The amount you start with will impact your return.
For example, if you never ask for a salary increase, you could be missing up to one million dollars in the course of your career. But if you do ask and if you follow our tips, you can increase your overall earnings (salary plus Employee Stock Options) up to 50% per year.
In this post, you’ll learn:
How to negotiate a salary;
Why salary negotiation is important for your career;
Best salary negotiation tips;
Common mistakes when negotiating;
Best free resources;
Let’s get started.
GrowthAdvisor helps you negotiate higher equity, find companies with the best compensation packages, and plan your career for the next 10 years.
First off, what is salary negotiation?
Salary negotiation is a discussion (not a dispute!) between you and the company’s hiring manager about your compensation.
Think of it as teamwork leading to a business transaction.
Though it might seem like the manager can bite off your head any time, she’s not a lion and you’re not in a lion pit.
You’re here to state your worth, and she’s here to state what she thinks you’re worth.
So, how do you do it?
You meet and have a talk. The goal of your talk is to arrive at a number that’s fair to both you and the company. (Remember, the manager only represents the company, so don’t shoot the messenger.)
In this talk, you’ll need to:
Prove your worth;
Sell your skills;
Let’s take a look at them one by one.
Before going into the meeting, write down a list of everything you have accomplished so far in terms of numbers. For example, at company X, your code improvement helped raise the profits from $5,000 to $10,000. And at company Y, your marketing campaign helped get three new clients.
Think of every item as it would be seen by the hiring manager.
What can you do for the company if they hire you or give you a raise? You’re an investment. What will be their return?
First of all, here is why it’s important you ask questions.
Whoever asks questions is in control. And whoever asks questions talks less and listens more.
Your job in a negotiation of any kind is to listen. Remember, the hiring manager is as afraid of you as you’re afraid of her. She’s afraid to give you too much money and see no return on investment. You’re afraid you won’t get as much as you ask for, or maybe even won’t get anything at all.
If you focus on asking questions and listening, you’ll come across as understanding and willing to collaborate. The hiring manager will relax. This is very important. There will be tension in your talk. After all, you’re talking about money. So instead of bracing yourself for resistance, you’ll create an atmosphere of a friendly discussion.
This is the most exciting and the most terrifying part.
What you have to offer are your skills. And if you won’t “sell” your skills, the hiring manager won’t “buy” them.
Think of your skills as a product.
To sell a product, you don’t tell the buyer what the product is. You tell the buyer what the product can do for them. In other words, you tell the buyer all about the product’s benefits.
In terms of your skills, you won’t be saying, “I can write code in my sleep.” The hiring manager doesn’t really care about what you can do. She cares about what you can do for her company. You’d be better off saying, “My code can double the speed of your video streaming.” Now that’s impressive. (But it better be true!)
Having said all this, it’s still intimidating to even think about salary negotiation. We’re not used to negotiating. In our culture, we’re used to researching the price, buying, and moving on.
But compensation negotiation is crucial to your career planning.
Here is why.
Your total working time will be about 50 years. And your career will take up about ¼ of your total working time. That makes it 12.5 years out of your life. Ouch.
Now, if you think of this time as an investment, the more you invest, the bigger your return will be.
Let’s say that every time you negotiate, you get an extra $5,000. And if you switch jobs 10-15 times in your career, that’s $50,000-$75,000.
But let’s say, you only negotiated once (all the other times you didn’t feel comfortable), and you made that extra $5,000.
If you invest $5,000 in an index fund, over 40 years it will compound to almost $1.4 million!
Imagine how much it’ll be if you negotiate salary every single time you get a new job offer or switch jobs. Even better, imagine how it’ll be if you negotiate not only salary but also your Employee Stock Options.
If your company goes IPO, you can make big money.
Now let’s talk about the best negotiation tips.
You decided to go for it. You decided to negotiate a higher salary. Congratulations!
Here is a list of quick and simple tips that actually work (you won’t break a sweat).
Pick the right time to meet (in person);
Have the highest (and exact) salary number in mind;
Don’t share your previous salary (or any numbers at all);
Wait for the offer;
Take your time to decide;
Let’s break this down.
