to any effects of the 2020 economic crisis), states that as many as 28% of workers—44 million in total—report being self-employed at some point during a given week. This figure is more likely to include workers who are self-employed part-time as well as employed by an employer.
These industrious people are in a wide range of professions—everything from construction to childcare and professional services to arts and entertainment. Whatever path your self-employment takes, these steps will help you decide how much to charge for your services.
Investopedia / Hugo Lin
1. Examine Your Peers and Competition
To begin with, check local sources, such as help-wanted ads, advertisements for services, and local business groups or your city’s chamber of commerce, to get a feel for what other professionals in your field are charging. Trade magazines and national professional organizations are another way to get a feel for your profession’s going rate.
The average self-employed salary in the U.S. varies widely, depending on whom you ask. According to Zippia, it’s $84,305 per year or $40.35 per hour. ZipRecruiter, on the other hand, says the average salary is $32,315 per year or $16 per hour.
Note
The total compensation for self-employed workers is effectively less because these individuals must pay for their own benefits. However, your self-employment situation depends a lot on your particular profession.
2. Define Your Local Market
Once you know the average salary for your field, it’s time for step two: Investigate the market for your services in your particular location. Questions you need to answer include:
- Do you live in a large city, where going rates are generally higher, or in a rural location?
- How much competition do you have in your area?
- Do you offer anything unique or especially desirable that goes beyond your competition?
- Is your field in high demand?
- Are there local networking or business groups you can join to gain contacts and clients?
Once you’ve answered these questions, you’ll better understand who you’re competing with, what they’re doing, and how to set yourself apart. You’ll also begin to grow your resource of contacts. The bigger your network, the more opportunities there are for your name and business to come up.
3. Tally Your Expenses: Taxes, Health Care, and Business Expenses
Another common mistake of those new to self-employment is forgetting that freedom is not free. When you’re the boss, you need to provide your own health care, pay your own taxes, provide for your own vacation time, keep the lights on, the car full of gas, and the office supply closet stocked. It’s also easy to let saving for retirement fall by the wayside, but with no one else to plan for your future, it’s crucial that you set aside regular retirement savings.
All of this overhead must be considered when deciding your salary. After all, you don’t just need to be compensated for your time; you also need to cover your bills.
Tip
An app that tracks cash flow and day-to-day business finances, like FreshBooks or QuickBooks, can make it easy to see how your money comes and goes.
4. Calculate Your Worth
One common mistake of people new to self-employment is undervaluing their time and expertise. Don’t fall into that trap—set your price for your worth. If you are new to the field, you’ll need to price yourself at the lower end of the average salary for your field, but if you already have an impressive portfolio or resume, price your work accordingly.
Warning
Pricing yourself too low can backfire—potential clients might assume your low rates mean you lack skill or knowledge. Since you’ve already determined the average pay of others in your field, you should have a reliable salary range on which to base your prices.
Once you have clients, keep track of the hours spent on each project. Efficient time management and impeccable record-keeping are a must for the self-employed. Simplify the record-keeping process with an app that acts as your personal project manager. HoursTracker or Clockify are good choices.
What Does It Mean to Be Self-Employed?
Being self-employed means you are working for yourself. This generally means owning a small business classified as a sole proprietorship, but you can also receive money directly, as you will be taxed the same regardless. Being self-employed offers many freedoms, but your tax bill will be higher, and you may need to file more regularly.
How Do I Report Self-Employment Income?
If you are employed and have a side hustle, or work for yourself full-time, you report it all the same. Self-employed individuals report their income with a Schedule C, a separate form issued by the IRS. A summary of the forms required, as well as all necessary information, can be found on the IRS self-employment page. Many self-employed individuals find it cost-effective to hire a tax professional to handle filings.
Can You Claim Self-Employment on Taxes?
One good thing about self-employment income is that you can reduce your taxable self-employment income by half of the self-employment tax before applying the tax rate. It sounds complicated, but it is rather simple. When completing the IRS Schedule SE, you may find that you don’t pay tax on the entirety of your income. If you have a tax payment that equals $2,000, that means that you can reduce your taxable income by half of that, or $1,000. Remember, this only applies to your tax payment and is not a blanket reduction on your taxable income.
The Bottom Line
When you make the jump to self-employment, you’ll need to consider several factors before deciding how much to charge potential customers. After taking into account your profession, your market, and your personal skills and experience, don’t forget to look at your costs of doing business. Once these numbers are established, you’ll have a better picture of how much to charge and what you’ll need for a comfortable lifestyle.
