talk

Salary Negotiation for Software Developers

Negotiating job offers can be scary: What do you say? What if they retract their offer? What if you seem greedy?

With a proven process to follow, negotiating your offer doesn't have to be scary. I'll walk you through a straightforward salary negotiation process so you know what to say to get the best possible version of your new compensation package.

[If you're looking for more, check out Josh's conversation with Joel on the egghead podcast] (https://egghead.io/podcasts/negotiating-your-salary-and-advancing-your-career-with-josh-doody).

About the Speaker

Josh Doody is an engineer by training. He began his career as an electrical engineer and pivoted to working as a project manager and business analyst. He later became a hiring manager, and now he is a salary negotiation coach.

If you'd like to learn more about salary negotiation, check out his website Fearless Salary Negotiation.

Key Takeaways

Don't give numbers before they make an offer.
Once the offer is made, determine your minimum acceptable salary.
Negotiate between 10%-20% higher than the initial offer.
Anticipate possible increments for the counter-counter offer and plan how you'll respond for each possibility.
Determine whether or not equity should be included in your negotiation strategy.

Disclaimer

It's good to keep in mind that the tips that Josh is outlining are based on his own coaching experience and professional experience in Europe, North America, and some parts of Asia. You may notice that some tactics are not the best practice in your country. Try to look at the underlying principles instead because they can be extremely helpful too.

Negotiation Starts Early

We usually think that negotiation starts when you get an offer. But the negotiation process actually begins much earlier, sometimes even before you start interviewing.

A common question you might run into is, "What are your salary expectations?" As soon as this question is posed to you, your salary negotiation starts. How should you answer that question?

Don't Give Too Much Information Too Soon

You may deal with a recruiter who asks you something like this: "Where are you right now in terms of salary, and what are you looking for if you make this move?"

hey want to know, "What do you think we should pay you based on your experience?" You probably don't know the answer to that question.

KEY TO REMEMBER: Do not share numbers in this situation. Say something like this instead:

I'm not comfortable sharing that information. I would prefer to focus on the value I can add to this company and not what I'm paid at my current job. I want this move to be a big step forward in terms of both responsibility and compensation.

When you respond this way, you're signaling:

You don't want to talk about numbers yet.
You want to be valuable to the team.
You want to be compensated appropriately for the value you'll bring.

Using this response means that you'll still have room to negotiate your salary. You won't be leaving any money on the table.

Negotiating After the Job Offer

Remember, you should negotiate 99.9% of the time. Why? Because there might be room to negotiate. But you won't know that unless you negotiate.

What are the steps you should take to negotiate successfully?

Determine Your Minimum Acceptable Salary

Before they even make you an offer, ask yourself, "What is the minimum they need to compensate me for convincing me to take this job?"

Why is this a question you need to know the answer to? Your minimum will be your baseline. They could make you an offer, and you can negotiate to meet or exceed your minimum salary. If they can't offer you your minimum, you can walk away knowing that that job wasn't a good fit for you.

How to Determine Your Minimum Acceptable Salary

Use salary reference points - Check some of the following websites to get an idea of what people are making in the job, field, and location you're looking at.
Account for pending raises and bonuses at your current job
- You may be leaving some unvested stock rent or a coming performance bonus behind.
- Make sure to keep these things in mind. Know what you're leaving behind if you move to a new company.
If you're relocating, account for the cost of living.
- If you have to move for this new position, think about how a different cost of living will affect your minimum acceptable salary.
Think about other opportunities you may have
Think about the risk involved
- This is especially important if you are going to be working for an early-stage startup. You'll want to be compensated for whatever career risks you may be taking.
Your overall feel for the role matters
- If the company culture, along with the job role and other factors align with your goals, it's okay to accept less compensation.
- If you see red flags or you're a bit skeptical, you may decide to pass up the opportunity even if the salary meets your expectations.

Pick Your Number and Stick to It

Once you follow through with those steps, and you determine your minimum, keep that number in mind. Write it down so that you don't forget it.

How Much to Negotiate

We know how to determine our minimum. But once the offer is made, how much should we actually negotiate.

Generally, counter offer 10% - 20% more than what they offer you. If they offer you $50,000, you should counter somewhere between $55k and $60k.

10% or 20%

How can you determine which end of the 10% - 20% scale you should be aiming for?

Gauge the interests and needs of the company. How badly do they need someone with your skillset for this role? Does it seem like they desperately want to hire you? If so, aim closer to 20%.

If you don't feel a sense of urgency and they don't seem particularly enthusiastic about hiring you specifically, be a little more cautious. If you notice any hesitance, aim closer to 10%.

Pro Tip: Counteroffer in an email if you can. This will allow you to be more deliberate about how you deliver your counter offer. It may be easier to counter offer on-screen opposed to face to face.

Define Your Negotiation Window

Now that you've made your counteroffer, you have a more specific negotiation window. If the initial offer was $50,000 and your counteroffer is $56,000. Now you have a $6,000 window.

Now you have to determine how you will respond to their counter-counter offer. This will be base on a combination of your minimum acceptable salary and increments that you can negotiate.

Plan For Each Increment

Plan for the increments that they might counter-counter offer. Going back to our previous example, increments might look like $53k - $54k and $55k - %56k.

If you're offered an amount somewhere in the $55k - %56k, you can walk away knowing that they've either met your expectations or come very close.

If you're offered somewhere in the $53k - $54k range:

You might try to negotiate a bit more. Ask for $55k.
"I'm on board at $55k."
What if the won't meet your $55k expectations? Ask for more equity.
What if they don't meet your equity expectations? Ask for a sign-on bonus.

What if the increment looks more like $52k - $52.5k? Follow the negotiate higher, equity, bonus steps for this kind of situation too.

You might try to negotiate for $54k.
"I'm on board at $54k"
What if the won't meet your $54k expectations? Ask for more equity.
What if they don't meet your equity expectations? Ask for a sign on bonus.

What do you do if they counter-counter offer very low? For our example, that would be $50- $51.5k?

Make sure not to accept anything less than your minimum acceptable salary. For instance, if your minimum was $52k, you would let them know saying something like, "I can't accept less than $52k".

What About Equity?

When should you ask for equity as part of your offer? If you can put a dollar value on the equity (aka if it's a public company with equity), then it's okay to incorporate that into your primary negotiation.

If you can't value the equity with real dollars or if it's a really early-stage startup, keep in mind that there's a fair chance that it may or may not pay off really big for you. In this instance, it's a good idea to focus more on negotiating salary as opposed to equity.

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