If you are not negotiating your salary, you are almost certainly leaving money on the table.  Negotiation is an important career skill and activity because it provides a very nice upside in overall career earnings. Preparation is important because the person you are negotiating with probably has a lot more experience in salary negotiations than you do.

It’s important to prepare for salary negotiation: it’s a big career milestone and the person you are negotiating with likely has more experience in salary negotiations than you do

This article provides some simple tips and strategies to prepare for negotiations and then what to expect during negotiations so you can have the best chance of maximizing your total comp for the position.

Evaluate the landscape

It’s important to understand the context. You’ve gotten far enough along so that you’re negotiating with at least one prospective employer, but consider the following:

• Do you have other job options?
  • Staying in your current role, if possible, should be included as an option
• Does the company have other options for candidates?
  • Even if they do, they’re negotiating with you, so it’s safe to assume that you hold some advantage over the next person in the queue
• What does the benefits package look like?
  • Benefits packages can have hundreds or thousands of dollars of hidden costs or surplus over your current benefits; understand these differences
• Will this job give me unique opportunities to learn?
  • If so, maybe it’s OK to accept less comp than you normally would and look at it as an investment in yourself

Understand that negotiation is normal, but can be uncomfortable

Negotiation in business is a completely normal thing. A salary negotiation is no different. It can be an uncomfortable and awkward situation, so preparation is important: the last thing you want to do is accept a lower offer just to get out of an uncomfortable situation. Preparation helps you to deal with the pressure and awkwardness you may feel.

Negotiating a salary is a normal business function. While it can feel uncomfortable and stressful, lean into it because it’s how you get paid

A good mindset is to understand that it’s a normal business process and lean into it. 

Prepare

Since they are negotiating salary with you, it’s obvious the potential employer likes you more than the next person in line. Don’t forget that fact!

Start a negotiation strategy list to keep with you, noting that you are their top choice:

Negotiation Strategy List:

Item # 1: remember, I am their top choice

Benefits and Pay Structure

Ask the company for their benefits package and understand how the benefits compare to your current before you agree to negotiate a salary.

It’s also important to understand the pay structure: what additional comp do they offer? A bonus? Equity (options or stock)? 

It’s entirely appropriate to ask for this info when you are setting the time to negotiate: Let’s talk on Monday at 2pm.  Before we do that, can you tell me how comp is structured and get me your benefits info?

Be sure to get details on the benefits before the salary negotiation. Benefits can cost or save you thousands

Other info that is great to get is the recent history of the bonus payout percentage. Some companies will have a 10% bonus target (for example), but not fund the bonus to the full amount. Ask this question: I understand you have a 10% bonus paid semi-annually.  Can you tell me the bonus payout percentage for the past 2 years?

Be sure to give yourself enough time before negotiation to analyze the pay structure. Then move on to figure out your desired salary.

Salary

Determine a fair salary, based on your character, work ethic, how well you demonstrated your value in the interview process, and any other items you can think of.  Figure out how much you want to ask for.  Don’t cheat yourself here!  Don’t be afraid to give what you think is a fair comp request for the value you will provide and then promise yourself that you will ask them for this amount!  

If you’ve made it to salary negotiations, it’s obvious they like you. Don’t be afraid or ashamed to ask for the salary that matches your value

Also write down (yes, write it down) why you deserve that rate. Justify your rate with your differentiators. The list of differentiators may include:

• Detailed accounts of how you added value (unique value?) in your past roles
• If you have a publicly verifiable body of work (open source projects, involvement in communities, presentations to groups/conferences, etc)
• Any relevant certifications
• Unique, demonstrated temperament and/or enthusiasm for the role
• Note your current total comp and benefits
  • Most companies can’t or don’t ask you for current salary anymore, but if they offer you something less than you are currently earning, clearly that is a situation you should leverage
  • If the offered benefits package is not as robust as your current, ask for more cash to offset 

These will come in handy in any moment of panic during the negotiation. Update your negotiation strategy list:

Negotiation Strategy List:

Item # 1: remember, I am their top choice

Item # 2: request $xxx,xxx base + xx% bonus.  DON’T chicken out!  See item # 1!

Item # 3: reasons why I deserve the rate in item # 2

Your fallback position

Even though you are just planning at this point, be prepared for them to offer/counteroffer  much less than you are requesting. We’ll get to the actual negotiation part in a following section, but for now imagine you’ve made your request and they counter with something much, much less. 

