I don't do it, but friend of mine used to. She's a SAHM and said she made $40k+ per year just doing it on weekends. (We are in a HCOL area.) She tried to get me to network with her high-end party planner connections, but I wasn't really in a position to do that at the time. The big money is wherever people are throwing big parties: bar mitzvahs, wealthy folks' toddlers' birthdays, etc. Definitely mostly on weekends, though special events happen around holidays and sometimes throughout normal weeks. Definitely my least favorite part of performing/working at events was losing good weekend/holiday time.
Dunno how payment normally works; when I performed it was usually through an event coordinator or talent company so it was all pretty formal, but I imagine lots of face painting is less formal than that. I'd do it for cheap for friends a few times to get a handle on what it's like (test out designs, figure out long you can do it, how often you need a break, what equipment works best, etc.) and then write up your general requirements + fee and put it out there through whatever marketing avenue makes sense to you. People throwing parties love things to be easy, so if you can say "My standard package is X", they love that, no matter how much you charge. (Going rate does seem to be about $100/hour though.)
