Estimated reading time: 5 mins
Do you dread this question because you don’t know how to answer it?
Ask for too much, and you fear you won’t get an offer.
Ask for too little, and you will be punching below your weight.
So how do you ask for the right amount?
If it’s any consolidation, many other people hate this question too. So to get your started, let me share some principles of salary negotiation with you.
Principles of Salary Negotiation
- Negotiating UP is far, far harder than negotiating DOWN
- So always start with what you want
- Understand the salary range of the job, in your area and industry
- Have an objective, honest assessment of whether you are above or below average in marketability for the role
- Package benefits can be found outside of pure salary
Understand the salary range
Preparation is key in answering this question. There is data out there to help – use it to your advantage. Sites like payscale will provide you with uptodate, insightful information to baseline the salary range for your job and area. It’s really easy to use. Choose the job title that’s closest to yours, your industry and enter your state or city, and see what employers are paying. The results are based on averages of large volumes of data, so it will give you a reliable view of the market rate. You now have the average rate/range of your job.
But, are you average?
If I asked this of 100 people, 99 of them would say that they’re above average. It’s true! You’ll need to make an assessment of what makes you above average, in terms of skills, experience and capability.
- Are you very experienced in your job, compared to your peers? (Or are you a noob?)
- Are you more skilled in a number of tasks, compared to your coworkers? (Or do they make their job look easy?)
- Can you work quicker, faster, more efficiently than the other people around you? (Or are you behind in your output?)
It’s wise to take a long, hard, honest look at how you calibrate against your peers so you don’t oversell yourself, or undersell yourself either!
What do you want, and what will you accept?
There is a difference – what you want in a salary is your ideal position – and quite likely at the top end (or above) of the salary range you will identify using the above tools. That’s OK. Why wouldn’t you want as much as you can get? It’s worth searching for salary data in the employer to learn what salary ranges they pay as standard for your role, and how that compares.
Then there is what you will accept. This is your lowest end of the salary range you will agree to. This amount should cover mortgage/rent, food on the table, insurance, bills, travel, clothing, ‘play’ funds and all other outgoings. Plus some savings and a reserve. It’s well worth understanding this financial figure as it’s the absolute minimum you can negotiate down to, without putting yourself under financial pressure.
Your want-accept range is your negotiation guide.
Don’t assume hiring managers want to pay you as little as possible
Hiring and retaining the best talent is a big concern for managers, so their concern isn’t how to shave off a few dollars when paying you, but instead their objective is in making sure they can pay you enough to accept the job and stick around. Particularly when the skills you possess are in high demand but short supply. Jobs that require many years of training are great examples of this; medical practitioners, actuaries, engineers, architects – to name a few.
Getting a handle on where the demand is and what the labor market can supply will tell you if the situation can be leveraged, or not.
How to pitch your answer, elegantly
There is a lot of conflicting advice on this point, so I can only talk from my own experience – I have typically negotiated a top ten-percentile rate for my pay so I must be doing OK!
Normally, I try to avoid giving a dollar-amount answer. It’s much better to wait for an offer first. See my post ‘Insider Secret: How to Negotiate the Salary you are Really Worth‘ and learn how I do this.
But if you are being pushed to give a dollar-amount first, then you can’t really avoid it.
There is a myth in salary negotiation – you can be negotiated down from your desired amount but you can’t negotiate up. But it doesn’t happen very often.
So this is how I answer it:
“My target salary is <what you want>, so how close can you come to that?”
And say no more.
The reason why this is such an elegant answer is that you’re making clear your expectation, but opening the door to a negotiation, and quite possibly, the amount being beaten. This answer leaves the most number of doors open.
How to pitch your answer if you have multiple job offers, or mischievously
If you have more than one job offer on the table, or if you are simply a player, then here is a slightly different answer:
“I have several offers on the table in excess of <highest offer>, so how close can you come to that?”
What to do when you don’t get the offer you want
Salary alone isn’t the only negotiation factor. There is more to work with. To top up your offer, you could ask for extras that will boost the value of your employment package, like:
- More stock/stock options
- Increased healthcare cover
- Childcare benefits
- More vacation days
- Higher bonus-earning opportunities
You will need to do your research on what the components of packages are to understand what options you have to play with.
How are you negotiating your salary?
Share your negotiation tactic by leaving a comment below. Thanks