Is the Pink Tax Ethical?
Charging more for women’s versions of products raises thorny questions.
Posted March 11, 2019 | Reviewed by Jessica Schrader
“OK, we'll buy nail polish and makeup and jewelry and hair clips. And—you know, and then even for the stuff that both genders are buying, we still pay more. And then, when we actually ask why, the answer is because you're enough of a sucker to pay more.” —Stacey Vanek Smith, Planet Money.
The "pink tax" refers to the phenomenon where many women’s products and services cost substantially more than comparable men’s versions. I’ve written before on this blog about why some women’s products and services cost more. In this post, I want to focus on one particular category that is notorious for hefty pink taxes—personal-care products, including razors, deodorants, body washes, shampoos, and conditioners. The question I’ll try to answer is whether it is ethical to charge higher prices for women’s versions of personal-care products?
How pricing experts justify the pink tax
Pricing experts argue that the pink tax on personal-care products makes perfect economic sense. It is just one example of value-based pricing and price discrimination that are the cornerstones of effective pricing strategy. This perspective says that men and women differ in how much they value personal-care products. Because women are willing to pay more, they should be charged a higher price. What’s more, sellers provide superficial product variations to justify the price differences. For instance, the women’s razor may be pink (versus blue for men), and a deodorant may have a different fragrance. The packaging will also be different. The pricing argument is that this makes the products distinctive and more attractive to women. Hence the higher price. And finally, their argument is that any woman who doesn’t want to pay the higher price can simply buy the cheaper male version, no harm, no foul. Pricing professionals call this method “gender-based versioning.”
Why the “pink tax is justified” argument is flawed
While I empathize with these arguments to a certain extent, the pink tax on personal products still leaves a bitter taste in my mouth. The following thought experiment may help to explain why. Imagine a hypothetical Indian restaurant starts offering two versions of a popular curry on its menu. It sells a less-spicy version for $8 and a spicier version for $10. Let’s also say this pricing is based on the owner’s logic that his patrons of Indian heritage (and some others) prefer the highly spiced version, and they don’t mind paying extra for it. He calls this offering an “ethnicity-based versioning” of the curry. Indian people pay more; others pay less.
Note in this example, the two curries meet all the criteria of the pricing experts’ arguments. The segments are clearly defined, there are differences in valuations between them, the two versions are different, and everyone has the choice to buy either version, even though the spicier version is marketed to one ethnicity. How do you feel about this pricing approach? Do you think customers will embrace it?
If you’re like me, this hypothetical ethnicity-based versioning will make you quite uncomfortable. Gender-based versioning makes me uncomfortable for much the same reason. Just as race-based versioning, sexual-orientation-based versioning, or religion-based versioning would. There is something inherently unfair about using a broad brush-stroke categorization to systematically charge one large group of humans more money. The underlying premise of the pink tax on personal care products is exploitative: “Women are more concerned about personal care, so they’ll be willing to pay more.” It sounds just like the logic behind the gender wage gap: “Women are willing to work for a lower salary than men, so pay them less.” These are lazy, clumsy generalizations.
Beyond this fundamental unfairness, there are other practical concerns about the ethics of the pink tax. First, the very premise on which it is based, that women are willing to pay more than men for personal-care products, is suspect. Trends in rates of adoption and popularity of men’s care products, along with feature requirement (e.g., special formulations to penetrate thicker, oilier skin of men), suggest that the opposite may be the case for large segments of men. Formulations for men may cost more to produce, and men may be willing to pay more for personal-care products. At the very least, it is possible to do better than classifying all men and all women in homogeneous groups and using suspect assumptions to extract a price premium from the latter group.
Second, labels matter. When a product is labeled as “for men,” it creates an implicit purchase barrier for women. Women perceive these products as “not for me.” What’s more, compounding this effect, men’s and women’s personal-care products are often sold in different areas of the store, especially in large supermarkets. For example, in the store I shop at, the men’s personal-care products are all displayed in one aisle. The female versions are two or three aisles away, spread out across a larger area.
Third, the difference in economic valuation of features that is touted by pricing experts is also questionable. Do women really like a pink-colored razor so much that they’re happy paying double for it? Or do they pay more because a pink razor is the only women’s version available?
The pink tax is unethical, because it is unfair. Over a decade ago, Coca Cola tried to introduce vending machines which changed prices depending on outside temperature. The idea was to raise the prices of chilled soft drinks on hot summer days and lower them on wintry days. This experiment didn’t last long. Consumer and media outrage put a swift end to it. In the same way, just because it is possible and profitable to discriminate between genders on the pricing of personal-care products doesn’t mean that it is fair to do. In the words of one industry expert, “We're seeing a convergence of masculine and feminine ideals” in personal care. Shouldn’t we see a convergence in pricing for personal care products as well?
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