# How to maximize your salary

Every time I've ever gotten close to a job offer, my Dad sits me down for a little practice negotiation session. He acts like my potential employer, and I act like myself. The conversation usually goes something like this:

Dad: “Kim, we are happy to offer you this job. We would like to pay you \$28,000.”
Me: “Thanks so much, I am so excited to work here. But I was hoping to earn closer to \$50,000.”
Dad: “Oh, I see. Well, we are prepared to raise our offer to \$30,000.”
Me: “Um, okay, thanks. I accept.”

As you can see, I find it awkward to negotiate over money — something I'm embarrassed to admit, especially considering that I write about money for a living. But I know I'm not the only one; in fact, women in particular find it difficult to ask for more money. That's why, according to Linda Babcock and Sara Laschever, authors of Ask for It, men are four times more likely than women to negotiate for their first salary.

That awkwardness comes with a steep price: Babcock and Laschever also report that failing to ask for more money at the beginning stages of your career can cost as much as half a million dollars over the course of your lifetime.

Back to my Dad and our practice sessions. Our conversation might sound a bit silly, but those practice sessions have earned me at least \$21,000 over the last six years. Here's how I get that number: At my very first job interview after graduate school, I was offered a salary of \$34,000. But because I practiced negotiating with my Dad, I asked for \$40,000. Eventually, we agreed on \$37,000.

A difference of \$3,000 might not sound like a lot, but consider that the salary increase not only continues year after year, but all future salary increases are based on that initial number. Say I average a five percent salary increase each year. Then that \$4,000 quickly turns into \$21,000 after six years. After 30 years, it becomes over \$200,000! The difference becomes magnified further if you negotiate a higher salary each time you change jobs.

In addition to practicing in advance of your job offer (and it doesn't even have to be with a real person — even your cat will do), make sure you have an overall game plan. Know ahead of time how much money you plan to ask for. If the offer comes in lower than expected, don't back down. If it comes in higher, consider asking for even more than you had planned on.

Don't be afraid to keep your mouth closed after putting a higher number out there, either. Silence gives the other person a chance to up their offer. As my Dad always says, “Whoever speaks first, loses.”

Doing research ahead of time will also put you in a stronger position. If you can, ask current employees at your prospective employer what the salary range is. If your prospective employer asks you about the size of your current salary, do what you can to delay answering. Otherwise, you risk low-balling your offer because of a low current salary.

No matter how the conversation goes, close the deal with an enthusiastic smile. You might not get all the money you'd hoped for, but this person will be your future boss. Make sure you start off the relationship on a good foot. In some ways, that's more important than the size of your paycheck.

J.D.'s note: This post is so important. Please please please go back and re-read this. There are few things you can do that will boost your bottom line as much as learning to negotiate your salary.

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kaitlyn
10 years ago

Employers know it’s a buyer’s market, so they are lowballing offers and not budging.(Three years experience and a BS in Chemistry for \$12/hr? Seriously?) I tried negotiating on one job that offered me an insultingly low salary, and they flat out refused. I didn’t try and negotiate for the job I eventually took, because the offer was already about \$10K higher than I’d been seeing other companies offer.

Michiel
10 years ago

Quick Typo: “Then that \$4,000 quickly turns into \$21,000 after six years.” should be “Then that \$3,000 quickly turns into \$21,000 after six years.”

Dink
10 years ago

Yeah, I think if you’re an extremely desirable candidate this has a chance of working; that is, if you’re bringing some skills or experience to the party that no other person they’ve interviewed has shown. But if you’re in contention for a low-level job that anybody could do, this advice isn’t really the best for the situation we’re in. Right now the employers, unfortunately, have the power. If you don’t take the job in the Paper Pushing and Stapling Department at the discounted rate, someone else will.

Nicole
10 years ago

We have a wage freeze this year. I do know I’m underpaid compared to my fellow faculty who have gotten outside offers. So if I want to increase my salary, my best option is to go on the job market again. Which I’m not really prepared to do at this time. We’ll see how I feel in the future.

