Step 2: Work Out How Much Side Income Your Bill Really Needs

Once you’ve picked the first bill to replace, it’s tempting to aim for exactly that amount. If your phone bill is $35, you aim to earn $35. But the money that lands in your pocket is almost always less than what a customer pays you.

Fees, supplies, shipping, and taxes all take a share. Working out your real target before you start saves a lot of disappointment later. Here’s a simple way to do it.

Step 1: Start With the Bill’s Real Monthly Cost

Look at your last few statements, not the advertised price. The amount you actually pay may include taxes, surcharges, or other charges on top of the plan price. If the bill changes from month to month, use an average of the last several months.

Step 2: Find Out the Fees Where You Sell

Every selling site and payment app has its own fees, and they change from time to time. Always check the current fee page before you set your prices. As an example, here is what Etsy listed for US sellers as of 2026:

• A $0.20 listing fee for each item you list, whether it sells or not.
• A 6.5% transaction fee on the item price plus whatever you charge for shipping and gift wrapping.
• A payment processing fee of 3% plus $0.25 per order for sellers with a US bank account.

Other platforms, apps, and craft fairs have their own costs, such as booth fees or card-reader fees. Write down every fee that applies to how you plan to sell.

Step 3: Work Through One Sale

Here’s a made-up example using those Etsy fees. Say you sell a handmade item for $20 and charge $5 for shipping, so the customer pays $25.

• Listing fee: $0.20
• Transaction fee: 6.5% of $25, about $1.63
• Payment processing: 3% of $25 plus $0.25, which is $1.00

That’s about $2.83 in fees. Now say postage actually costs you $5 and the materials cost $6. Your take from the sale is $25 minus $2.83, minus $5, minus $6, which leaves about $11.17 before taxes. The numbers are only an illustration; your own costs will be different.

So in this example, a $35 phone bill would take more than three sales a month to cover, not two.

Step 4: Leave Room for Taxes

Side income is generally taxable. If you work for yourself, the IRS says self-employment tax applies once your net earnings from self-employment are $400 or more for the year. The self-employment tax rate is 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare. Regular income tax may apply too, depending on your total income.

Many people find it easiest to move a portion of every payment into a separate savings account so the tax money is there when it’s needed. How much to set aside depends on your situation, so a tax preparer or the IRS pages linked below can help you pick a number. Our taxes on side income basics covers the forms you might see.

Step 5: Add a Small Cushion

Some months will be slow. A customer may return something, or a payment may arrive late. Many people add a little extra to their monthly target so one quiet month doesn’t leave the bill uncovered.

Putting It Together

Your real target is roughly the bill’s monthly cost, plus the fees and costs of making the sales, plus money set aside for taxes, plus a small cushion. Then divide by what you actually keep from each sale or each hour of work to see how many you need.

If the number looks too high, that’s useful to know early. You can raise your price a little, choose a selling method with lower costs, trim the bill first, or start with a smaller bill. Results vary from person to person, and that’s perfectly fine.

Check Your Benefits Too

Side income can affect your taxes and, for some people, benefits such as Social Security before full retirement age, SSI, Medicaid, or housing assistance. This is general information only, so check your own situation with the Social Security Administration and the IRS. Keeping simple records of every sale and expense will make all of this easier.

More on Replace a Bill

• Step 1: List Your Monthly Bills and Pick the First One to Replace
• Step 4: Understand the Taxes on Side Income
• Step 5: Set Up a Simple Record-Keeping System

Sources

• Etsy: Fees & Payments Policy
• Etsy: Etsy Payments Policy
• IRS: Self-employment tax (Social Security and Medicare taxes)
• Social Security Administration: Receiving benefits while working