A Behavioral Study of Pricing Decisions for Professional Services: A Focus on Gender

Abstract

Professional service providers (e.g., doctors, lawyers, architects, management consultants, and veterinarians) can engage in dynamic pricing, that is, varying prices among customers. Yet, little is known about how professionals set prices for their services. With the increase in the proportion of women in many professions, it is important to understand the influence of gender on the setting of prices for professional services. A field experiment using an in-basket approach to study pricing decisions reveals that women tend to set lower prices than men for the same services offered. The relationship between gender and price setting was also found to be mediated by a veterinarian's relationship orientation. Further, women professionals were influenced by the number of the associates in their practices and the clients' characteristics in setting prices while men's prices were unaffected by such considerations. The findings hold important implications for theories about price setting decisions particularly related to considerations beyond the traditional economic ones.

Keywords: Gender, pricing, relationship orientation, PLS modeling