Article for Presentation For Women Only at Women & Wine, presented at Cultivated Cocktails and hosted by Rustic Grape, September 19, 2023
Women and Wine Survey Results
Introduction
Pricing is one of the biggest issues Mari encounters when consulting with new clients particularly, women business owners. In this presentation and blog, I will cover:
How does pricing impact the overall success of your business? What role does it play in marketing?
Why do women undervalue their services or rates?
How do you know if you are charging too much or not enough?
What numbers should you know?
About Me and why THIS topic?
[You can read my full bio here] Before I dedicated my career to marketing, I was in corporate in two facets - primarily administrative role (15 years) and later, in executive management role both as an employee and then as business owner (the last 18). Pricing both as business owner and as employee was always a factor of my career I struggled with. From my first management position to diving into being a solopreneur and then developing into an agency model, I struggled with pricing. Over the last several years of consulting, I continue to see women business owners who also struggle with pricing.
What this is NOT - This isn't a talk about gender pay inequality. That does exist and I do feel like it's getting better. This isn't a talk about pricing strategies. I am also not addressing how different generations of women are addressing pricing (as employees or business owners). Each of those are stand alone presentations.
What I am sharing is my perspective from my own struggles, consulting experience and as a business owner. I hope sharing my experience and perspective will help you as well.
How does pricing impact the overall success of your business? What role does it play in marketing?
Price is one of the four Ps of the Marketing Mix:
Product
Price
Place
Marketing is one of the 4 cornerstones of your business - operations, management and finance are the other 3. They all relate and therefore all impact one another. Terrible operations, management or financial controls can take down a business even with an excellent product or service.
Focusing on the Visual
Today's digital business culture focuses on the visual. Out of the four Ps, I see many business owners focus more on the visual and promotional side of marketing - The Product, Promotion and Place. You might know these as the branding, website, social media, content like blogs and email newsletters. It’s our culture that focuses on our image so no wonder that we focus on how our marketing looks. Price is often not given the attention it deserves. It's unseen and yet it can make and break your business.
Pricing will dictate PROFIT.
Pricing can change your ENTIRE success track and can impact your Work / Life Balance because you can earn more with less.
The Profit Dilemma
Let's say you have the product, place and promotion down. You're busy. You have no trouble selling your products or services but yet, you're not breaking even, making enough profit to reinvest in your business, pay bonuses, etc. You feel like you have no work life balance and are working all the time. There are many businesses that are popular and busy but may be going broke. Often, this is rooted in their price. Don't worry, I experienced this for the first few years of being a solopreneur when I was charging $20/hour for website design but my actual effective hourly rate was like $7/hour.
I learned this lesson as I transitioned from being a solopreneur working from home to having a brick and mortar office with real overhead and later when I became an agency and brought on people. I had a responsibility to meet financial needs of people that work with me.
Why is this? I believe women undervalue their services or rates resulting in not charging enough.
Why do women undervalue their services or rates?
Did you know:
The gender pay gap is far worse for women who freelance than for those in full-time employment, a US study shows.
Men working in some sectors of the gig economy charge an average of 48% more than women.
Accounting and consulting is the sector with the widest pay gap for freelancers.
Unequal pay contributes to gender disparities which will take 132 years to address at the current rate of progress, says World Economic Forum's Global Gender Gap Report report.
(Source: World Economic Forum, Aug 2022)
Factors leading to undervaluing of services by women (my experience as a consultant):
Confidence
Not Including Our Time
Negotiation Skills
Self Promotion
Hierarchy of Priority, back to that work life balance.
Confidence
If we're not confident, this translates into value. We don't charge enough because we don't value ourselves. Show me a confident woman and I guarantee she's charging enough. Show me someone who lacks confidence, and odds are that she is not charging enough. Confidence does come with experience but it doesn't mean you have to have experience to charge more. Huh?
My first executive management job, I was offered a great salary but I turned it down. I made them pay me $10k less because in my mind, I didn't have the experience and therefore, I couldn't understand why they would pay me as though I had. They had more confidence in me than I did. I later realized that when you're in corporate or freelance, you're often asked to do things you've never done. But no one says I'm paying you less, they say figure it out. Eventually, my employer fixed my salary and I was okay with it after I saw how much work I put into it.
