Female Proprietors Underprice Services

If you’re a woman and you own your own professional-service business, chances are you tend to charge less than your male counterparts, according to a research paper examining the effect of gender on pricing practices (“A Behavioral Study of Pricing Decisions: A Focus on Gender,” presented at a national meeting of the Academy of Management in Atlanta in August). The authors noted that much has been made of the fact that women overall earn less than men; however, this research revealed that even when women have substantial discretion over the amounts they charge, they still make less.

The result was so prominent that leaders are concerned that the average incomes of entire industries could decline as various professions attract more women, said study author William L. Cron, DBA, marketing professor and associate dean of graduate programs at Texas Christian University’s M.J. Neeley School of Business in Fort Worth, Texas, in a press release. This is important because recent U.S. Census statistics indicate that professional-service businesses account for approximately 11.4% of the U.S. economy.

“Our major finding is that the gender of professionals has a strong direct impact on their pricing decisions,” says Cron. “Certain characteristics of some clients may lead women business owners to give them a price break,” and women tend to be softer on prices in general in order to foster relationships. The upside is that while female proprietors may sacrifice some income in the short term, the customer loyalty they strive to develop may lead to greater income stability and profitability in the long run.