JOHANNESBURG – Although the gender pay gap is closing slowly in South Africa, it still exists.
This is reflected among business owners, where female entrepreneurs too often make the mistake of under-pricing their products or services when first launching their offering to the market.
A possible reason for this may be that women, more so than men, tend to ignore the valuable years of experience that they have gained in previous employment positions and business ventures – despite this being the core foundation of their business expertise.
While overpricing your products puts you at a high risk of losing clients, especially in tough economic times as currently being experienced in South Africa, setting your price point too low can also be problematic. Low prices can signal lower quality, and pricing your products and services below market average may actually make some clients hesitant to work with you.
Finding the right price for competitive products and services without underselling yourself, can be a tricky balancing act. Female professionals leaving formal employment for the flexibility of their own venture should therefore pay special attention to how they price their products and services. Here are some general tips to structure your pricing accurately:
Compare your business offering to competitors: It is important to keep a close eye on what other businesses in similar fields charge for their products and services. Your prices should be neither too high, nor too low in comparison, as this can indicate either an overpriced offering or a lack of experience in the industry.
Consider your expenses: One of the crucial factors to take into account is the accumulation of expenses, such as office rental, electricity, petrol and vehicle wear and tear, as all of these will affect pricing structures and ultimately affect the business’ bottom line.
Set different fee structures for different types of customer requirements: Offering a choice of different pricing structures may appeal to more potential clients. Cash-on-delivery, hourly or packaged rates, and extended payment terms such as 30- or 60-days, can all cater to the varying requirements of your customers.
Partnerships are key: In today’s demanding business environment, many clients seek a one-stop-shop instead having to deal with a number of different firms and suppliers. If a business can build strong partnerships with other industry players and offer a single comprehensive package, they have the best chance of securing the contract.
Ben Bierman is a managing director at Business Partners Limited.