Rachel
10 years ago

For all those saying its not the right climate to negotiate with your employers – remember it really depends where you live. Here, in Australia our unemployment levels are pretty much right on normal (if not a bit low), so for me it will be an idea time to negotiate.

I have to say, this is one of the most useful articles I’ve read on GRS. Thank you so much for it.

Steven Williams
10 years ago

Negotiating a salary or pay really has nothing to do with negotiation. It has everything to do with your value. If you value yourself and your skills you should ask for more salary. If your boss values your work they will raise your salary based on what the company can pay. Every boss understands where the company stands with its pay and if an employee request a salary increase the boss is more willing to give in based solely on the value they place on that particular employee. I currently have 13 employees on my staff and I pay the… Read more »

NoTrustFund
10 years ago

Whenever I get a job offer, I always work under the assumption that the initial offer is less than the max they are willing to pay me. This gives me the confidence to ask for more. I don’t always get more, but I at least feel better knowing I asked. If done the right way, I also think negotiating looks good in the eyes of your employer, it is good to have done your homework on salary and to be willing to go to bat for yourself. It’s horrible to feel like you are underpaid and never tried to do… Read more »

Everyday Tips
10 years ago

I have never had a problem asking for raises. Where I worked, you could get a raise if you showed good justification. However, the company was happy to let you go without an increase as long as you seemed content. When I left that job, I was making \$10,000 more/year than a coworker who started a month before me. May not seem like much, but that was 13 years ago, so imagine what that would have snowballed into.

Great post!

Janette
10 years ago

Wonderful post.
I am not good at this and you gave some practical tips.
My son in law is really good at it and negotiated up his salary \$15000 from the starting point. It was interesting to listen to his recap. He is only 23!

Me
10 years ago

I encouraged a friend (thanks to Jack Chapman’s book) to go to the Bureau of Labor statistics for her salary range. When HR low balled her (as they were preparing her for weeks during the interview process) she came back at them with the figures. They couldn’t argue with the BLS and upped her salary immediately.

I agree with the poster that negotiating poorly costs you. Yet, I agree with the commentors that in a trouble economy it is easier said than done. After prolonged unemployment a person takes what they can get. I have seen both sides.

Great post!

schmei
10 years ago

I’d also like to note that if you’re already getting the offer, negotiating your salary can make you look _more_ desirable. I’m a younger woman and my boss is a woman in her late 50s. When she hired me, I negotiated my salary. I later learned that she was really impressed that I did that – it showed her that she can rely on me to be assertive in touchy situations.

Chris Gammell
10 years ago

I’m curious to know how job hopping will affect younger people in their future careers. Sure, there are dire effects to having a low starting salary…but what about when changing jobs? I see the job change as a point to wipe out past knowledge of salary and incremental increases and start fresh. I just hate when future employers ask about past salary, that’s usually the tricky point. (Shouldn’t it be “how much am I worth to you” not “how little can you get me for”?)

Chickybeth
10 years ago

I didn’t find this post all that helpful. It’s pretty basic knowledge that you need to negotiate your first salary. I was hoping for more example conversations or what to say when the HR person comes back with rudeness or crazy talk! I lost a great opportunity because the HR person didn’t know what she was doing. It would be nice to have some better ammunition going in to a negotiation than “please can I have more money? *smile*”.

Techbud
10 years ago

It is important to try negotiation when first offered a position. Once hired companies typically have internal guidelines on things promotional increases, reviews, etc and makes it difficult for you to make a big leap once you are hired. Maximizing the highest salary when you start is key.