Don’t attempt salary-affecting math on the fly. Have a fallback salary figured out prior to negotiations

If you feel that you can indeed accept less than your opening offer, come up with those fallback comp numbers now. Don’t try to do salary math on the fly: negotiation can feel tense, uncomfortable, and awkward. Don’t attempt career-affecting math under those circumstances.

Understanding your cost structure

It’s important to understand your cost structure so you can know if and when it’s appropriate to walk away from a given offer. Your initial/opening request for salary will likely be what you want; your fallback position may be more based on what you need to manage your cost structure: things like housing, transportation, social, etc.  Don’t craft a fallback position that you can’t live with.

Your initial comp request will likely be what you want; your fallback will likely be based in part on your cost structure

Consider a signing bonus

In your fallback position, also have a contingency ready to take some of your comp as a one-time signing bonus. The signing bonus has a couple of mutual benefits:

• It is paid out in a lump sum, so you get more money in your account quicker
• It is a one-time cost for the employer, so they don’t include it as part of your recurring comp or factor it in a percentage bonus

A signing bonus can be a good middle ground for a disputed amount

Negotiation Strategy List:

Item # 1: remember, I am their top choice

Item # 2: initial salary request of $xxx,xxx base + xx% bonus.  Don’t chicken out!  See item # 1!

Item # 3: reasons why I deserve the rate in item # 2

Item # 4: fallback positions (one with and one without a signing bonus)

During the negotiation

You have your negotiation strategy list. Stick to it in the following moments.

Keep in mind that today just this is just the beginning of negotiations and there is no rule that you have to come to an agreement today.  It’s entirely common to have negotiations span many days. Keep this in mind! You are not trapped! You can always “take time to consider their offer”.

Negotiation Strategy List:

Item # 1: remember, I am their top choice

Item # 2: initial salary request of $xxx,xxx base + xx% bonus.  Don’t chicken out!  See item # 1!

Item # 3: reasons why I deserve the rate in item # 2

Item # 4: fallback positions (one with and one without a signing bonus)

Item # 5: we don’t have to come to an agreement today; we can continue tomorrow

The negotiation flow

Negotiation time comes. Deep breath. Here goes! Approach this time as a way to collaborate with the negotiator to find the best solution for both parties.

The actual negotiations flow can be unpredictable. Here are some common phases/events and how to handle them.

Common events in the session

The opening offer/request

The opening offer can be made by you or the prospective employer. I don’t necessarily have a preference as each option has benefits and drawbacks. If they ask you for an initial salary request, go for it, and then defend it.  

If the company puts out the first offer, that’s fine too. Take measure of it. If it’s higher than your initial salary request, congratulations: much of this won’t apply to you! I still recommend countering with a bit more salary. Worst case: they say no and you take the initial offer.

Don’t be afraid to counter a good initial offer

The initial rejection of your request and what comes next

They reject your initial request. If the two sides are close enough, you can signal that you are willing to negotiate. Explain that you have a cost structure  that your salary needs to support. Don’t disclose your hard limit.

You can signal that you are willing to negotiate, but you can’t accept an offer that does not support your cost structure

If they don’t accept your initial comp request, be prepared for the roller coaster that will follow. One or more of the items below is likely to happen:

The feeling that the person you are negotiating with is judging you or disappointed with you over the amount you are asking for

You may feel that they are doing this. Maybe they are, maybe not. Who cares? Ask for what you think is fair. If you feel uncomfortable, embrace the awkwardness! Keep your promise to ask for your initial request. Be prepared to justify why you deserve it.

Negotiating against yourself (don’t do it)

If they reject your comp request, but don’t put forth their own offer, they may ask you if you can come down. Make it known that you will negotiate (if you feel it’s appropriate), but make them craft a counteroffer. Don’t simply take money off your request. Whether they are meaning to or not, they are asking you to negotiate against yourself.

If they reject your offer, don’t consider coming down in price until they craft a counteroffer. Otherwise you are negotiating against yourself

Pressure that you need to come to agreement today by accepting their offer

The negotiator may have this negotiation as just another task on their list to complete. Don’t worry about their task list: focus on negotiating a good salary, even if it takes a few days

Everyone wants to get this done quickly, but you most certainly do NOT need to come to an agreement during the first negotiation session. This is an important milestone in your career. Take your time and move deliberately.

This is an important milestone in your career. Take your time and don’t be rushed into making a decision

Our initial offer is our final offer

The company may tell you that their opening offer is the final offer. This amounts to a “take it or leave it” tactic. It’s a heavy-handed move and definitely a warning sign. 

If this happens, you can play it cool and tell them that you’ll take a day or two to consider the offer. 

