Earn Entrepreneurship

Women Small-Business Owners – Pay Yourself More!

Rhonda Abrams  |  May 6, 2019

Just about everyone knows this tough fact: employed women earn less than men–about 80 cents for every dollar. That’s one reason many women start a small business or become self-employed.

After all, when you can set your own fees, you’ll make the same as men, right? Not so fast. Here’s a disappointing finding: Self-employed women still make a lot less than self-employed men.

Ladies: It’s time to give yourself a raise.

“The data suggest a massive gender wage gap exists among freelancers, with men out earning women by 28%,” according to the Women in the Independent Workforce Report, a recently released study by FreshBooks, a Toronto-based accounting and invoicing program for self-employed and small businesses. This earnings gap is equivalent to–wait for it–the cost of two years of child care.

“In 2017, we noticed there was a massive earnings gap between male and female self-employed individuals. Even when we controlled for industry and business size, that gap remained,” said Carly Moulton, FreshBooks’ Data Insights & Communications Manager, who co-authored the study with Dave Cosgrave, Director of Market Insights & Strategies.

“This year we decided to look into that gap more closely,” said Cosgrave, “figuring if we can get even a handful of women to charge what they’re worth, we can close that gap considerably.”

Why do women who set their own rates make less?

“A lot of folks who go out on their own either lack the confidence or data to know what to charge, and with female entrepreneurs there’s maybe more systemic bias,” said Cosgrave. “Some are raising kids and choosing to work part-time or fewer hours.” But “when you take two businesses that have 100 clients in the same industry and you still see an earnings gap, what’s happening?”

“I’ve gotten some budgets from clients after I’ve done work with them, and I’ve seen some pricing (for other consultants) that’s higher than I currently charge, and they’re men,” said Bree Swezey, founder, Authentic Edge Design and Company in Tampa, Florida. Swezey has over 15 years of graphic design experience and a degree in graphic design, but she echoes the 30% of women in the FreshBooks survey who think clients don’t view women the same as their male peers. “I don’t know if they were going with me because I had a lower rate. If I were to raise my price I’m not sure they would pay the same amount.”

In other words,  Swezey isn’t confident that she, as a woman, could charge as much as her male competitors. “I think it speaks to a little about the seriousness with which we’re taken as women … especially as a mother, it’s seen as a hobby, side job, you’re not valued as much for your expertise.”

The FreshBooks’ survey of self-employed women gives insight into why self-employed women earn less than self-employed men in the same industry.  These women entrepreneurs reported:

  • 20% believe they have to charge less than male equivalents to get and keep clients
  • 34% have experienced gender discrimination while self-employed
  • 30% believe they’re not taken as seriously as their male peers
  • 30% believe they have to work harder than men who do the same work

And, while some of the self-employed wage gap can be explained by women working fewer hours or being in lower-paid industries, wage differences continue when controlling for those factors. In data given to me exclusively by FreshBooks, in businesses with over 100 clients—where male and female entrepreneurs are most likely to have similar characteristics, the gender gap still persists in virtually all fields, with women earning 49% less than men in IT (information technology) and 34% less in marketing and communication and 27% less in “creatives,” traditional women’s fields.

So what can women do to set–and receive–higher rates?

  1. Connect with others. “The folks who were most confident were heavy-duty networkers, belong to industry associations … They ask others for feedback on how you priced the work,” said Cosgrave.
  1. Stress value over price. “Most people find it easier to talk about the value they bring to the client,” said Moulton, “that makes it a lot easier to bring up the topic of pricing.”
  1. Work on being more confident. Swezey thinks she, and other women, need to change their mindset. “It’s a value and confidence that needs to be built. … When I left corporate life, it was more for the work/life balance…but money isn’t always icky.” She’s investing more in her company and is about to launch a new website with design packages. “And I’m setting higher prices.”

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About Rhonda Abrams

Rhonda Abrams has helped millions launch and grow successful businesses. Her first book, Successful Business Plan: Secrets & Strategies, just published its seventh edition, and is the bestselling business plan guide of all time. Rhonda’s books have sold more than 2 million copies and been translated into 30 languages, including the popular Six-Week Startup, Business Plan in a Day, and Entrepreneurship: A Real-World Approach. Rhonda is the entrepreneurship/small business columnist for USA Today and, an entrepreneur herself, is the founder and President of PlanningShop.

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