She says that female entrepreneurs who are leaving formal employment for the flexibility of their own entrepreneurial venture, whether it be freelancing or starting a small business should pay special attention to this gender gap and price their services appropriate. Speaking in light of Women’s Day, celebrated annually on 9 August, Mjadu says that as women are opting for a more family driven, balanced lifestyle and in turn, turning to entrepreneurship, female entrepreneurs should be conscious of not undervaluing their service offerings.
Women’s earnings generally tend to be less than their male counterparts, both locally and globally. Mjadu points to the International Labour Organisation’s 2014/15 Global Wage Report which noted that women’s average wages are between 4% – 36% less than men’s earnings. Figures published by the South African Revenue Services (Sars) also revealed that in 2013, women, on average, earned approximately a third less when compared to their male counterparts. This is discouraging, says Mjadu, and highlights the need for women in entrepreneurship to work towards avoiding a similar situation in entrepreneurship by correctly pricing their skills and knowledge.
“Although a gender gap still exists in the workplace, female entrepreneurs should not focus on this and undersell their experience and capabilities when pricing their products and services,” says Mjadu.
She adds: “Female entrepreneurs should remember that although their small business is relatively new, the price paid for products and services does not need to match the age of the business. Women, more so than men, tend to ignore the years of experience they may have gained in previous employment and business ventures – despite this being the foundation of their business expertise.”
As client bases continue to shrink as many companies turn to internal resources instead of outsourcing, the level of competition increases. “This means that naming a price for products and services that is competitive with similar market players, without underselling yourself, is even more crucial to the future success of the business,” says Mjadu.
Mjadu provides a few tips for female entrepreneurs to structure their pricing effectively:
- Compare your business to competitors: Have a look at what other businesses in similar fields charge for their products and services. Prices can neither be too high, nor too low in comparison, as this can indicate either an over-priced offering or not as much experience in the industry.
- Set different fee structures for different types of customer requirements: Just as an entrepreneur’s business may be small, it may cater to other small businesses who cannot afford the rates that larger organisation budgets can. Different pricing structures, such as hourly or package rates, and extended payment terms, such as 30 or 60 days or cash-on-delivery, may appeal to different types of clients and their varying requirements.
- Partnerships are key: In today’s demanding business environment, many clients seek a one-stop-shop and prefer such businesses instead of dealing with a number of different firms and suppliers. If a business can build strong partnerships with other industry players and offer one comprehensive package and offering, they have more chance of securing the contract.
- Consider practical expenses: One of the most important considerations to take into account is the practical expenses, such as office rental, electricity, petrol and vehicle wear and tear, as all of these will affect pricing structures and ultimately impact the business’ bottom line.
“While all business owners tend to find the task of pricing their offerings a challenge, female entrepreneurs however should pay particular attention to pricing their products correctly to avoid widening the gender pay gap. We advise female entrepreneurs to carefully analyse their pricing structures as pricing shouldn’t also be a deterrent that keeps potentially powerful women from entrepreneurship, and from contributing to the growth of the South African economy,” concludes Mjadu.