I am so miffed at all the financial reports and advice that states how many millions-of-dollars a person needs to be comfortable, to retire, et. al. Giving actual dollar amounts is pretty dumb. Every life is different, every account has a different spend.
Instead, multiples matter more than millions. That is already the common factor when it comes to advice of emergency funds (1 month, 3 months, 6 months, 12). I would have you make it a common factor of your financial planning!
Using actual dollars makes the rule-of-thumb calculations much harder than they need to be too. The commonly touted safe withdrawal rate of 4% for retirement (a term I will interchangeably use with financial independence)? Well, that 4% is the spend of one (1) year of living. And to figure out the wealth to support that withdrawal, we are told to take what we aim to spend per year in retirement, and divide by .04 – ick!
Rather, consider this: 4% is also one-twenty-fifth (4/100 = 1/25) of the total amount of expenses expected to keep in net wealth; flip that around (100/4) and that means 25x a year of expenses today suffices the 4% Rule!
And don’t get me started on how actual dollar figures change and decay (i.e. inflate) over time. Subjective and average numbers are not consistent, are not applicable to you nor I! The thief of joy is any figure that is not yours; get your own figures and your own confidence of how you are doing by standards lived by your reality.
So let’s talk more on multiples. We saw the common financial independence “4% Rule” is 25x a year’s cost; 5% (discussed as a more reasonable withdrawal, especially if looking to die with $0) is 20x (100/5); 6% Fat FIRE (live like a rockstar after work) is ~17x; etc.
Example: A person has spent about $60,000 in the last few years – they have a stable lifestyle they are content with and find enjoyment in. Cool. They feel safe with a tad more risk or vacation allowance than the 4% Rule, so opt to start enjoying financial freedom early with a 5% instead. That means, they will need 20x their spending in net wealth to secure their financial freedom.
$60,000 x (100/5) = $60,000 x 20 = $1,200,000 needed after debt
Or maybe they want to wait to retire for 10 more years. With a stable lifestyle, they might expect a 3% inflation to catch up after 10 years, so:
($60,000 x 1.03^10years) x (100/5) = ($60,000 x ~1.3439) x 20 = $1,612,680 needed after debt in 10 years to retire as planned
An easy formula too for figuring out bare-minimum wealth needs and more-than-enough hoarded (e.g. 17x [might make it work] to 33x expenses [any more is wasteful]). So long as we know a year’s typical expenses by having lived an authentic lifestyle, the rest is cake.*
Multiples offer more consistency, apply to a person’s unique situation, and are simpler napkin math that applies to 99% of people out there (I am being hyperbolic).
* How do we figure out expenses? The nitty gritty is for another post. I would suggest here to go through bank and credit card statements from the last few years for the full year (since things like insurance or car maintenance can jack-up by-month expenses). Getting these numbers in hand, I myself throw out plain averages – outlier years (lots of one-time costs or a long hiatus in the no-money-mountains) skew these pretty badly. Instead, either median (most common costs) or my preference of weighted averages (more recent years get counted more)** gives a clearer picture of what life spending has been like.
** E.g. You have 5 years of data. 5 years ago multiplies by 1, 4 years by 2, … last year by 5. Add all the multiplied results up, then divide by adding all the multiples up.
I started my financial literacy when asking the Q from Tim Ferriss, “which of these, if done, would make all the rest easier or irrelevant?” That answer was and has been and might forever be money. It adheres to the principle of Ockham’s Razor, taking the simpler sufficing path. We have taken today the simpler path that will suffice for most general lifestyle targeting and financial independence freedom.
You don’t need millions, you need multiples. I do not think this misses the mark, so comment now or forever hold your peace 😁
Die With Zero by Bill Perkins is one if not the top book of mine read in 2024. As a guy who has spent years coming to grips with finance, retirement, et. al, this one book changed my views of money fundamentally.
I hope Die With Zero will change your views too.
Will You Die With Zero?
The principles of the book are keen, yet they lack a tool to apply them to.
I made one to check if I would or could die with $0 left over in the bank. Cleaning that sheet up, here is a generic copy for you and your friends to check where you are now (money in, money out, net worth), where you are going (interest, growth), and how you too might live a life full enough to die with zero (life expectancy, retirement).
