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The New York City Department of Consumer Affairs (DCA) recently published a study1 of prices in 24 NYC stores for 794 products. It found that female products cost an average of 7% more than comparable male versions. Such differences were widespread; in 30 of 35 product categories, female products had higher prices. The report ominously concluded that “…women are paying thousands of dollars more over the course of their lives to purchase similar products as men.” Not good.
But the part that interested me most was this statement from the report’s conclusion:
“Though there may be legitimate drivers behind some portion of the price discrepancies unearthed in this study, these higher prices are mostly unavoidable for women2.”
Such a conclusion is not new. In the past, gendered pricing has been evaluated, among others, by Consumer Reports3 and the State of California4. Both found evidence for a “gender surcharge” or a “pink tax”5. It is clear that women shoppers pay a hefty price for being women.
In this post, I want to explore two issues about gendered pricing in more depth: (1) What are the “legitimate drivers” behind gendered price discrepancies, and (2) Are higher prices really unavoidable, or can women do something about this?
Many Female Products Cost More to Produce and Sell
While it is irrefutable that women pay more than men for many things, in some cases there are valid reasons. Take the case of laundering clothes6. In dry cleaners across the US, it is common for a woman’s blouse or shirt to cost 30%, 50%, or even 100% more to launder than a man’s shirt7. To add insult to injury, many dry cleaners simply refuse to launder women’s shirts. They can only be dry cleaned, a more expensive proposition. Why?
These differences are not because American dry-cleaners are misogynists or bigots. Nor do they have a collective impulse to exploit women. The real explanation is a lot more humdrum. The price difference is almost entirely based on labor costs involved in laundering a male vs. female garment8. All men’s shirts have a similar shape and are made of cotton, polyester, or a blend. Neither the shirts’ shape nor their materials have changed for decades. (The puffy, pirate shirt from Seinfeld never made it to the mass market9). The dry cleaning industry has developed commercial pressing machines to automate the “finishing” process for men’s shirts. They require little human labor and can iron dozens of shirts per hour10.
For women, the situation is completely different. Women’s shirts and blouses come in a wide variety of sizes, shapes, and materials that change every few months. This makes it difficult to press at high speed with machines configured for standardized tasks. A skilled person must iron each garment adding to labor cost – and the price. If a dry cleaner doesn’t employ a skilled ironer (and many don’t), they won’t be able to launder women’s garments.
A similar logic also applies to haircuts. When the Danish government tried to standardize men and women haircut prices a couple of years ago11, hairstylists across Denmark erupted in outrage. A salon-owner summarizes the industry’s logic for gendered pricing:
"Firstly we charge men less because it doesn't take as long to cut their hair, but also they're in the salon more regularly - it's more like every four weeks, rather than six to eight for women. And there's less time taken and fewer products used on the finish - for a man it's four to five minutes, whereas women's blow-dries can take a long time12.”
For labor-intensive services, gendered pricing is logical, fair, and the price differences are simply due to cost differences to deliver the service.
Marketers Charge Price Premiums for Adding Feminine Features to Products
From gendered pricing studies, one thing is clear: although male and female versions of products are similar in many respects, they are rarely identical. Even in many products cited in the DCA study such as deodorant sticks or razor cartridges, there are clear differences. Ingredients such as fragrances in male and female deodorants made by the same manufacturer are different even when they have the same active ingredients. The razor’s shape, packaging, and the materials used in the cartridges differ for male and female versions. For some products, like toy scooters or bicycle helmets, the differences may be entirely cosmetic such as different colors for boys and girls (red vs. pink).
Do such design, ingredient, and appearance variations warrant the large price differences? A definitive answer to this question is tricky because it requires information about costs to make the male and female versions. Such data are invariably proprietary. But if I had to guess, I would say that in most cases, marketers earn a handsome profit premium from selling the female versions compared to the male counterparts.
After all, a cornerstone of good marketing practice is to pinpoint consumer segments that are willing to pay more and then introduce variations in products (even if they are superficial) to justify higher prices. Women are a highly attractive and profitable consumer segment. Not only do they have lots of disposable income to spend, but many women value aesthetic features in products much more than men do. So they are willing to pay more. To the extent that women are partial to a particular feminine scent, a contoured razor edge, or a visually appealing package, savvy marketers are going to introduce such features to female products and then charge a hefty premium.
