In the News

The gender pay gap for women entrepreneurs

The gender pay gap has been well covered in media and research. The unadjusted pay gap for women — which doesn’t account for hours worked, occupations chosen, job experience, etc. — has been commonly cited as 78%, meaning a woman makes 78 cents for every dollar a man earns.  

But there’s also a gap when it comes to women and entrepreneurship.

One of our previous blogs touched on the gap in funding and investment in women-owned small businesses, but the gap extends to how much women are paying themselves. FreshBooks, an accounting and invoicing software company, launched a study called “Women in the Independent Workforce Report” in 2018. The data suggests self-employed women pay themselves 28% less than men.

Here are a few ways women entrepreneurs can advocate for themselves and raise their rates:

Research fair and equitable rates

You’ll need to know what the marketplace demands before you jump in and ask for more money for your services. You can conduct salary research in your industry via websites like Glassdoor or Career Contessa, which collect data for different markets and industries.

These numbers are a good start, but they don’t account for self-employment taxes, health insurance, retirement, overhead and so on. Another benefit to this research is knowing how much you can expect to pay your own employees.

Another way to conduct research is through your personal network. Ask other budding entrepreneurs about their salary structure, or reach out to other self-employed folks in your industry. You can also turn to a local industry or trade organization and see if they have salary figures.

Study negotiation techniques

Almost everything in business is a negotiation. Whether it comes down to your rates or an employee’s salary, knowing how to properly negotiate is an essential business skill. The book “Women Don’t Ask” by Linda Babock suggested women often don’t even attempt to negotiate their salary. That bleeds into other parts of business.

There are many online and print resources dedicated to the art of negotiation, so take ample time to read up and learn.  

Confidence goes a long way!

You might be starting to see a theme in some of these blogs. Confidence is important in any type of work you do, but it’s especially important in all facets of self-employment. To increase your salary and improve your business, you might have to raise rates for your services. And that isn’t an easy task.

In the same FreshBooks study, 20% of self-employed women said they had to charge less than their male equivalents to get and keep clients. Having research and confidence in your increased rates will help you during negotiations and convince your clients you’re worth the extra money.