Remember, the goal is to live a full life so you can die with as close to $0 as possible – you can’t take it with you. Read the book for more excellent insight as regards to inheritance, lifestyles, and health!
Other Finance Heuristics
The above is a pretty plain tool, yet in an afternoon it can give insights to if a person is on the right saving and spending path.
It is certainly better than the over-simple “expenses x 25” (a 4% nest-egg withdraw rate estimate), “expenses x 33” (~3% withdraw), or “expenses x years-to-Social-Security” (an early retirement guess-timate).
That, or the “nothing is as good or bad as it seems, hedge 33%” (though this could shore up some extra security at end of life).
Let’s not forget the survival estimate using SS Social Security, which is “.7 x (years-to-SS x expenses + [end-of-life-age – age-to-start-SS] x SS-estimate)” – kinda icky.
If you really want to get into the weeds, spend a day with Finance Mentor or Projection Lab (I have no affiliation with either – I just like the apps). These go through details and life possibilities with much more advanced simulations, but they will not matter unless you are closer to or just had a major life event (e.g. divorce, lottery win, settlement, child, vast cost-of-living change, etc.).
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Comment what you think about the tool. Do all or most of these calculations show you have secured your future? Great! Count yourself freed from need – these tools exist to work for you, not you to exist to work.
Cheers to you making it through the finish line while making a grand time of it ~
Recently, I have been chatting with some folks who are in positions to give me compensation for the value I historically would bring to them (per annum, millions of dollars, perhaps even lives).
AKA interviews 😂
While passing tests and getting along great as people, I keep needing to do what you too must see on a frequent basis: convince others of your worth.
I have the $$$ figures, I have the historic evidence, I have the rapport, yet I need a little help from experts.
Some experts on the arts of negotiation and selling oneself have been visited before in Devaluing Your Worthand What Is Your Work Worth?. Those insights are gathered here with new insights sprinkled in that I have negotiated tens-of-thousands of compensation for.
So read on – it will only be 15-20 minutes. This bit of prep could help land you enough to make all the difference. Here goes:
First off, you need to know what your value actually is – without that, you have nothing, the same as your value in another person’s eyes.
So convince yourself of your worth first: understand how many years of experience you have for a given role, the skills you bring, how and how fast you learn, and the quantities of cash and cash-equivalents (time savings) you have brought to other roles.
That done, figure out what is a fair compensation range for that role. This can be found through:
Bureau of Labor Statistics
What should be the be-all, end-all source of compensation data, BLS is a treasure trove of data. By role, by industry, by state, and by county, medians and averages and other data are everywhere. It can be a chore to navigate – the effort will be worth it!
Glassdoor
The most common work resource on the internet. Besides researching the company being talked with (reviews, history, and interview topics), Glassdoor houses a vast collection of salary and total-compensation for cities, roles, and roles at the company.
NOTE: Glassdoor will track your use and after the first page you view, it will require you to sign in to view more. While contributing to the Glassdoor community is a valuable way to give back, it can also be annoying.
Instead, do all your Glassdoor searching in a private/incognito window. When the page blocks you, copy the URL, close the entire private/incognito browser, then reopen the browser, navigating to that copied URL. Voilà!
Levels.fyi
Largely tech-focused, this site’s deep breakdown of different companies, roles, and cities for both general and specific job titles (e.g. “software engineer” vs. “L4”) is invaluable.
Stack Overflow
More of a software resource than general, it provides a great, easy-to-read walkthrough of reported data, something you can learn from in reference to other data providers.
Other resources like Salary.com or industry-specific reports like the annual report from the Game Developers Conference (GDC) can be great for pulling additional data points.
From the above, collect the averages and medians of both salary and total compensation (dealing with those in the next section). If there are multiple results, take them all. Put everything into a Google or Excel Sheet – you will need it >_>
Example: Throughout this article, we will reference a fictional role that, after calculation, comes to $98,765 base salary, $123,456 total compensation.
These terms are investigated later, but now you have the details!
More Than Just Cash
Now you have a collection of average and median $$$ figures, a bunch of base salaries and total compensation packages. Here, we need to find what amount of compensation comes from things other than a paycheck.
