Five good reasons why self-employed business women shouldn’t undersell themselves

Did you know that from 4th November 2014, women were effectively working for free compared with their male counterparts?

It is 40 years since the Equal Pay Act and yet women working full-time in the UK are still paid on average 15.5% less per hour than men, according to a women’s rights campaign group, the Fawcett Society.

Actress Emma Arterton outside the Houses of Parliament with the original Made in Dagenham ladies whose strike action in 1968 forced the introduction of the Equal Pay Act (picture courtesy of Grazia Magazine)

Actress Emma Arterton outside the Houses of Parliament with the original Made in Dagenham ladies whose strike action in 1968 forced the introduction of the Equal Pay Act
(picture courtesy of Grazia Magazine)

But there has been some good news. Due to lobbying from the likes of Grazia magazine’s ‘Mind the Pay Gap’ campaign and Labour MP, Sarah Champion, proposing that section 78 of the Equal Pay act should be enforced requiring that companies with over 250 employees be forced to publish details of any gender pay gaps.  It won, passing by 258 votes to eight.  It still has to go through its second reading in Parliament in February, but hopefully there shouldn’t be anything standing in the way of it being ratified with such an overwhelming vote in favour.

Will anything change?

I find it somewhat depressing that there is still a gender gap in salaries and that government has to enforce transparency to try and put the spotlight on companies to change their pay policies.  Of course publishing the rates is not the same as then equalising them, but it’s a start. And at least it now gives women the option of voting with their feet and finding companies that do pay fairly.

Let’s hope that there is sufficient support put in place to either help women lobby for the same pay as their equivalent male counterparts without being deemed trouble makers. And I think that’s a big risk.  When I worked for a large insurance company in the 90s, I was the first female manager to be employed at that grade. Which was a shock in itself. I’ve never had the misfortune to work at such a sexist organisation and I could quite easily had a case against them. The sexism was endemic, from the staff who worked in the canteen through the board appointed directors.  One day I was talking to the HR lady who happened to have her screen facing me and I could see the salary figures for me and my fellow male managers. Astoundingly, I was paid over £4,000 less a year. I was staggered.  But I felt could do nothing about it. Neither that nor the terribly sexist way I was treated. Not without sounding like some hairy armpitted, rabidly left wing, soap box thumping lunatic.  I did try – I talked to my director (not about the money though) who blustered a lot, but nothing changed.  Thankfully, I was head hunted and moved on swiftly within a year.

So I fear that it will be difficult to make the changes without further struggle.  But struggle we must.  I firmly believe that you should be paid an equivalent and appropriate salary irrespective of your gender, religion, sexual orientation etc. if you are doing the same job as someone else.

Right, I am going to get off my soap box now!

What does this mean for self-employed business women?

As a self-employed person, running my own business, these rules don’t apply to me, but it got me to thinking about what women who run their own businesses charge for their services compared with men to see if there are any parallels.

And in my limited observation, it seems that there are a large number of women who undercharge for their services.  Here are some examples from my experience:

A website offering PR/Social media services. ‘A’ was offering an advertising slot, plus one hour meeting, regular shout outs on Facebook and Twitter, for £10 a year!!! At the time, other sites were charging £30 a month for a lesser service. Thankfully prices have now gone up to a more realistic level, but her basic package is still £150 a year, which is still quite frankly a bargain considering  how much work she does for them and how much traffic the site now gets.

A coaching company – ‘B’ is offering a monthly telemarketing workshop, monthly accountability emails, a one to one and access to information and other resources for £10 a month for six months. It then goes up to £27 a month. But still, that’s a lot of stuff for not very much money.

I had a paid meeting with ‘C’ with me that took over three hours and she’d also spent probably the best part of another three hours preparing for the meeting.  I knew, from a colleague, what she should have charged (£90), but at the end of the session when I said I need to pay her she suggested £45. That’s £7.50 per hour, barely above the minimum wage for skilled and expert advice. Cleaners charge £10-15 per hour! I insisted on paying her the full £90 and had stern words with her for undervaluing herself.

Whilst in all cases, the charges were almost secondary to a strong altruistic feeling of wanting to support others and this is to be applauded, I strongly believe this insistence on undercharging is bad for a number of reasons:

  1. Expertise
    It undermines your expertise and value and says, my skills are not worth more than this. Subtext could be read as – actually I’m not very good at this which is why I have to charge so little.
    You are good at what you do, so why not charge what your skills, experience and training are truly worth? If you don’t know, do some research or speak to someone who knows. If you are just starting out, it’s fine to undercut your competitors, a little, to counteract your lack of experience. But do not get into a price war, you’ll get business from people who are more interested in saving money/getting something for free or cheap rather than what you are actually selling them. And they are invariably very demanding and don’t believe they are getting value.
  2. Self respect
    It says I don’t really believe in or respect myself enough to charge properly. There’s far too much apologising for stating your charges. ‘I’m afraid it’s going to be £x’. Don’t be afraid – if you don’t believe in your rates, no-one else will. If you want to give your time away free – do it in a restricted manner. Set yourself a limit of either number of complimentary sessions you will do a month, or decide you will work pro bono for one organisation, but no more. Believe, L’Oreal style, that you’re worth it!
  3. Not a long term strategy
    It can’t work long term – you cannot make a living out of some of the rates I have seen women charge even if they are trial offerings. Which is fine if you have a partner and it’s a lifestyle type job, or you can rely on government support to top up the earnings. But if you are looking to grow your business, to get investment, take others on, or even franchise your business, it needs to make money to make it attractive to others. And even if it’s a social enterprise, then surely you want to make good money in order to be able to reinvest it back into the business to maximise the good you do? Remind yourself of why you got into the business in the first place. Even if you don’t have great expectations about what you may earn, I always feel a good rule of thumb is, what would someone being employed to do this work get paid and that should be your minimum standard.
  4. Market rates
    It makes it difficult for others to charge a proper market rate for their skills and forces prices down (not always a good thing!). And if you are grossly undercharging, then it says you’re not even in the same business. Unless you have a real market advantage of being able to sell large volumes at a very low price to make your margins. But unless you are someone like Asda, this is tricky to do and not sustainable. See point 1 above – do your research.
  5. It is counterproductive
    I’m always wary of ‘cheap’ deals. As Deborah Meaden once said on Dragons Den – if it looks too good to be true, it probably is too good to be true. So, the great offer may not generate the business you would hope for, because people don’t always trust cheap – unless you have a proven model.  Maybe as a loss leader, as an introduction to a service, like a trial period, possibly. But still, it should have an appropriate, close to market value.

I’m not suggesting you should price yourself at the top end of the market, or price yourself out of business, but I am asking you to honour yourselves and try to understand what your drivers are that make you feel you need to price your services as you do.

I’d love to hear your feedback – let me know what you think or any tips and hints to help develop a thriving business.

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