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During the interview process, hiring managers will ask, "What are your salary expectations?" to understand if your expected salary is within their salary range.
A salary range is the minimum and maximum base salary an organization will pay for a specific role. For example, if the lower salary for a job is $50,000 and the higher salary is $100,000, the salary range is $50,000-$100,000.
A salary range is also the difference between the lowest and highest salary that an employee wants to receive if they join the team.
In general, salary ranges include low, mid-point, and maximum salaries. For example:
- $50,000 (bottom of the range)
- $75,000 (average salary)
- $100,000 (maximum)
- Range: $50,000-$100,000
This article discusses the use of salary ranges, how to determine a salary range, the factors that affect it, and how to negotiate your salary with hiring managers.
When are salary ranges used?
During the interview process, job seekers use a salary range to give the hiring manager an idea of their desired compensation based on market demand, employee expertise, and industry. Providing a salary range instead of a specific amount provides room for the employer and employee to negotiate. For example, if a job application asks for a salary requirement, a candidate could say $100,000-$150,000.
While the salary range for a job seeker highlights the compensation they would like to receive, it has a different meaning for employers. Suppose an employer provides a salary range in a job posting or interview. In that case, they're giving you an indication of the approved budget they have available to pay new employees in the position.
When employers decide on a salary range, they often use research to determine an adequate amount. They also consider factors like experience, education, competition for the position, and cost of living.
If you're a job applicant setting a range, it's best to provide a range where the lowest end of the spectrum covers your cost of living. At the same time, you need to ensure your provided salary band matches the role. You can price yourself out of a job offer if you offer a band that is too low or too high.
More established companies tend to have a salary range structure (or salary structure) for a group of jobs within their organization and tend to stick to them. Salary structures are typically expressed as pay grades or job grades to reflect the compensation of current employees at the organization.
With that said, hiring managers typically have flexibility with their budgets and exceed the pre-approved salary bands for super-qualified candidates.
How to determine a salary range
As a job applicant, it's best to determine an appropriate pay range based on what similar companies are paying for similar roles while factoring in your experience, skillset, and location.
- Use sites like Glassdoor, Salary.com, Payscale, Levels.fyi, and Indeed to find salary averages and estimates.
- Ask colleagues in your field what salary range they think is suitable for your experience, skills, and qualifications.
- Review government publications like the Occupational Outlook Handbook, which contains salary figures for various industries.
- Consult professional organizations to inquire about salary surveys in your field.
- College students can check in with their career office, which has information about entry-level salaries for college graduates provided by the National Association of Colleges and Employers.
To determine an appropriate salary range, you'll also need to consider the cost of living and industry differences in base salaries. For example, you'll likely be paid more for the same job if you live in New York City than in Bali. The same is true if you apply to Google versus a small non-profit.
Most online salary calculators will allow you to enter your location to see salary data targeted to your area. However, it's also wise to look at comparable companies in the same industry.
What factors affect salary ranges?
A job candidate's place in a salary range depends on:
- Relevant experience: The more time you've worked in a related area and industry, the more likely the employer will offer at the higher end of a salary range.
- Results: Job candidates who have added value at previous employers will receive higher offers. Identify areas where you have accomplishments relevant to the potential employer and highlight them in your answers to interview questions. Leverage the STAR method to create compelling, memorable replies.
- The job market: If your role is in high demand, you'll be more likely to receive offers at the upper end of a salary band.
- Employment situation: If you're not actively looking for work, you likely have more leverage and can negotiate a higher salary than other job applicants who need work.
- Industry: Some sectors have strict salary grades where employees fall within a pay level based on their education and work experience.
- Location: Unless you're applying to companies with location-agnostic pay, employers will factor in the cost of living in your area in your salary.
- Reputation: Candidates who are well-known or come with excellent references tend to receive offers at the upper end of a salary range. For exceptional candidates, companies may even create new ranges.
- Skillset: Job applicants with rare skills or certifications that are in high demand get job offers higher up in the salary range.
- Size of company: Larger organizations tend to have more formal human resources processes and set salary ranges for each job family. In contrast, smaller companies tend to have more flexibility when making new hires.
- Profitability of the company: Companies with solid margins can afford to pay candidates more and typically have wider salary bands.
How to negotiate a salary based on the salary range
Employers may present you with a wage during the interview process and ask you to adjust it according to your financial and personal needs.
Follow these steps to negotiate a salary based on a salary range:
1. Start with research
Before the negotiation process, you need to research typical salary ranges for the position, industry, and geographic location. This research will allow you to confidently explain your desired salary and negotiate from a point of strength.
Research salary information on sites like Glassdoor, Salary.com, Payscale, Levels.fyi, and Indeed to find salary averages and estimates.
Remember, you need to look at what people are making in your role with similar experience in the same company, industry, and places with similar living costs.
Always look at multiple sources to get the best estimate.
You should also factor in your seniority, skills, experience, education, and any other unique attributes that help you stand out, and don't forget about non-cash compensation. Employee benefits, bonuses, equity, and other perks are essential too.
2. Get the company to share their budget for the role
It's best to get the company to share their approved funding for the function before you mention salary expectations. The good news is this is becoming a legal requirement in many states and countries.
Do not mention your desired salary range in your cover letter, resume, or application unless you are required. Sharing your expectations without knowing the company's budget puts you at a disadvantage.
If you are required to mention it, you can include something like:
"My desired salary is open for discussion during the interview process."
3. If you can't get the budget, present a range
If the hiring manager doesn't provide a range, you should confidently present one. Keep in mind hiring managers may reject you if your expected salary is too high or too low, and they'll aim for the lower end of the range you provide.
If you present a salary range that is too low, it can raise doubts about your skills and experience. If it's too high, recruiters may think you're too senior for the position.
When you provide a range, make sure your target salary is close to the bottom end of the spectrum and keep the range tight with a variance of no more than $10,000-$20,000.
Once you present your range, be ready to explain your reasoning.
4. Negotiate additional benefits
If the hiring manager offers a lower amount than your desired salary range, ask them what additional benefits they can provide.
For example, this could be extra paid time off, health insurance, contributions to your retirement account, or equity in the company. Some companies may even offer a four-day workweek.
5. Be realistic about your desired salary
Unless you were vastly underpaid, you probably can't expect a 100% increase from your current salary. Nor should you expect identical compensation if you change industries.
You need to base your expectations on the industry, company size, location, and your skills, relevant experience, and qualifications.
If you want the job and the company's offer meets your expectations and living standards, take the role. If the offer isn't compelling, look for other opportunities.
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