Usually, total comp refers only to base salary, annual bonus, and stock grants/options. “Cash is King,” as is said, but for many, the additional bonus and stock can be the linchpins in the agreement.
Bonus and stock can be viewed as cash equivalents – not as good as cash, but within a margin of error, can bring major payouts later on a yearly or quarterly basis. Sometimes it can be cash-in-pocket right away – signing bonuses with lenient claw-back terms should be considered as a cash bonus in the offer.
With the numbers you have, look at the whole package of salary, bonus, and stock when the offers come in – any other benefit is gravy. This does not decrease the value of PTO (sick and vacation, approximate value of 2% of base pay per 5-days/1-week; assume “unlimited” is 15 days or 6% of base pay, i.e. 3 weeks before someone starts asking), work from home, or other benefits – it only means that we can judge like with like, salary-bonus-stock numbers compared with the offer of salary-bonus-stock.
But how much does salary and everything else make up total compensation?
Simple: You have salary and total comp numbers from the previous section. Divide salary by total comp in each pair, and get an average and median – this will give two numbers in percentile of how much salary should be making up the total offer package. Since cash is king, pick the higher percent (i.e. expect a higher salary right away vs. waiting a year for benefits to kick in).
Example: $98,765 is the base salary, while $123,456 is the total comp. $98,765 / $123,456 = .8, or, 80% (round up if needed) Therefore: Expect base salary to be 80% of total comp.
Total Comp * Percent = Base Salary
Keep this percent for later.
Update Your Numbers
Setting salary aside, bring out the total compensation numbers so we may calculate the total range of value your work is worth!
Adjust all the total comp numbers by the rate of inflation, rounding up to the nearest 5% (e.g. 8.9% = 10%). We do this because virtually all data will be a year (or more!) old.
Next, whenever using general resources that apply to the entire nation (e.g. “X in the USA” vs. “X at Y company, in Z city”), adjust those numbers by the cost of living in your city.
CoL can be found online. I am partial to Best Places to determining my city compared to the national level, e.g. Las Vegas is +11.6% as of August 2022. Best Places, Nerd Wallet, and Numbeo all have excellent city-to-city calculators too (if there is a difference between them when you research, take the number best for you).
(Use the city-to-city calculations later if considering work in another city, but only if the result is higher than what you already have!)
Example: $123,456 is the calculated total. Assuming inflation is 10% and the position would be onsite or remote in Las Vegas, the CoL is 12%, the new total comp is:
$123,456 * 1.1 * 1.12 = 152,097.792, or, $152,098
Aim High to Make Fair
Adjusted numbers in hand, get them down to just 4. Plug the numbers into this grid:
Average of the Averages
Median of the Averages
Average of the Medians
Median of the Medians
Comp Number Breakdown
These numbers define what you ought expect as a total comp floor from any offer.
The lowest number in the grid is your secret floor. If desperate, you can accept offers just above this value, but for pity sake, accept nothing lower. Tell no-one this number. Cool?
Take a look at the highest number in the grid. That number is your quoted floor, the bottom offer – this is what you will tell folks when they ask “what is your range?” Round up to the nearest thousand. Do your utmost to stay away from this median.
Medians are mediocre. I trust you bring more than a mediocre value.
Time to aim high, getting us closer to the 75% percentile in wages. We do this because it helps inflation-proof your compensation, improves the performance rewards you ought be getting for a good job, it helps prevent a company from low-balling you, helps your peers in the field by demanding a higher wage, and saves your self respect.
What’s not to like?
Anyway, take your bottom number. Multiply it by 15%, 18% if feeling confident. Round that up to the nearest $5K. That is now the top of your range.
Example: Assume $152,098 is our lowest of the 4 values. The highest value is $156,789 (round to thousands).
$152,098 is the secret floor. Acceptable if the company is great, the work good, you would like to work right away, and you and your boss have a plan to review that number in a few months.
$157,000 is the bottom range. Told to prospects.
$157,000 * 1.15 = 180,550, or, $185,000 is your top range. You sell yourself near or above this number.
The Reveal
You have your top and bottom range, a secret floor, and salary percentage. While you never reveal your floor, contrary to this section title, you try, try, try not to reveal your range.
Why?
