How to Negotiate Your Salary

I’m often surprised how many software developers neglect to do any salary negotiations at all or make a single attempt at negotiating their salary and then give up and take whatever is offered.

Negotiating your salary is important—not just because the dollars will add up over time and you could end up leaving a lot of money on the table—but, also because how you value yourself and how you handle yourself in a salary negotiation will greatly influence how you are perceived at the company you are working for.

Once you are part of a company it is difficult to shake the first impression that has been pinned on you. If you handle salary negotiations in a tactful way that indicates your value while still respecting your prospective employer, you’ll likely paint yourself in a more positive light which can have huge implications on your future career with that company.

Businessmen arm wrestling

Negotiations begin before you even apply for the job

Your ability to negotiate your salary will be greatly influenced by your reputation. Think about a famous athlete or movie star, how much negotiation power does having a well-recognized name have for either of these professions? The same is true for software development or any other field. The more recognized your name is, the more power you will have when it comes to negotiations.

So what can you do to build up a name in the software development field?

For some people it will happen by chance, but for most software developers it will require some careful planning and tactics. If you follow this blog, you probably know that I highly recommend building a personal brand and actively marketing yourself as a software developer.

The basic strategy to do this is to get your name out there through as many different mediums as possible. Write blog posts, get on podcasts, write books or articles, speak at conferences and user groups, create video tutorials, contribute to open source projects and whatever else you can do to get your name out there.

Since, marketing yourself isn’t the topic of this post, I won’t go into details here, but if you are interested in learning more about marketing yourself as a software developer, you can check out this post on the topic or if you want a real in-depth treatment of the topic, you can check out my How to Market Yourself as a Software Developer course.

Just remember the better job you do of marketing yourself and building a reputation, the easier it will be for you to negotiate. This might even be the most important factor. I’ve worked with software developers who have been able to literally double their salaries based on nothing but building up a bit of a personal brand and online reputation.

How you get the job is extremely important

The second biggest factor that will influence your ability to negotiate your salary will be how you got the job. There are many different ways to get a job and not all of them are equal. Let’s examine a few different ways you might get a job.

First, you might get a job by seeing a job posting and cold-applying to that job posting with your resume and hopefully a good cover-letter. In fact, many job seekers think this is the only way to get a job. This is in fact the worst way to get a job. If you get a job in this manner, it is difficult to have a good negotiating position, because you are in a much weaker position than the employer. You are the one taking all the initiative and asking for the job.

The person with the greatest need always has the disadvantage when negotiating anything. Ever played monopoly? Ever tried to negotiate with someone who didn’t really need anything from you, but you needed one of their properties to complete your monopoly? How did that go?

Another way to get a job is through personal referral. You know someone who works at a company, they personally refer you for the job and you end up getting offered the job. This is definitely a much better situation than just applying for a job. In fact, you should always try to get a personal referral when you are actively seeking a job. In this situation, the prospective employer might not even know that you are actively looking for a job—so, your need is going to register as less. And, because you got a personal referral, you already have some credibility. You are essentially borrowing the credibility of the person who referred you for the job. I’m sure you can figure out that the higher credibility of the person who referred you for the job, the higher credibility you will have. This credibility will greatly influence your ability to negotiate when given an offer.

Ok, so how else can you get a job? How about the best way possible? When the company who offers you a job finds you and comes after you either directly offering you the job or asking you to apply for it. How the situation presents itself will influence your negotiating power. Obviously, your best situation would be if a company knows of you and directly offers you a position without even an interview. In that case you’ll be able to just about name your own price. But, any time an employer directly seeks you out, you’ll have a very good position to negotiate from.

Now, you might be thinking “yeah right, an employer is not going to directly seek me out, much less offer me a job without an interview.” I’ll admit, it is somewhat rare, but it does happen. The best way to make these kinds of opportunities happen is to build up a name for yourself and market yourself like I mentioned in the first section of this post.

First person to name a number loses

Bundle of dollar

Ok, so now that we’ve covered the preliminaries—which are actually the most important part of negotiating your salary—let’s get into the actual details of negotiations.