If you can help it, don’t negotiate over email or phone. Insist on a meeting. It’s much easier to make a sale in person where you can see the hiring manager’s body language. Spoken words account only for about 7% of what we mean to say. A firm handshake and direct eye contact are equally important.
However, if you’re uncomfortable with meetings, you can get away with a phone meeting. But try to avoid negotiating over email at all costs.
Why? Because you won’t know when the HR manager will read your email.
Timing is important.
The best times are when the company is doing great and when the hiring manager is in good spirits. In terms of the day of the week and time, it’d be the late morning in the middle of the week. So Tuesday, Wednesday, or Thursday.
Before the meeting, do your homework.
Research the salary ranges for your desired position and pick the highest number.
This will give you room to negotiate because the hiring manager will try to bring this number down. Plus, if you choose an exact number, it’ll show that you are prepared. You have calculated exactly how much money you need.
It’s a bad idea to give any number at all, especially the one that’s lower. The hiring manager will immediately jump on it and never go higher. Don’t do it.
Remember, it’s a negotiation that will lead to a business transaction. You’re selling a product. The buyer will try to buy as cheaply as she can.
Many online articles will recommend you say your number first. We think it’s a bad idea.
It’s the hiring manager’s job to make you an offer. Your job is to accept it, decline it, or negotiate for a better number.
If you say your number first, you could miss the higher number that the hiring manager has in mind. That could cost you dearly down the road. Remember how much that extra $5,000 per year compounds too?
Don’t come across as too eager or needy. Stay calm. Pause for a few seconds before answering any question. And when you hear the offer, pause for at least 5 seconds, thinking.
The world is not on fire.
It’s perfectly okay to say you think to think about it. Actually, it’s good practice.
It might prompt the manager to offer a higher number. And it’ll give you the time to really think it over. After all, it’s the next 13 years of your life.
Now, let’s talk about common mistakes.
As we mentioned above, compensation negotiation is a discussion, not a dispute. There is no need to be aggressive or pushy.
Keep calm, stay professional, and avoid these mistakes:
Don’t argue, demand or criticize—you’re here to collaborate;
Don’t share any personal details unless asked—you’re here to do business;
You’re here to assert your worth so don’t explain or apologize.
You’re here to demonstrate your professionalism so don’t rush or interrupt.
Don’t come unprepared—you’re here for you, not for them;
Don’t leave empty-handed—you’re here to get the return on your time investment;
Finally, let’s over the best free resources.
You can begin by googling “negotiate salary,” but then you’d be hit by over 176,000,000 results in 0.47 seconds!
That’s where GrowthAdvisor can help.
We’ve analyzed over 800,000 companies to help you make smarter career decisions.
With our free tool you can:
Learn how and when to negotiate;
Estimate any company’s future performance;
Estimate your best job offers;
Create a simple step-by-step Negotiation Chart;
Map out your entire career;
Plan your next promotion;
Make smarter decisions on when to switch jobs;
Set financial goals and track your progress;
Think of GrowthAdvisor as your friendly automated CFO. If you had a friend like that, they’d help you pick the right (and the best) career path based on their knowledge of numbers.
The bad news is, you most likely don’t have a friend CFO.
The good news is, you now have GrowthAdvisor! Even better, you don’t need to do the math. We’ll do the math for you. Try it here for free.
How do we do it?
We’re proud to say that we’re the only service in the world that uses real-world data to predict the valuation of any company—up to 10 years into the future.
What does this mean for you?
It means that you can do smart career planning.
You can map out your career based on which company will make you the most money.
Ready to give it a try?
Salary negotiation is a critical step on the road to your prosperity. Negotiate for more, earn more, invest more, and you can get financially independent faster and retire early.
Then you can do anything you want and never have to worry about getting a job or negotiating salary (or walking into the HR department ever again!).
We hope that this post helps you better understand what negotiation is and how to do it successfully.
If you have any questions, please email our team at email@example.com, and we’d be happy to help you.
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