Keep the employer honest – they ought give you a range expectation for a role first, especially if they reached out to you first. Who knows – they may give you a higher total comp range than you calculated! (This gets touched on later.)
This section though is about when your casual efforts have failed and the employer stonewalls you on the value of your labor. So it is your turn – after giving the context that this is the reasonable range for your experience, the role, and other factors, reveal your range.
Example: “After researching the role and the value I am bringing to it on places like Glassdoor, the Bureau of Labor Statistics, and industry reports, a reasonable total compensation range would be $157 to $185, though with my proven career of success, I feel I would fall closer to the top of this range.”
If the person you are talking to balks, you walk. If the person says anything but no, you have the door open 🙂
Even if the employer mentions they likely could not hit the top of the range, they now know your bottom, and are more inclined to meet well above the bottom knowing your expectation of more!
What Is Your Base?
Many times, recruiters haven’t done the homework to figure out what their company is offering in total. When you give your total comp reveal, this may leave them confused. Here is where you save the day:
After the other person expresses they don’t know total comp or need a salary range, you can provide the base salary of your bottom and top numbers using the percentage calculated before.
Easy! So long as you remind them that these are flexible numbers depending on the extra benefits – total comp is always the goal, your personal value placing you squarely at the top of the range.
Example: The total comp range (in thousands) is $157 to $185. The calculated base salary is 80% of total.
Therefore, the base salary range is ~$126 ($157 * .8) to ~$148 ($185 * .8).
(Rounding up, as always.)
Wrap It Up
Find numbers from resources: BLS, Glassdoor, Levels.fyi, etc.
Calculate base pay percent from total comp: base / total
Update numbers for inflation and CoL.
Pick the highest numbers as your bottom total comp, saving the lowest numbers as a secret floor.
Calculate top total comp: bottom comp * 1.15
You now have your secret floor and bottom-to-top total comp range.
Calculate a soft, flexible base salary range for those in need:
Bottom: bottom comp * base pay percent
Top: top comp * base pay percent
You now have your flexible base pay; this is a guide since total comp is the goal.
Nifty, eh?
But what good is knowing your worth if they won’t realize that value?
That’s where negotiation comes in.
Negotiate Like Your Life Depends on It
Your life really will depend on your negotiation. From misplaced time to opportunity cost, you must negotiate – it is one of the most important things you must learn to do.
While I am only a student myself, here is the best I’ve gleamed:
Get a range during the first screen / conversation. Get the other party to reveal a range first if possible; otherwise, give yours and specify how you land at the top of the well-researched range.
Kick behind during the interviews – this is non-negotiable. Study, rest, eat well, destress, clear your calendar. Brush your teeth, wash, dress fine. Smile, mind your manners.
When the offer comes, express your thanks that they considered to give you an offer, and all the time they have invested so far. However:
Offer is above your goal: Great news! Do not show your elation. Instead, explain you have learned through the interview that the role is worth more than originally estimated. Maybe it is responsibility, requirements, or near-future challenges – see how far north it can go with salary, bonus, stock, and signing compensation. (Don’t negotiate too hard here – you have already ‘won,’ so congrats! Anything else is icing on the cake.)
Offer is well below your goal: Oof. While you do not get flustered (take a breath!), verbally gasp or suck in air through your teeth. After thanks, let them know that this is well below the market asking price for a person of your skill and that the offer is very far off of expectations.
Offer is around your goal: OK. It is close. Let the other party know this. Ask how the offer might meet expectations. Let them figure out how to meet your value – if they need help, suggest that you all look at non-salary benefits, such as bonus, stock, signing, and extra weeks of PTO to make up the difference.
Be quiet. Silence. After making a statement, shut up. Let the other side fill the void. They may give you more information or negotiate against themselves.
Walk the offer along. When the offer is below the top range, walk that top range down to the bottom. Choose a way to do this beforehand:
Ackerman Model/Technique: T is the top of the range. B is the bottom. T-B is the difference D you work with. “B + D” is the “T” you initially aim for.
Zeroth offer: T
First offer: B + (D * .35)
Second offer: B + (D * .15)
Third offer: B + (D * .05)
Fourth: B
(Give thanks, but offer no more after this.)