One important thing to understand is that the first person to name a number is at a distinct disadvantage. In any kind of negotiation, you always want to act second. Here’s why:

Suppose you applied for a job and you expected that the salary for that job was $70,000. You get offered the job and the first question you are asked is what your salary requirements are. You state that you are looking for something around $70,000. Perhaps you are even clever and say somewhere in the range of $70,000 to $80,000. The HR manager immediately offers you a salary of $75,000. You shake hands, accept the deal and are pretty happy—only there is one big problem: The HR manager had budgeted a range from $80,000 to $100,000 for the job. Since you named a number first, you ended up costing yourself potentially as much as $25,000 a year—whoops.

You might think this is an extreme example, but it isn’t. You have no way of knowing what someone else is expecting to offer until they tell you. Revealing your number first puts you at a distinct disadvantage. You can’t go up from the number you state, but you can certainly be talked down. So, when you name a number first, you have no upside, but a big downside potential.

Oh, but you are more clever than that you say. I’ll just name a really high number. This can blow up in your face as well. If you name too high of a number, you might not even get countered, or you may get countered very low in response. It is almost always to your advantage to have the employer name a number first.

The only exception to this is when an employer is purposely going to low-ball you. This situation is pretty rare, but if you have a good reason to suspect this will happen, you may want to name a number first, to set an anchor point. Why? Because if you get a low-ball number, it may be difficult to get an employer to come up a lot from that number. Of course, in that situation, you probably aren’t going to have much success no matter what you do.

But, what about when you are asked to name a number first?

Don’t do it. Just say “no.”

Yes, I know this is tough advice to follow, but let me give you some specific situations and some ways to deal with them.

First of all, you may get asked about your salary requirements before an interview or as a field on a job application. If you have a field on a job application, leave it blank if possible or simply put “negotiable depending on overall compensation package.” If you have to name a specific number, put $0 and then explain why later.

If you get asked directly in a pre-screening interview about what salary you require or are expecting try to answer the same thing. Say it depends on the overall compensation including benefits. You may get a response stating what the benefit would be or that they just need a general number. In this case, you should try to as tactfully as possible turn the question around and ask a series of questions like the following:

“I’d rather learn more about your company and understand more about the job I would be doing before naming an exact number or estimate, but it sounds like you are just trying to figure out if we are in the right range, so we don’t both waste our time—is that correct?”

Mostly likely you’ll get a yes. Then follow up with something like this.

“You must have a range that you have budgeted for this particular position, right?”

Again, you should get a yes. If you are brave, just pause here and don’t say anything else. You may then get them to answer with the range, but if you aren’t brave or they aren’t volunteering any information, you can follow up with:

“Well, if you tell me what the range is, even though I don’t know enough to state exactly what my salary requirements are, I can tell you whether or not the range matches up to what I am looking for.”

Now, obviously, this isn’t easy to do, but if an employer is going to ask you to name a number, there is no reason why they shouldn’t expect to name one as well—or even first. Try as hard as you can to get them to name one first.

If they absolutely refuse, you still have some options.

If you have to name a number, name a large range and make it conditional on the overall compensation package, but make sure the lower end of the range is slightly above the absolute lowest you are willing to go.

For example, you might say: “I can’t really name an exact figure because it is completely dependent on what the overall compensation package is, but I would generally be looking for something between $70,000 and $100,000—again, depending on the overall compensation package.”

What if you are asked about your current salary?

This is a tough one; technically it’s none of their business, but you can’t exactly say that. Instead, what you want to do is to turn the question around. There are a variety of different ways to do this, but here is one suggestion:

“I’d prefer not to say what my current salary is because if it is higher than what you expect to pay for this job, I wouldn’t want that to eliminate me from being considered for this job—since, I might be willing to accept less for the right position—and, if it is lower than what this job would pay, I wouldn’t want to sell myself short either—I’m sure you can understand.”

This is a pretty honest answer, which will mostly likely avoid the question without causing offense. You can also state that you’d just prefer not to answer that question or that you are under a confidential agreement with your employer to not talk about exact salary numbers.