What Should Savvy Women Shoppers Do To Avoid the Gender Tax?
Despite the DCA study’s dispiriting conclusion that higher prices are “unavoidable for women,” this is not the case. When shopping, women can avoid the gender tax with a little effort. While there is merit in regulations that handcuff marketers and prevent gendered pricing, a better solution is for women shoppers to help themselves. Here are four ideas to do exactly this:
- Pay close attention to all prices. Marketers rely on the fact that very few consumers monitor prices13, which is why they can get away with charging high price premiums for superficially different products. When is the last time any of us checked prices of both male and female versions before buying something? Just paying close attention to prices and comparing different available versions across sexes will help to make smarter shopping decisions.
- Buy the male version. To avoid the gender surcharge, the key decision is whether the features of the female version are worth the higher price. Is it really worth spending $49.99 on a pink colored toy scooter compared to $24.99 for a red colored one14? For many products like sunscreen, deodorant, or razor cartridges, the male version may be a perfectly acceptable substitute for many women. Buying the cheaper male version is the quickest way to erase the gender price gap.
- Shop across stores and brands. Even for the same product, there is a lot of variation in prices across different stores and brands. On Target’s website, for example, one can buy a woman’s deodorant stick for anywhere from $.97 to $11.9915. Buying a substitute such as a cheaper private-label brand or something that is on sale or with a coupon is an easy way to avoid the pink tax.
- Negotiate a lower price. Many shoppers mistakenly believe that prices in stores are fixed. More often than not, that is not the case. Simply asking a store employee whether a better deal is available may lead to receiving a lower-priced offer, or a useful suggestion about how to buy something cheaply (e.g., use a store loyalty card). Bargaining is especially effective when purchasing services that usually have hefty gender surcharges such as dry-cleaning or haircuts where service providers often have a lot of discretion in what prices to charge.
With a few simple steps, and some forethought, planning and paying attention when shopping, savvy women shoppers can turn the tide in their favor and avoid the gender tax altogether. This is also the most effective way to send a clear message to marketers that charging unfair price premiums to women is simply not going to work.
Notes
[1] The study has a rather ominous title “From Cradle to Cane: The Cost of being a Female Consumer” and it can be found here.
[2] This sentence is in the report’s executive summary on page 6.
[3] The Consumer Reports study was described in its January 2010 issue, and can be found here.
[4] http://articles.latimes.com/1995-10-14/news/mn-56735_1_gender-based-pri…
[5] See this video by the feminist reporter Liz Plank for an entertaining summary of #pinktax: https://www.youtube.com/watch?v=RfvFVAB6nn0
[6] A 2009 New York Times article has been widely used in popular media to discuss this issue. It found that in 50 Manhattan drycleaners, men paid an average of $2.86 for laundering a shirt whereas women paid $4.95. The article can be found here.
[7] I can attest to this difference from my personal experience. When I take my shirts for laundering at our neighborhood dry cleaner, they cost around $1.50 in Houston where I live. But my wife’s shirts cost $2.75.
[8] A more detailed discussion of the cost differences can be found here.
[9] You can see Jerry all puffed up here. I defy you not to crack up after watching this clip.
[10] See this neat video for a demonstration of the finishing process using a commercial pressing machine. The speed of such machines means that a man’s shirt can be pressed in less than a minute, whereas a woman’s shirt or blouse would require several minutes (depending on the ironer’s skill and experience level.
[11] http://abcnews.go.com/International/battle-sexes-women-pay-haircuts-men…
[12] http://www.vogue.co.uk/beauty/2013/01/23/denmark-says-womens-haircuts-s…
[13] There are many academic studies about this. A classic study is this one: Dickson, Peter R., and Alan G. Sawyer. "The price knowledge and search of supermarket shoppers." The Journal of Marketing (1990): 42-53. It reported very poor knowledge of prices among a majority of consumers.
[14] This example is on page 7 of the DCA report.
[15] www.target.com/c/deodorant-personal-care-health
I teach core marketing and pricing to MBA students at Rice University. You can find more information about me on my website or follow me on LinkedIn, Facebook, or Twitter (@ud).