Aggressive Technique: Something I have used before. T is top range, B is bottom, D is the difference in between:
Zeroth offer: T
First offer: B + (D * .6)
Second offer: B + (D * .3)
Third offer: B + (D * .1)
Fourth: B
(Give thanks, but walk after this unless the job is needed and the secret floor is met.)
Be prepared to walk away. Those that can leave the table have leverage; those who cannot are slave to whatever the other party wishes.
All of this is barely skimming the surface level of understanding, demonstrating, communicating, and convincing others of your worth. It is at least a start.
Why would you hire me, such-and-such proven professional?
What do you feel I should know before coming on?
How will we know we are off track in the role? How do we get back on track?
For the missing or subpar offer:
How am I supposed to do that?
How can I help improve this for us?
How would you like me to proceed?
How can we proceed?
What else about this bothers you?
The Secrets of Closing the Sale by Zig Ziglar
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Those are my tools! Now those are your tools too ~
Like ideas or drafts, the first offers may not be up to snuff. Stay patient, friends, as best you can. Your situation is undoubtedly different from mine – no matter what it is, use these tools to convince others of your worth. Stick to it, k?
Here is to your gains and your greatness! Share with me your success stories and own methods for achieving your value. Cheers for now ~
All the below are estimates using free online resources. Your mileage may vary.
The Data
THP – Take Home Pay (assuming only income taxes without contributions apply) Inf – Inflation (not used for the year of writing, ’23) CoL – THP normalized to national Cost of Living
Senior Software Engineer, L3 Base Pay: $175,000 THP (after effective tax of 32.54%): $118,050 CoL: $71,545 (THP / location’s decimal-percentage CoL) Aerospace Company Westside Los Angeles Metro Area, CA
Excluding all stock, bonus, and other amenity info. Checkout Glassdoor (use an incognito browser) and levels.fyi for great value-add resources.
Takeaways
California income taxes suck. Guess that is why so many CA tech companies offer stock and options, those taxed at a different, i.e. lower, rate!
I haven’t experienced too harshly the cost of living change – housing nearly triples the national average, but Airbnb and fully-furnished month-to-month options are perhaps 100-150% vs 200% higher. Not to mention what would happen with a roommate(s)!
Regardless, take-home pushes me ever closer to financial independence FI while allowing luxuries in some lifestyle choices (e.g. no need for roomies).
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That is it for this year! Checkout 2021’s data (skipped 2022 – the company gave no raises [I should be “appreciative” that the stock went up, which then proceeded to nosedive] before summer layoffs).
Wanna talk numbers? Would =adore= getting to hear! Curious about an offer or the non-base-pay bits left out of this post? Hit me up for a call!
It is dangerous to go out into the working world alone – I am hear for you. Until needed, I send you cheers in your pay and careers ~
It is fine if you don’t – they seem to have died out as fast as they blazed on to the Twitter scene.
To say that a lot happened in 2020 would be to understate and understatement. Now the situation in the US is beginning to stabilize (go get your sticks, folks 💉💉) with an accompanying boom in hiring.
But if people are getting hired again, are they getting paid enough?
THP – Take Home Pay (assuming only income taxes without contributions apply) Inf – Inflation (not used for this year, ’21) 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.
Takeaways
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.
Use ’em.
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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.
Inflation
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 (what a shame to be underpaid):
Where
CoL vs National
Est. Min. Salary
Est. +10% Salary
Las Vegas
111.6%
$123,436.62
$135,780.28
Redmond
185.1%
$204,732.24
$225,205.46
Seattle
172.3%
$190,574.63
$209,632.10
Austin
119.3%
$131,953.30
$145,148.63
Washington
152.1%
$168,232.16
$185,055.38
Boston
162.4%
$179,624.61
$197,587.07
New York City
187.2%
$207,054.97
$227,760.47
San Francisco
269.3%
$297,862.73
$327,649.01
San Jose
214.5%
$237,250.49
$260,975.54
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, nor is the opportunity cost for not having cash-in-pocket slight, 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! Unblocked. 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).
Barring 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 to maximize your worth to the other party and to yourself.
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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!
I’ve been around the block a few times as it comes to employment and figuring out my work’s value.
In figuring that worth out, a few excellent tools have made themselves invaluable time and time again.