Patrick
10 years ago

I have recently undertaken a significant amount of additional responsibility, a new role and more client-facing activity. I have been doing a very solid, if not outstanding job, in this role for four months now and approached my manager about a potential pay increase at the next review cycle. I cited the comparable salaries I found on payscale.com and on money.cnn.com’s recent “best jobs” report. His response was “If you can find that salary elsewhere, go after it, because you won’t get it here.” Discouraging to say the least. Either my estimation of my responsibility is way off, or I… Read more »

HollyP
10 years ago

Excellent article. My husband and I are living proof of this. He is much more likely to negotiate than I. When I look at our annual statements from the Social Security Administration, despite the facts that I’ve worked 4 years longer and our salaries right now are comparable, his lifetime earnings are much higher.

kj
10 years ago

While I agree that it’s definitely important to negotiate, this article erroneously makes it appear that by merely asking, the employee is likely to get an increase. That’s most definitely not always the case, and I am an excellent example. Three years ago, my position in my company was being eliminated. Because I am an excellent employee, a new position was created for me and I was promoted into it. This also meant that I changed supervisors. Even though I did my research and knew that the salary range for my new position *started at \$5000 more than what they… Read more »

Kelsey
10 years ago

I negotiated in my current position now and got about \$3k more.

Kaitlyn
10 years ago

I love Ask for It, and I have heard Linda Babcock speak. Women still make 88 cents for every dollar a man works in the same job. And we wonder why. Bosses expect men to negotiate, but when women do, they perceive them as “cold, relentless bitches.” Women should not be afraid to ask for something they want/need/deserve even when it is difficult to do so. In the book, Laschever and Babcock suggest practicing asking for all sorts of things in your regular life. Ask your husband to do the laundry, ask the salesclerk for a discount, ask your cable… Read more »

Courtney
10 years ago

I didn’t negotiate my current salary, because the offer was already \$25K more than I was currently making (went from a fellowship to a regular position). I sometimes wonder if I should have, but it was within a few thousand dollars of what I was expecting, and I felt like saying “We both know I’m already getting a 54% raise with X, but I was really hoping for X+\$4000” was kind of weak footing.

SupportingParents
10 years ago

I have a government job with a set pay scale so no negotiating here. However, when applying for other jobs in similar organizations I have been asked countless times to put “salary requirements” in my cover letter. This has always been a sore subject for me because 1) I have no idea how much work I’m expected to do for that salary until the interview 2) I may shut myself out of a job that I might be willing to accept less on if I put a higher figure in the letter 3) It just seems tacky to me, shouldn’t… Read more »

Steve
10 years ago

In my 7 completed years in the workforce since college with the same company, I’ve gotten raises 7 times, but they are all much, much, smaller as a percentage of my salary than the increase I got by just asking for more when accepting the offer. I like to say that was my “biggest raise.”

I was also negotiating from a real position of strength– I had another offer, and it was actually higher. Be wary of really bluffing.

Brent
10 years ago

I’ve always offered my number first. I have no idea if I’m doing it right. I think my salary is great, but I don’t think I’ve ever high-balled my salary expectations though. I’m going to start negotiating for a raise in a couple months, but its hard to know what I could ask for. I’ll probably talk with some coworkers I trust to tell me what they would offer me.

Tyler
10 years ago

@Patrick: Exploring opportunities at new companies is EXACTLY what you have to do. The best case scenario is to find a role with a new company that WILL pay what your current duties are worth. You can then go back to your boss and say “I gave you guys the opportunity to give me a pay increase a few months ago, but you declined. I now have a job at \$XXX, which you either can match or I am leaving.” The ball is then in their court to decide how valuable you are. My own negotiation story: had three job… Read more »

The Other Brian
10 years ago

I think it incorrect to assume that your annual raise will be same % (in this case, 5%) regardless of your starting point. Most companies band their employee compensation and try to keep similar employees in a similar range. It they pay you near the top when you start, you are probably more likely to get a lower % at your first review. Negotiations are critical when starting a new job, no doubt, but I think it is inaccurate to extrapolate the increase over a lifetime of earnings. The best method for increasing salary and advancing your career still involves… Read more »

Kent @ The Financial Philosopher
10 years ago

Sound advice. I like this as an alternative:

“If thou wilt make a man happy, add not unto his riches but take away from his desires.” ~ Epicurus

Stephen
10 years ago

Don’t forget that salary, while quite important, isn’t the only part of “overall compensation” you can negotiate.

