In this article, we're going to walk through how to set your compensation range. When talking about your compensation range, we're not just talking about your salary. We're going to consider all of the factors that make up your total compensation.
There can be quite a few numbers involved in your compensation package (the total payment and benefits that you receive).
Let’s first break down the components. This will help you see what you can negotiate about, and make it easier to talk apples-to-apples with the company.
Your package might include:
Base salary: How much you receive each year via regular payment periods. This is often presented as an annual amount. If it’s a contract role, it’s usually hourly.
Bonus: The money on top of your base salary that you receive each year, usually expressed as a % of base salary and awarded annually. It can be discretionary or performance-based, and the extent to which people expect to receive their bonus varies. In a sales role, you receive a commission, a % of the revenue that you bring in or retain on behalf of the company.
Equity: An ownership stake in the organization. For startups in technical roles, equity can make up half or more of the total compensation. For public companies, grants of shares can also be a significant part of compensation.
Signing Bonus: A one-time sum that you receive when accepting your offer. This is often used as an incentive for accepting quickly but often has to be paid back if you leave quickly. These are highly negotiable.
Benefits: This includes health insurance plans, 401K (with or without matching), and vacation time. These are rarely negotiable.
Perks: Companies offer a wide variety of perks such as company cell phones, tuition assistance, meal allowance, and commuting allowance. These are not usually negotiable.
Relocation Assistance: Companies will provide anything from a stipend, to expense reimbursement, to a full concierge package if you need to move for the role. These can be negotiable.
At some point during the interview process, you will likely be asked about your salary expectations. It's often asked by the hiring manager or a recruiter, but it could be asked at any time. When that time comes, you need to be ready with a well-thought-out number.
To start, you will need to research the typical compensation for this role right now. If the company is big enough, you might even be able to figure out how much they have offered other people in similar roles.
Useful sources for your research include:
AngelList and Builtin
Levels.fyi and Blind for Big Tech companies
Ask your Career Coach!
Now, that you've done your research, you should have enough information to come up with a range of much you expect to make.
Next, decide your range for the base compensation. Many times, the employer will expect to negotiate about the base and save the rest of the details for later.
Effectively, you need to get both ranges in mind: the amount you’d like to make in total compensation, and the amount you’d like to make in base salary. We’ll guide you through it momentarily.
By now, you should have a solid understanding of how much your skills are worth in the market. Your next step is to determine how you should approach your target compensation for a specific company. There are three components to this:
Your relative strength for the job
The company's compensation policies
Your interest in the job
You need to evaluate where you stand in comparison to the typical candidate who fills this role. If you’re incredibly well-qualified for the job, you should expect to be at the high end of their salary range. If they are making a leap of faith by giving you this role, you’ll likely be offered at the lower end range.
A few factors that help you make an extra-strong case for higher compensation:
Your level, according to the employer
Breadth and depth of responsibility you’d have in the role
Specialized, in-demand skills that are difficult to hire for
A network that is highly relevant to the company’s goals
Demonstrated results hitting targets the company values
Several years of experience doing very similar work
Ability to tie your work to revenue and profit
Advanced degrees that they value
Most companies treat employee compensation as a strategic decision. Some decide to consistently pay higher-than-average salaries while others pay lower-than-average.
The company's compensation policy will play a significant role during your negotiation. If possible, get company-specific info during your negotiation. Otherwise, you might end up with less than you could have!
To figure out a company's compensation policy you can:
Ask the recruiter. It's totally normal to ask, "What is [Company]'s compensation policy?" You may be surprised what you learn!
Ask a current employee. You can ask the same question as above during an informational interview.
Search online. For larger companies, you can often get a sense of their compensation policy online.
Naturally, you also need to consider how much you're interested in this job and what the minimum you'd be willing to accept. There are two elements you should consider at this point:
Your lifestyle. If you aren't willing to make lifestyle adjustments, make sure you know the minimum amount you need to make to maintain your lifestyle.
Passion. If you are passionate about the industry or role, you might be willing to accept a lower amount. Similarly, if you aren't that interested in the job, you might decide you're only willing to do it if they pay you a lot.
Finally, think again about your BATNA. Would it be a severe problem if this job offer fell through? If not, we bet you can afford to #askformore!
Once you’ve gathered all of the data together, you need to decide a range you hope for and at which you would be delighted to accept. Remember that you usually won’t get this number in the end, so it should feel ambitious. You need to give them an appropriate amount of room to talk you down.
Here are some benchmarks for making your ask:
Let’s assume that you have no company-specific salary data, but you do have good role-specific salary data in the industry.
Take the median salary typically paid for this role (ex: Product Manager in San Francisco) and add 30%.
Check yourself -- is this a company that pays top of the market where this ask is too low? Adjust accordingly.
Check yourself -- is this a company with tight budgets where this ask might scare them off? It well might be. Adjust accordingly.
Check yourself -- is this a situation where they’re offering you a job IF you can come to terms, and they have other candidates they like almost as much? Adjust accordingly.
Remember to walk through this for both total and base compensation so that you won’t be caught off-guard in any situation.
Drumroll, please! After all the above, you should now have:
A total compensation package you hope for
A base salary you desire for
The general range you will give, if and when you have to
A specific range you will provide, if and when you have to