How to Negotiate Your Salary
If you’re in the market for a job, you may be wondering how best to handle the most uncomfortable part of the interview… The salary discussion. Well, I recently ran across an interesting tidbit on the topic from a headhunter named Noel Smith-Wenkle.
Obviously, there are a couple of major factors at play here that you have little control over: location and line of work. These two factors will go a long way toward defining the salary range that is available for the position that you’re interviewing for. The key word in that preceding sentence is range.
In the vast majority of cases, employers don’t have a fixed amount available to fill a position, but rather they have a salary range. Their goal is (more often than not) to keep you at the lower end of the range, whereas your goal is to land at the high end of the range.
More often than not, your prospective employer will bring up the topic of salary expectations, either on the job application, or during the interview. This may seem like a relatively innocuous question, but you’re at a huge disadvantage when answering it. As a general rule, the first person to name a number in such situations will ultimately lose.
If you ask for too little and you may get paid much less than you’re worth – and there’s a good chance that your future employer will try to negotiate you down using this as a starting point. But if you ask for too much, you risk losing the opportunity entirely. So how can you defer the question without coming off like a uncooperative jerk?
For starters, do your homework. Find out how much people with similar backgrounds are earning for similar work in the location of interest. This latter point is huge, especially if you’re relocating. You may not have a good feel for the cost-of-living, so get one. If possible, ask around. If not, start poking around online. There are a number of good sites out there to get you started, such as GlassDoor.com and Salary.com
Based on your above research, you need to define a minimum acceptable salary for the position in question – but don’t tell them what it is. If you’re asked about salary requirements on the application, leave it blank (or write negotiable). When they ultimately ask you in person, respond with:
“I am much more interested in doing (type of work) here at (name of company) than I am in the size of the initial offer.”
This does two things: it allows you to dodge the question, and it also helps to distinguish you from the “thundering herd” of applicants who are primarily focused on the numbers. And, according to Noel, this simple sentence will prompt the hiring manager to come back with a fair offer.
If instead the interviewer asks a second time, respond with:
“I will consider any reasonable offer.”
This is obviously just another stalling tactic, but it’s polite and has enough wiggle room in it that it doesn’t pin you down in any way. According to Noel, only about 30% of cases will get past this point without the hiring manager coming back with an offer.
If you’re asked a third time (and yes, it’s probably starting to get uncomfortable by now) then Noel advises responding with:
“You are in a much better position to know how much I’m worth to you than I am.”
Here again, you’ve been polite, but you’ve refused to name a number. According to Noel, it rarely gets beyond this point, but if they continue to prod, he suggests that you stick with this final answer. Of course, doing so might cost you the job opportunity, but it will protect you against getting less than you’re worth.
The whole point here is to get them to say a number. This establishes a minimum in your negotiations, and you can work up from there. If, on the other hand, you speak first, you have effectively established a maximum, and the final number will likely move down from there.
And of course, once you get them to throw out a number, you don’t have to respond immediately. You might even respond with a bit of awkward silence to see if they’ll revise the number upward on their own.
Oh, and while we’re on the topic, be sure to check out The Salary Theorem. 
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Modified on May 30th, 2011 - 8 Comments
Filed under: Working
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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May 27th, 2011 at 10:21 am
By politely presenting some basic figures about comparable salaries that were higher than my offer I got myself a $5,000 signing bonus for my first job out of college and a bump in line for a $2,000 raise two months in. I hadn’t even planned to negotiate, but a friend talked me into it. When I got my bonus on top of my first paycheck I was really glad I’d agreed. The whole thing only took less than an hour of my time. I wish I could make $5,000/hr all the time.
May 27th, 2011 at 11:49 am
With over 12 years of recruiting, I will respectfully disagree with this article. The first 10 years of my career were on the agency side and the last two as an internal corporate recruiter. If someone stone walled me three times, the interview may end or at the very least leave me with a bitter taste. As a recruiter, it is my job to make sure we are not wasting time for my client/manager. I would suggest something more to the affect of, “For a salary range, I would like to base the number on three different pieces. The first is team equity in your company, the second is market rates, and the third is my historical earnings. The range I have come up with, without knowing your team equity, would be XXXXX dollars. If that is not in range with your team, I am very willing to listen to offers.” SHOOT HIGH! When negotiating, as mentioned in this article, terms will generally fall closer to the first number offered. The last line of the aforementioned quote will give you an out if your number is not in line with their target. Why not set the bar higher than you expect and work down? It is easier to roll a rock down hill than up!
May 27th, 2011 at 1:12 pm
Mike: I think that your idea of throwing out a high number along with a statement that you’re willing to listen to counter proposals is a good middle ground.
May 27th, 2011 at 1:14 pm
Also, fwiw, I’ve been in the position of having a salary offered to me that was a good bit higher than I would have asked for. In that case, I was taken aback and just sort of fumbled around and said “okay.” I probably should’ve countered within something higher yet, but it was so unexpected that I wasn’t ready for it, and didn’t have a good response in mind.
The lesson here is to be prepared for all possible scenarios.
May 28th, 2011 at 3:23 pm
We all want the highest possible salary, but need to remain aware that it’s an employer’s market. I’d be careful of too much haggling with a long line of hungry unemployed standing outside the door. Better to provide a prospective employer with a verifiable skill set and accomplishments that will help make them lots of $$$$.
May 30th, 2011 at 11:57 am
OK, let’s float some basic reasoning onto the internets. What matters to both sides is the terms of the *accepted* offer.
The offer is wasted company time if the candidate does not accept. The candidate option for higher compensation is illusory if the offer never comes. (This candidate won’t even start the salary discussions after several questions …)
Whether the company or candidate makes the *first* statement is really not relevant. As a candidate, provide a realistic and optimistic compensation package that you would be happy with, if it were accepted.
May 31st, 2011 at 3:42 pm
Whoah! Asking for a salary rise was one of the toughest things I’ve ever had to do. To be honest my boss was okay with it and he met me half way. The thing that annoyed me the most was that he would have happily let me work away for the lower amount forever. The simple maxim holds true – fortune favors the brave! go ahead and ask – the worst that they can say is ‘No’.
May 31st, 2011 at 11:07 pm
Right now I’m in the market for a new job. I’m still employed though but I am leaving to get at least market rates because I am HIGHLY underpaid. Anyway, I agree with Mike. Stonewalling 3 times wastes everyone’s time. I’m printing Mike’s answer and sticking it in my purse so that I can memorize it.