Fellow Female Entrepreneurs: It’s Partly Our Own Fault That Male Entrepreneurs Earn More
This was originally written for AllBusiness.
We hear a lot in the media about the wage gap female employees experience in the workplace, but something that didn’t occur to me was that there is a similar divide for female entrepreneurs. If we can set our own prices, why aren’t we making more money?
Look, we can point the finger in a million directions. We have to charge less to get our foot in the door. We’re not taken as seriously as men. Men are just more aggressive when it comes to charging more.
But I think we have to admit our own role in the situation.
I know for me, when I first started my marketing firm in 2006, the idea of charging anything more than $50 for a press release seemed preposterous. Who was I to charge more? I hadn’t been in the industry that long (though I had an MBA), and I felt that I was hobbling along and it showed. So I charged little for my services.
I remember my ex-husband imploring me to charge more. I didn’t want to risk not getting new business because I’d asked for more than they wanted to pay. He told me to quote just 20% higher for the next potential client that called. I settled on 15%. And the client readily agreed to that rate.
I was floored. Maybe I hadn’t charged enough. Exactly how much were my services worth?
Why Are We Afraid to Ask for What We Want?
Whether you believe that men are innately aggressive hunters who are fearless when it comes to slaying the beast or closing the sale, you have to admit we’ve fallen into certain patterns when it comes to how we operate as a gender. Certainly not every man will confidently quote double what female entrepreneurs will ask a client for. Nor will every woman lowball herself.
But I think that history courses through our veins, and some of our challenge in asking for what we’re worth comes from the struggle it took to get where we are. When you consider that women having rights (to vote, to work, to have an opinion, to succeed) is a relatively new status, it’s understandable that we might feel a little wobbly with our newfound power, even if we were born after Women’s Lib. Memories of oppression live long, and many women simply don’t want to rock the boat.
So we don’t ask for what we want.
We quote a rate we’re fairly confident a client will pay. We don’t ask for an increase, even if we’ve been working with a client for years. We play it safe and have to work longer and harder to make ends meet.
As I write this, I realize I’ve used the verb “ask” twice here. Men don’t “ask” for more money. They say, “This is what I charge. Take it or leave it.”
So why are we asking permission to get what we deserve?
Over the years, I’ve gradually increased my rates. Sometimes I’ll throw out what I think is exorbitant just to see if the client will bite. Sometimes they will (hooray!) and sometimes they decline. But the more clients I get at a higher rate, the more confident I have become in knowing what I’m worth. Now I charge more than many of my competitors, but I know I’m damn good at what I do, and I know I’m worth it. If a potential client can’t or won’t pay it, I know it’s not a good fit.
So How Do We Change Things?
I think this is deeply personal for each female entrepreneur. I can tell you to have confidence in yourself and your ability, but I can’t make you more confident—that comes from within. I will tell you that if you get paid more for one project, it’ll light a fire, and you’ll start charging that much (or more) for the next one.
I’d suggest not posting your rate sheet publicly. Women are three times more likely than men to post their prices online, and as a result, they’re making 15% less than those who negotiate their rates privately. Yes, I’ve wasted time chatting up a potential client who in no way could afford me, but I try to present my rates right away when we talk about what they’re looking for so we don’t waste too much time.
Know what others in your industry charge. You might be amazed that others are making double or even triple what you charge. Use that as a launchpad for figuring out what you are comfortable charging. (Spoiler alert: You may never be comfortable charging what you’re worth. Lean into it.)
Be uncomfortable. You might feel sick to your stomach when you quote a client more than you ever have. Don’t apologize. Don’t justify. Just be silent. Live in that discomfort. And when that client agrees to your rate, you can thank me for the short-term pain that led to long-term growth.
Don’t charge by the hour. This applies to services like writing, graphic design, or consulting. I work lightning-fast, so charging by the hour ends up screwing me. Instead, I charge by the project or length of article. I know how many articles I can write in an hour, so I have a rough idea of how much I make hourly, but the client need never know that what he assumes would take me all day, I finished in two hours.
Simply being aware of the issue is a place to start. Don’t sign on clients who are more focused on cost than outcome. They need to learn that quality work costs money, and while you might lose a few clients because of this, you’ll be left with those who value what you do at the price you charge.
I’d like to point out that Susan is not actually an entrepreneur. She is a consultant or contractor. Entrepreneurs create businesses that have value outside of billable time. While this comes with its own challenges, which are well addressed by Susan in this article, they are very different than the issues that entrepreneurs come up against. Female founders receive 2% of all VC funds, even though female founders return more than twice the revenue per dollar invested when compared to their male counterparts. Female contractors and consultants have similar pay issues to all female employees, such as reticence in asking for higher pay. This article would be very helpful to contractors, consultants and employees but not very helpful to entrepreneurs.
Hi Jessica. I’m afraid we’ll have to disagree on the definition of an entrepreneur. The ice cream shop owner down the street is an entrepreneur (used to be me). The business writer who charges per article (me now) is an entrepreneur. Anyone who owns a business is, indeed, an entrepreneur.
You are spot-on about female founders getting a fraction of what their male counterparts receive of VC funds. It’s sad.
It’s not about the type of business a female owns but how comfortable she is in charging enough. That ice cream shop owner might not want to scare customers off by charging more, and so she might struggle with low profit margins. It’s endemic to women in business, not in a particular role or industry, and I wanted to draw attention to the issue so that, hopefully, at least one woman out there would realize she was worth more.
Thanks for reading and commenting!