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Women professionals tend to charge lower prices than men out of concern for relationships with clients, study suggests

August 1, 2006

For more information, contact: Benjamin Haimowitz, HHaimowitz@aol.com

Research has shown that women make less money than men do for the same work, even when they are the ones who set the price. For example, a study of mortgage lenders found that female brokers made $575 less per loan than their male peers making similar loans. But why this should be has been a matter of conjecture.

Now a new study provides an answer based on the pricing behavior of a large number of women professionals. "Women adjust prices," the research finds, "because they care more about their relationships with their customers... than do men."

To be presented on Wednesday, Aug. 16, at the annual meeting of the Academy of Management in Atlanta, the findings derive from an analysis of the pricing patterns of 536 veterinarians, about one third of them women.

"Women veterinarians tended to charge needier clients less than better-off ones," conclude the study's four authors, John L. Graham and Mary C. Gilly of the University of California, Irvine, William L. Cron of Texas Christian University, and John W. Slocum Jr. of Southern Methodist University. Male veterinarians, in contrast, did not consider "the attributes of their customers."

There was, however, a striking exception of the tendency of the women vets to charge less than their male counterparts. The number of associates in the veterinary practices sampled ranged from zero to 15, and in larger practices women proprietors charged higher prices than male proprietors did. "For males, owning larger practices had no effect on the prices set. Alternatively, females were affected by the size of their practices -- those owning (representing) larger ones tended to ask for higher prices."

The finding, the authors write, is consistent with earlier research that found that "women representing others in negotiations will tend to ask for more than women only representing their individual interests. Because women will focus on the needs of associates to a greater degree than men, they will be triggered to negotiate more aggressively when in a representational role."

The researchers' choice of veterinarians as subjects was influenced by a number of considerations, including the fact that, compared to physicians, veterinary professionals "have considerable flexibility to set prices...and the whole process of setting prices is likely to be somewhat idiosyncratic, [making for] fertile situations for examining the effects of gender on pricing."

The sample was drawn from a larger study by the American Veterinary Medical Association, but was restricted to sole-proprietor owners, "because personal pricing tendencies are most likely to be exhibited by owners of small businesses."

In their analysis of pricing behavior, the researchers took into account, in addition to gender, such relevant factors as market potential, practice size, experience, income, and income satisfaction. Pricing behavior itself was determined by asking the subjects to respond to a hypothetical clinical situation involving a 12-year old terrier with advanced kidney failure. The doctors were offered three treatment options of different degrees of elaborateness and were asked to select one option and estimate its cost. In about half the hypothetical cases, the client was described as a "young professional," and in the other cases the pet owner was supposedly an "elderly widow."

The researchers found no significant difference in the procedures recommended by each gender. But "[t]he price set by male veterinarians was unaffected by the characteristics of the client. Alternatively, the characteristics of the client were considered in the pricing decisions by the female veterinarians -- they tended to charge a widow less for the same treatment."

In further analysis, the authors considered whether fear of negative evaluation, a psychological construct measured in the survey, contributed to the gender differences in price quotes. The fact that women "displayed higher levels of fear of negative evaluation" suggested that it did. This accords with earlier suggestions by other scholars that women have a particular "fear that asking for something they want may harm the relationships with the person they need to ask."

The study's findings carry special weight, the authors observe, because "the representation of women in professional graduate programs has grown rapidly in the past two decades," with women now constituting about half the enrollment of medical and law schools and nearly three fourths that of veterinary schools.

What to make, then, of the fact the female professionals in this study appeared to be "leaving [so much] money on the table"? The authors offer two thoughts. On the one hand, they suggest that "women veterinarians must learn to ask for more, certainly in the negotiations with customers but most likely with vendors and employees as well." On the other hand, they allow that, "[g]iven that women professionals may be sacrificing short-term prices and income maximization for long-term customer relationships, it my be said that they have more of a marketing orientation than men. The customer focus may result in more long-term income stability and profitability for professionals."

The paper, entitled "A Behavioral Study of Pricing Decisions: A Focus on Gender," will be among thousands of studies presented at the Academy of Management meeting.

Media Coverage:
Reuters. Women earn, charge less, in wage gap: study. (Tuesday, August 15, 2006).

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