Not including Time
If you charge by the hour or flat rate where your hours are included, this is where I see a lot of lost Value.
We often come up with rates based on market rates or we expect people to pay, what we think people will pay but we're often very wrong in that. Of course there are factors in this such as competition, market demand, etc. I'm not factoring those in at this stage. I see a lot of consultants and freelancers that don't track and include their time. We may be charging X for a project when in reality that project is taking additional hours we are not accounting for and our real, effective rate is much lower which translates into not charging appropriately for the project. This is definitely something I did at the beginning of my freelance career.
Time isn't just money; it is value. We charge our time according to task vs. results and in so doing, we do not charge enough. My theory on this is that we have become accustomed to discounting what we do at home as low value, a service that should be included and that it then translates to the work place.
Salary.com estimates in their Mom Salary Survey (May 2021), that if you paid a mom to do what she does, the salary would be $184,820.
I learned this lesson while working in the legal and accounting fields where everyone's time was accounted for - billable vs. nonbillable time. We tracked it. We could run a report showing real effective rate vs. billable rate. It taught us how to be efficient, where we saw time wasted and of course, where we may not be charging enough. This is it's own presentation but not tracking your true amount of time in something is where we lose a lot of value.
Negotiation Skills
Negotiation skills will determine your expenses or costs of our products or services. If we can't negotiate terms, then you're probably paying too much which then means its forcing you to charge more. This impacts things like rent, third party services, even negotiating salary or contractor pay and ultimately, negotiating when vendors make mistakes. I've consulted with friends and clients many times on how to negotiate. I negotiate often, weekly in most cases on behalf of my clients.
Women are actually excellent negotiators especially those with families but for some reason we don't translates those skills from the home place to the work place. We're not as confident at the work place and our negotiation skills take a back seat. Negotiation starts with communication and women are excellent at that but communicating in a business setting and presenting your terms requires a different kind of communication. I learned this when I learned DiSC for business.
Several years ago I met someone who taught DiSC. I worked with her to help me to understand communication styles for a personal relationship but then hired her to help me use it in business. I learned that negotiation is not just about terms but about communication and women are excellent communicators. Learning how to focus our communication in certain settings where we are negotiating pricing that can ultimately impact our business profit is important. If we’ve been raising families, you’ve been negotiating. Learning how to negotiate means learning how to communicate with people who communicate very differently than you. Communication is about personality but learning DiSC removes the personal and focuses on the communication in order to achieve the results you want.
Self-Promotion
Part of negotiation is self-promotion and its something we were taught not to do. Patting yourself on the back, keeping track of your achievements, etc. What women need to realize is that self-promotion is about communicating your value.
When you work for yourself its very important to communicate your value. Each month with my clients, we review what my team has accomplished. If something stellar happened, I inform the client. It's not just about getting things done but how well we do them.
I've struggled with this and still do. I highly recommend the book, "Women Don’t Ask, Negotiation and Gender Divide" and the first chapter is all about self-promotion. How women view it differently than men.
Women Don't Ask - Hierarchy of Priority, back to that work life balance.
About half of employed women (48%) report feeling a great deal of pressure to focus on their responsibilities at home, compared with 35% of employed men. (Source: Pew Research, Gender pay gap in U.S. hasn’t changed much in two decades, March 1, 2023
How do you know if you are charging too much or not enough?
Every business industry has benchmark rates and prices but the way you know is what we referred to in the accounting world as the "bitch rate." Every business expects customers to complain about their rates but how much is too much and how much is not enough? The range is somewhere between 15% and 30% depending on your business. If no one complains, you're not charging enough and of course, if no one is buying, your prices may be too high or the demand just isn't there.
What numbers should you know?
What is your breakeven amount to make each month? What do you need to make just to pay the bills?
Then, how much of X do you need to sell in order to breakeven?
Beyond breaking even, how much do you need to make in order to achieve your other goals? How much net profit?
What are your projected sales? I look at this each quarter based on our work and run a projection.
Are you charging market rates and if not, why not? You can have special conditions or just make a personal decision not to.
If you're in management or consulting of any kind, what is your true hourly rate?
Marketing Outpost is a full-service marketing agency based in Asheville, NC serving small and independent businesses and nonprofit organizations.