Once you’ve had time to consider the situation, if you decide that you still want to consider the role, you can:

• craft a counteroffer anyway (if you like the role but think a higher wage is justified)
• accept the offer as-is 

Or you can politely decline the offer and keep looking.

The feeling that you are being a bother and/or making trouble

Below are some comments I’ve heard in negotiations that gave me pause, with some insight for handling them:

• “Well, I’ll have to go back and ask for that, we don’t usually offer that much”
  • It’s fine for them to go back and ask on your behalf, but if they make it seem like a chore, that’s a bad sign
• “But at that pay rate, you’ll be the highest paid person on the team” 
  • I’ve seriously run into this argument in negotiations, that being the highest paid person on the team is a bad thing. It’s not a bad thing if you can deliver the value. If you believe you can, go for it!
• “At that pay rate, you won’t have any room to grow your salary”
  • This is an interesting statement for a lot of reasons which are beyond the scope of this blog
  • Even if that is true, you want to have more money sooner, so accept that “risk”
  • This opens the door nicely for you to ask what the pay range is for the position
    • I’ve never had one company answer that pay range question, but it’s a good tactic to ask if they bring it up
    • Most companies have some type of target pay range for a given position; you’ll have to read the moment to figure out if their reply is an honest one (“we can’t disclose that”) or not (“we don’t have any kind of pay range for this type of role”)
• “We really wanted to have this wrapped up today”
  • They may explicitly state this; again, it’s not necessary to get things done today

The feeling that they want to work with you to find a mutually beneficial agreement

Here are some things I’ve heard in negotiations with companies that indicate a great culture:

• “We want you to come here and be happy; let’s work this out”
• “Let me see if I can get you that salary”
• “I appreciate you coming down in salary: let me see if I can get you a signing bonus”
• “Do you want to think it over tonight and talk tomorrow?”
• “We’d be happy to pay for that training you suggested”

Comments like this indicate a great culture where you will be happy and work with other people who will be happy. Working in a great company culture may be worth giving some leeway in salary.

Don’t say a final NO or YES during the session; take time to think about it

Whether you are leaning towards yes or no, it’s important make a decision on the offer outside of the negotiation

They’ve made what they say is their final offer. It’s best (and entirely appropriate) to tell them that you need to take a day to consider their “final” offer.  This move gets you out of the pressure you are likely feeling in the moment and lets you give the offer the full consideration it deserves. It’s a big deal.

Considering the “final” offer

Take some time to consider the offer. Review your finances again. Exercise, play some Call of Duty, or whatever else you do to burn off stress. Then come to a decision.

Decide to accept the offer

If you decide it’s a good offer for comp and/or a role that offers unique opportunity to build your skill set, congratulations, you’ve done it!

Decide to reject the offer

Being prepared mentally to walk away is important. You are not trapped; you do not have to accept a role simply because you’re negotiating a salary.

You are not obligated to accept the role simply because you are in salary negotiations

If the offer does not compare well to your current comp, does not allow you unique opportunity to build your skills, or does not support your current cost structure, it’s valid to politely say no. The company may end up just accepting your last offer anyway if they see you are willing to walk.

Also take note of how they have conducted themselves during the negotiations: have they treated you with respect and patience? Take that into account.

Prepare a counter offer

Understand that although their offer is final, you can still make yet another counteroffer. Take stock of how the company’s negotiator has conducted the negotiations and your overall impression of the company culture and job opportunity.

If you are firmly in favor of refusing their final offer, OK with losing the opportunity, and don’t believe they’d accept your last request if you walk, this is a good option. 

If you’re prepared to walk over their “final” offer, go ahead and prepare another counter offer

If you see a reasonable middle ground between what they’ve already rejected and their “final” offer, go for it. 

Get creative here:

• guaranteed full bonus payout the first year
• signing bonus
• guaranteed formal training (invest in yourself!)
• whatever else you think may work

The worst that can happen is that they say no and decide to move on to another candidate. That’s fine, because you were willing to pass on the offer anyway.

I personally like this option because it shows you are putting in the effort to come to an agreement with a company that you like that wants to hire you.  It also shows that you don’t give up; many employers will appreciate that, since perseverance a trait that often can’t be taught.

If they agree to your counteroffer, make sure your requests are noted in the formal offer letter.

Final thoughts

Negotiating a salary may be one of the most important activities that affects your overall career earnings. Use these tips above to help you prepare for a good negotiation session. Also keep in mind that negotiation is a skill that improves with repetition, so don’t be discouraged if you make a few missteps: it’s important to start the habit to develop the skill. Your future self will thank you!