THP – Take Home Pay (assuming only income taxes without contributions apply) Inf – Inflation (not used for this year) CoL – normalized to national Cost of Living (compare this)
#TechPaidMe #GameDevPaidMe Senior Software Engineer Base: $123,000 THP: $92,967 CoL: $90,259.22 MZ, owned by AppLovin Las Vegas, NV
Let’s talk about this.
I believe these are high numbers (if interviews with Las Vegas-based businesses are to be believed). This does not include bonuses, stock options, WFH, or other benefits (rough estimate would increase base pay 130% for that value).
The term “Golden Handcuffs” comes to mind, but that’s another post.
What also comes to mind is that companies can afford to pay you much, much more than they currently are.
And why aren’t they?
I’ve written on negotiating your compensation before and have linked articles all throughout this post. The resources are out there to both evaluate what you ought to be earning and how to muster the courage to politely demand more.
You ever want to discuss numbers? Let’s talk – 20 minutes is all we’ll need.
In the meantime, go earn your freedom! Don’t work too hard getting that bread. Drink water, take rest. Cheers ~
Hey there! Before going on, know that I’m hardly a professional. Knowing what a professional’s value is, however, is invaluable.
This post is for you that need to double-check if you are being valued; for you looking for work so you know what’s acceptable to ask for and what an employer ought to be offering. For simplicity, I’ll be using my own profession of software development as the example to be used.
Note: Having a pen-and-paper handy along with a calculator to figure out the value of your own work while you read may save your time.
From 2019 to 2021 (now), inflation has been 2.88%. (This will be important as we’ll be getting some salaries from 2019.)
Because some of the following numbers will be multiplied by hundredths-of-a-percent, there is going to be some inevitable rounding. If the values are off by a few dollars, no sweat – you should be rounding up anyway 😉
With a trusty map of 2019 pay for techies, we can take the national value and inflate it, leaving us an estimated $110,606.29 per year median.
The hypothetical $111K is contradicted by Salary.com’s reported $115,430 per year average. Since this is private company is only a statistically insignificant ~4% different, we’ll ignore Salary.com for now in favor of the official numbers (inflation and BLS).
A few example metros / locales follow. I received two different CoL calculations in my recent research – Best Places in general had higher values while PayScale was more conservative. Naturally, I went with the former ~
CoL vs National
Est. Min. Salary
Est. +10% Salary
New York City
CoL Applied to BLS Median Pay
You, sharp reader, will have noticed that the numbers estimated above do not match up quite with the BLS values previously. That is because BLS does not always include bonuses, stock options, the size of the company a person is employed at, or what has been the best few years for software companies ever.
More on that in the next section.
Remember: Always round up to at least the nearest thousand thereabouts. Exact numbers shown here to allow you to make your own decisions on how comfortable you are with rounding.
Also remember that odd numbers (123.45 vs 120) psychologically seem “more official” and “legitimate.” If you can round up while keeping some of this oddness when you go into negotiating your value, it’ll help you greatly!
Expected Salary Range
Not every company has or likes to have the cash on hand to pay huge base salaries. Though cold, hard cash is almost always preferred, you can leave it up to a company to make up the difference in your value.
Base salary is usually less than the CoL and BLS calculations above, yet this does not take away from your value. You can accept this lower pay by expecting the company to exchange cash bonuses, equity, PTO, or other subjective boons.
A cash bonus usually is a lump-sum payment delivered every six-months or a year. Usually about 10% of your base salary, you can negotiate this percentage higher to make up the total value difference. If the bonus is variable, say, based on performance, only calculate for the “you did no more and no less than your job” value.
Equity is some investment in the company. My personal rule aside is to only accept equity at a 2:3 rate, where for every $2 of base pay being forgone, $3 comes in equity. Why? Equity is variable with the market and often delayed in being granted to you. There is no timely guarantee for your work to be properly compensated, so as equity literally costs the company nothing to give you, asking for more is always a safe bet.
PTO (paid time off) is a common benefit working at most companies. PTO comes as paid vacation, sick time (if separate from vacation), and holidays. Each PTO day is 8 hours but the value of the whole day is your daily salary rate, i.e. base salary divided by 250 days. Daily rate multiplied by the number of days is PTO’s value.
Finally, there are other boons that the company can give. Maybe it’s better healthcare, a shorter commute, a better title, work-life separation, etc. Tangible (physical, material) or intangible (time, feeling), only you know what’s more important than cash-in-the-bank. Always keep in mind that any boon you accept in replacement of direct pay is doing the other party a favor.
Glassdoor Et Al
Every company changes in what they may offer potential new-hires. Glassdoor, Levels.fyi, and other websites have oodles of employee-reported data on pay, among other things.
If you are looking at a company that has a presence on one of these sites, use the site. Compare the ranges of base salary and other payment options to your BLS and CoL numbers. This gives you not only an idea of what other compensation to negotiate for with the company, but also a second set of values that may be higher than BLS + CoL (needless to say, increase any site-found value by at least 10% since site values do not account for CoL increases or inflation).
Tip: I always salary search using a Google Chrome Incognito window to do my browsing. Sites like Glassdoor track your usage, preventing further use if you navigate to a different page. Incognito gets around this:
Arrive at a blocked page.
Copy the website URL.
Close all of the Incognito tabs / windows.
Open a new Incognito window.
Paste the copied URL.
Tada! Continue researching your value.
Putting It All Together
You now know what you should be compensated based off of your research into the company, role, BLS, and CoL.
When the talk of money comes up, here is the handy equation to keep on hand:
Total Compensation = Base + Bonus + Equity + PTO
If you have other boons you are looking for, convey to the other party that you are taking these for granted, increasing your base or bonus or equity if the other party wants to take these boons away. Never Split the Difference is an astounding book (read it at least four-to-six times so far) that goes into more depth in how to handle leveraging boons that may not have an impressive dollar value.
Now, that total compensation ought to be a range, something like the fair value you found through research of median or average pay (whichever is higher), and at least 10% more than that. Propose the larger numbers and have the other party justify why they ought to be offering you less, giving a sense of disbelief the entire time (much more in Never Split the Difference).
Baring the most dire circumstances of survival, never, ever accept below the median or average pay for the role in the place you are bidding for. It is anti-social and masochistic and despicably weak. Don’t do it.
On the plus-side, if the other party counters above your expected compensation range, smile! Then let them know that’s a good base-pay starting point. “Now let’s talk about bonuses and equity.” Using the simple trick of adding 10% more to acceptable figures, you enable yourself maximize your worth to the other party and to yourself.
Having gotten through this article, how are you doing? Are you making out like Robin Hood, maximizing your value above par? Are you being taken for granted, paid pennies on the dollar?
If you need to be valued more, talk with those that pay you about increasing your compensation 10% if you are being underpaid by 10% or less. However, should the compensation be undervalued by more than 10%, you can still have a conversation with the payor, but it is also time to look at other companies since you have been clearly disrespected and taken for a ride 😐
Enough talk! Check your numbers, go get your value, and be confident that you are in the right (heck, you at least have the United States government backing you up). All the best to your endeavors going forward – cheers!