– If the company is publicly traded, try for some/more stock options.
– If there is a waiting period for health benefits, try to have that waived (I have)
– Like @Tyler (#23), try for a signing bonus and/or relocation funds

Salary typically comes from the hiring department’s budget and is hard to part with, but the other benefits may not and be easier for the company to provide as an incentive.

Danny
10 years ago

Any actual tips on how to negotiate your salary? Seems like this post just says “Always negotiate your salary” with no real useful information. Perhaps you could write a follow up article with advice on how to actually maximize your salary? Tips on negotiating, researching what you should be making, etc.

Schotzy100
10 years ago

I don’t think the author intended to suggest that employers will offer a fixed salary increase year after year. What I believe she was doing was showing the time value of money. A powerful picture for those who do not easily have a mind for money. Think along the lines of your 401K account…monthly installments of \$100 over the course of the year is likely to return greater results than an installment of \$1200 made a year from now. For anyone needing a refresher in negotiations or to learn about the skill in general, I highly suggest reading “Getting to… Read more »

The Other Brian
10 years ago

One more thing I thought of that #27: Stephen made me think of: If you can’t get a salary increase, ask for more vacation time, especially if they allow you to cash out vacation. Often, your salary is set by the department/division/location’s budget but vacation time is often “on the books” only at the corporate level.

Jackie
10 years ago

Your dad sounds like a smart guy! It’s great advice to always negotiate your salary. After all, the worst they can do is say no, but it’s not like a no would translate into “Oh my god, nevermind, we don’t want to hire you afterall!” And chances are you’re likely to get at least *some* improvement. If a place really can’t budge on the salary portion, you can always ask for other concessions instead.

Michael
10 years ago

Salary isn’t the only thing to negotiate. I joined a startup this year. I was given a full look at the books and knew that the salary I wanted was right at the border of what they could offer.

What I did request was to get 5 months pay in advance to pad my emergency fund so that if the startup went under, I wouldn’t have quit my other job for nothing.

They were happy to do it. It got them a developer, and it gave me a little more peace of mind.

chacha1
10 years ago

+1 to Stephen and The Other Brian re: benefits. If an employee is in a reasonable job and is due an increase which the company can’t/won’t offer, come back with a request on the benefits side. Flex time, four-day weeks (getting easier to arrange as more jobs become telecommute-friendly), extra days off, even a workspace upgrade (e.g. if you would be working in a cubicle, negotiate for a high-quality desk chair. It makes a difference over time). And as Jackie says, if you already have an offer, they aren’t likely to be disgusted by you asking for a better one.… Read more »

Jennifer
10 years ago

I wish I had known this when I started my first job after college. It was a government position with published pay scales but I didn’t realize that I didn’t have to start at the bottom. Thankfully I did work up the courage to ask for a raise a few years into my position. Even with union-negotiated contracts & set raises there’s usually a way to get more money. It also helped that I worked with the budgets so I knew there was money there.

Joe M
10 years ago

What happens when your employer is actively cutting your salary? Time to change jobs?

David/moneycrashers
10 years ago

But I think you also have to go into these types of discussions informed.

Meaning, you can’t just throw out a number and have nothing to back it up.

You have to do research for comparable salary numbers for that position, and also be able to expalin WHY you are worth the extra money…

Tara
10 years ago

What about when you’re offered a raise? I was recently offered a generous raise (10%) at my performance review, and I smiled and said thank you. Should I have asked for more??

Ash
10 years ago

While I like this article, I’d really LOVE to see an example of a play-by-play negotiation. It’s knowing how to phrase it that gets me. I know I should ask, I just choke sometimes. How do you get past that awkward, “that’s a fair salary for this area, but I feel I’m worth more than the ‘average’ in the market and here’s why”? How do you do that tactfully?