I don’t use these tools until I have an interview lined up or a change in job title or I’ve been employed at the same place for 9 to 12 months. However, when used appropriately, they’ve put the leverage on my side when negotiating a salary or raise. For the cost of an hour looking up values, I’ve netted tens-of-thousands of dollars in value added.
That, and the tools have let me know if I’m walking into a proposal as being underpaid – as an advocate for the worker, never be underpaid 😐
Here, I’m opening-up my personal toolbox for your use. May it be a starting point on your next job offer, a stepping stone to ask for a raise, or merely another reference for your own methods to calculating your work’s worth 🙃
TLDR
(Really, you should read on. But, if pressed for attention, do the following.)
Get the job title for the new job / your current job.
Next, get the city for the job’s cost of living (CoL; google “cost of living theCityName“).
Go to the Bureau of Labor Statistics, searching for the job title, and recording the median salary.
If the median salary is not in your current year, search “inflation calculator”, using what you find to turn the salary into your current year’s dollars.
Multiply the median salary by the CoL percentage (111% CoL = 1.11).
Take the multiplied result, round up to the nearest tens-of-thousands (this is the Minimum Salary you should consider for the job).
Multiply the result again by either 110% (this is the Expected Salary you should quote to anyone who asks).
If your Minimum Salary is less than $100,000 and you’re feeling fierce, multiply the Minimum by 125% instead of 110%.
Aim for the Expected Salary or more (negotiate!). Accept nothing less than the Minimum Salary.
If you want more detail, you’ll have to read on 😁
Variables
So what’s important in determining worth? Well, simply put… everything.
That’s hardly helpful, so here are some base values needed for the figuring:
Job Title (Title)
Company
City
Base Salary (Salary)
Potential Bonuses (Bonus)
Performance Awards
Signing Bonus
Stock Discounts
401K Matches
PTO
Gym Memberships
Commute
etc. (Don’t worry too much on this.)
Cost of Living (CoL)
Titles can be important, and bonuses lucrative, but unless you have some special arrangement to fully leverage non-salaried bonuses like stocks or commission, nothing will be cash in the bank at the end of the day.
If the salary can’t be increased, multiply the difference of what you want vs. what is offered by 2 (“2” for the number of years a person typically works in a position). Negotiate for bonuses equivalent to that number.
Sites for Values
To get values for the variables, Sperling’s Best Places, the Bureau of Labor Statistics, Glassdoor, Salary, Salary Expert, and the job post itself will be your best friends.
(If any of the salary sites have bonuses, record those too).
Search for the job title for the median salary and national area data.
Example of a Software Developer. (The “State and Area Data” tab has county information that gives you another salary value when you hover the mouse over the maps.)
If the salary medians are from a past year, use Google to find an inflation calculator to turn those old salaries into today’s dollars.
Get more salaries for the job title at the location of the job.
The Job
Here is where you get the job title, company name, and city.
If your industry has compensation reports (eg Software and Stack Overflow, Video Games and the GDC Game Developers Survey), include those here too! More data, more power!
Formulas Go Brrrr
You’ve been good so far. Now, do this:
Get one salary out of the reported salaries.
If there’s a national salary (eg BLS, Glassdoor), multiply that salary by the CoL of the city the job is in to get the salary to use.
Eg $100,000 national salary * 1.10% CoL = $110,000
Calculate the Median and the Average for all salaries collected from every source.
Whichever of the calculated Median and Average is higher, keep that and discard the other.
Do this for the bonuses too.
Round the calculated salary up to the nearest tens-of-thousands place. This is your Minimum Salary.
Round the bonus up to the highest place (eg $102=$200, $1799=$2000, etc).
Multiply the Minimum Salary by 110% to 125%. This is your Expected Salary.
Why “110% to 125%”? Well, it depends. The higher the percentage, the more difficult it gets to defend during negotiations asking for the Expected Salary. Use judgement and self confidence in this – regardless of what gets asked for, a salary will always need defending, so preparing a longer argument of why the salary is warranted comes with negotiating 🙂
Tada! You now have a Minimum Salary, an Expected Salary, and Bonus values, aka your work’s worth. That said, let’s put them to work 😎
Using Your Worth
Here’s where the negotiation comes in. Negotiation is a topic unto itself and is better covered by cleverer folks than I, so I’ll leave you with these bullet points to keep in mind:
Ask for more than you think you’ll get. That’s why asking for Expected Salary is the least you can do for yourself if pressed to give an expected value.