If you absolutely have to name a number, try to make the number as variable as possible by talking about bonuses or benefits that affect the overall compensation or state it as the overall compensation package is valued at x dollars and add up what any benefits you are getting are worth.

When you have an offer

If you can avoid the salary question, you’ll eventually get an offer and it will have to have a number on it. You can’t really get an offer without a number, because it wouldn’t really be an offer. But, negotiations don’t end when you get an offer, that is unless of course you named a number and they gave it to you—whoops.

Woman signing a paper

(By the way, if you are in this situation, don’t try and pull any stunts. If they give you what you asked, you pretty much have to either take it or leave it. If you name a higher number than you first asked, not only will it be bad taste, but you’ll likely get the entire offer pulled.)

Once you have an offer in hand, you will almost always want to counter. What you counter with is up to you, but I’d highly recommend countering as high as your stomach will allow. You might think that by coming closer to their number, you’ll be more likely to get a favorable response, but in general that approach will backfire. Pick a high number and counter back.

Now, you might be worried that doing this will cause you to lose the offer completely. As long as you do it in a tactful way, it is pretty unlikely that the offer will be completely taken off of the table. Usually, the worst case scenario is they stay firm on their offer and tell you that you’ll have to take it or leave it. If the offer does get pulled, you can always respond by saying that you made a mistake and after weighing everything you realized that their original offer was more than fair. (Not fun, but if you really need the job, you can always go down that road.)

The fact of the matter is that once you are offered a job, you aren’t likely to just get that offer pulled. Remember, an employer that has invested that much time in interviewing you and making an offer isn’t going to want to just start over again, so you can afford to be a little brave.

In most cases when you counter, with your high counter, you’ll get back another response with a slightly higher offer. You can accept this offer, but in most cases, I’d recommend countering just one more time. Be careful here, because you can piss people off. But, one tactful way to do it is to say something like this:

“I’d really like to work for your company. The job sounds great and I am excited to work with your team, but I am still just a bit unsure on whether the numbers will work out. If you can do x dollars, I can be sure and commit to it today.”

If you do this right and don’t ask for something too much higher, you can usually get a yes. Most employers would rather pay you a little bit more rather than lose you. Worst case, usually, is that they will tell you they can’t go any higher.

I really don’t recommend negotiating beyond this point. If you are really brave you can try, but past a second counter-offer, you are really risking losing good-will and souring the deal. You want to appear shrewd, but not greedy. No one likes to feel like they just got worked or taken advantage of.

(For a good book on negotiation, check out: Getting Past No: Negotiating in Difficult Situations)

Some final advice

Know your numbers well. Research as much as possible what the salary ranges are at the company you are applying for and what the salary ranges are for comparable positions. There are some sites online you can use to get salary ranges, although they aren’t always reliable. The better the case you can make for what your salary should be, the easier your negotiations will be. You are in a much better position if you can name exact number ranges and statistics that show why the salary you are asking for is justified.

A reason for the salary you are requesting is never because you “need” that much money. No one cares what you need. Instead talk about why you are worth a certain amount or what benefit you can bring to the table. Talk about what you have done for past employers and why investing in you at the salary you are requesting is a good investment.

Get as many offers as possible at any one time, but be careful playing them against each-other. You are at a distinct advantage in any negotiation if you can afford to walk away from the deal. To be in this position, you may need to get multiple offers lined up, so you may want to apply for several jobs all at once. Just be a bit careful in playing different offers against each other. You can do it in a tactful way by talking about how you have a couple of offers you are currently considering and want to make the best decision, but be careful not to sound arrogant. Confidence is good, arrogance is bad.

Reference: How to Negotiate Your Salary from our JCG partner John Sonmez at the Making the Complex Simple blog.

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One Response to "How to Negotiate Your Salary"

  1. Hi John

    I like the article very much because every point mentioned here sounds very reasonable. With my personal experience I am sure marketing yourself is the first step towards.
    I would appreciate if you share your thoughts on how to negotiate better with current employer.Actually that would be helpful to lot many people who face annual compensation /appraisal discussions.

    Thanks
    Sankalp

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