Stacy
10 years ago

I’m in the “this is nice but not universal” department. I work in human services and we are under a company-wide wage freeze this year. They have also cut some of our other reimbursements. During years when we have gotten raises they are standardized (somewhere in the 1-3% range) and so far as I can tell there’s no room for negotiation there. There is also a standard starting salary/wage. Oh, and I have a BA so this isn’t a rock bottom job I’m working.

Jenn
10 years ago

I teach this topic to business school students, and I just wanted to add a few points that I talk about in class. (it ended up longer than a blog post and not as amusing, but hopefully helpful to someone somewhere). A survey of HR managers found that about 80% would be willing to negotiate job offers, but that only about 33% of applicants are comfortable negotiating. That’s a lot of lost opportunity. I think if you prepare well and take a positive attitude, you should be comfortable at least asking if the offer is negotiable. Some company/manager norms are… Read more »

Gal @ Equally Happy
10 years ago

I would mention that it’s also up to you to make yourself worthy of a raise. I’ve seen employees who think they deserve a raise simply for doing a good job. Sorry, I hired you to do a good job and we agreed on a salary with the assumption that you’ll do a good job. If you want a raise, do something more than a good job, find a way to provide your employer with more value. Otherwise, why should they give you more money?

Tim @ Faith and Finance
10 years ago

Great article Kimberly!

I love how you included the ‘silent treatment’ when talking about negotiations. This is a great technique for almost any negotiation (work/buying a car/ home/ insurance/ etc). It doesn’t always work, but it’s always nice if the other party makes another concession if you are silent.

@Jenn, nice follow-up. I’d be interested to see your points laid out in a blog format. Let me know if you ever want to write a guest article for us.

Tim

Heather
10 years ago

These things are completely foreign (but fascinating) to me. I’ve never had a job with a negotiable salary … or negotiable anything, for that matter.

Erica
10 years ago

I was told “whoever says a number first loses”, so I didn’t mention compensation at all when I signed on as a freelancer for my first (and current) job. My boss just said to send an invoice saying how many hours I worked and I’d get paid. Eventually I had to ask, and she told me the lowest hourly rate for my field. I have since raised my rate (without any problem), but it would have been nice to have some advice on what to do as a freelancer, when nobody brings up rates. Incidentally, I was also applying for… Read more »

BD
10 years ago

I’m with Stacy. I think wage negotiation is not a universal rule. I’ve always worked in a highly over-saturated market (graphic design) where at any given time, there are thousands of designers out of work. Asking for a higher wage will just be met with a “No. I can hire someone much cheaper than you right now, who is just as experienced and talented, with no effort”.

Wage negotiation only works in job situations that aren’t so highly saturated.

Gal @ Equally Happy
10 years ago

@BD So what if you encounter that response? No one is going to fire you unless you make your request in a rude manner or seem completely unrealistic. Usually, they’ll just say no. I just hired a tech writer, which is a very over saturated field, and I would not have been offended if she asked for a higher salary. We would have negotiated and come up with something acceptable to both of us. It’s basically like approaching someone at a bar. If you try, you might fail, but at least you also have a chance of succeeding. If you… Read more »

chacha1
10 years ago

When my husband decided to go freelance, he asked a few other professionals in the field he planned to enter what their rates were. Then he looked at what they could offer versus what he could offer, and set his rates slightly *higher* than the average. Unique skill sets make a huge difference; if you’re doing something that many, many other people can do equally well, you’re not going to have the negotiating power you want. As Gal says at #41, you have to be MORE than just a good employee or good contractor in order to get the raise… Read more »

ami
10 years ago

Negotiation is scary and can be tricky. What helps is having information: 1) information (and confidence) about your own qualifications – esp. in comparison to the market, and in comparison to what the company already has on its staff. 2) information about the company’s needs. You can get this during the interview process, from network friends within the company or at other companies who may know something about the company where you’re interviewing. Use this info (and your knowledge of your own skills) to show how you’ll add *extra* value to the company (more than the typical candidate). 3) info… Read more »