If given an offer more than the Expected Salary and the Expected Salary hasn’t been told to the person making the offer, counter with at least the offer’s salary and the Bonus calculated earlier, if not asking for an increase in the offer’s salary by 10%.
If given an offer less than the Expected Salary, work with the offer to see about raising the salary to the Expected (*cough* negotiate *cough*). Should the offer salary not be raised, do mental math to calculate twice the difference of the offer and the Expected Salary – negotiate for that value in Bonuses (signing bonus, PTO, etc.).
Don’t accept less than the Minimum Salary. The greatest power is to the person who’ll walk away first.
That, and accepting less than what’s literally fair (the median and average) hurts you, your peers, your industry, and your country. Don’t do it.
These values you’ve calculated are the bare minimum acceptable to not hurt yourself (Minimum Salary) and a reasonable request for the work to be done (Expected Salary) with wiggle-room (Bonus).
Remember, you are asking for compensation for the work to be done first, your history and experience second. Be aggressively fair for future, but only use the past as a lens instead of an anchor keeping you from accepting reasonable work.
Further Learning
The Secrets of Power Negotiating for Your Dream Job by Roger Dawson.
One of my go-to books for scraping data, asking the right questions and for the right things, and giving me the confidence to stand up for myself.
Think it’s about time I contributed to #TechPaidMe / #GameDevPaidMe. Why? Why not? Transparency in worker pay gives power to the worker. Gives power to you.
My history has been thoroughly and chronically underpaid for the value brought. After reading Chris Voss’s Never Split the Difference, I’ll never do such things again. After reading this post, maybe you won’t be underpaid either. Sound good?
I’ll save you some time by crunching the numbers with 2020’s income tax for take home pay (THP), then inflation (Inf; doesn’t count Roth 401K and IRA contributions), then normalized cost of living (CoL; to a US national 100%) so you can get some decently useful.
The Data
(Skipping pre-2013 dev work as I was preoccupied with other things at the same time.)
That means in 2020 dollars, adjusted for cost of living nationally, I took home about $54K. Let’s continue…
2014-2015
#TechPaidMe #HealthcarePaidMe Technical Services Problem Solver (customer support + custom dev) Base: $69,000 (I think? I actually can’t remember. I just know it was under folks hired some 3-6 months after!)
THP: $51,757
Inf: $55,988.32
CoL: $50,079
Epic Systems
Verona, WI (Outside Madison)
2015-2016
#GameDevPaidMe SDET II Tools Developer Base: $66,000
THP: $48,387
Inf: $51,690.73
CoL: $40,926.94
Microsoft
Tigard, OR (Outside Portland)
2016-2018
#TechPaidMe #GameDevPaidMe Software Tools Developer Base: $75,000 (not including bonus up to 15%)
THP: $59,588
Inf: $60,842.61
CoL: $54,518.47
Aristocrat Technologies
Las Vegas, NV
At this time, I read Never Split the Difference among other books and Reddit posts. Continuous learning evidently pays dividends:
2018-2020
#TechPaidMe #GameDevPaidMe Senior Software Engineer Base: $104,500 (not including bonus; had a raise for a few months before a promotion with a final raise here)
THP: $80,179
Inf: $-
CoL: $71,844.98
Aristocrat Technologies
Las Vegas, NV
Despite all of the lower-than-expected pay, despite coming late to the FIRE Movement, I am well on my way to financial independence. No debt, minimal other expenses, and investment performance is set to CoastFIRE me in less than 10 years, FatFIRE in less than 15. If we suffer a crash in the markets, independence will happen sooner with savings on hand that were meant for buying property 2 weeks before COVID-19 locked the US down. #BulletDodged
If you feel comfortable in sharing, what have been your numbers in tech and game dev? I used to be very sensitive over letting others know what I earn, so I understand if all you get is a reference point for your future salary negotiations 😉
Before we go, checkout these resources that have been such boons to me:
Jimmy Chattin 
