Today, my family and I are driving from LA to San Francisco! We’ve enjoyed our time on the road so far, and I’ve been reflecting on the many conversations I’ve had in-person and online with my fellow women entrepreneurs recently, and it’s been interesting to see just how often the topics of pricing, underpricing, and discounting come up.
We already know there is a gender pay gap for employees – according to The Institute for Women’s Policy Research, women made .80 for every dollar a man made in 2017.
But here’s the disturbing truth: we still pay ourselves less, even when we’re our own bosses, and it’s even worse. Women entrepreneurs, on average, pay themselves .28 less for every dollar than their male counterparts, according to Inc.com. This happens for several reasons, we:
- think we have to when we’re ‘new’
- lack confidence in our abilities or the quality of our products
- mistakenly assume that our success is due to luck or a one-time favorable outcome, and that under-performance is our true baseline
- FEAR that we won’t get clients or that clients will leave
- have to be nice and agreeable
- believe that we don’t deserve it, or that struggle is just part of owning a business
These beliefs lead to failure. We don’t make enough money to pay ourselves (let alone build security and affluence), and we don’t make enough to invest back into our businesses.
So, how much should you charge? It depends, here are some factors to consider:
- market research (assess if you’re competing on price or value)
- develop a network of trusted peers – what do they see in your industry?
- focus on the value that you’re creating and price accordingly
- how much it costs to produce your product or service (don’t forget your own time, labor, supplies, mileage, lease, utilities – all the ‘little’ things we take for granted besides cost of goods)
There is a lot to figuring out the pricing sweet spot, but here’s my parting shot – your price is ultimately what someone is willing to pay. How many times have you seen an inexperienced or unscrupulous businessperson charging more than you because they had bravado?
Nudge your price up a bit at the next opportunity – you might be surprised at how easy it is.