How (and Why) To Negotiate a Job Offer

Though Negotiating Can Feel Awkward, Studies Show It Works

Fact checked by Vikki VelasquezFact checked by Vikki Velasquez

Negotiating a job offer may feel intimidating or awkward, but avoiding salary discussions can affect your earning power for your entire career. For example, the typical U.S. annual salary increase is between 3% and 4%, so if you accept a starting salary that is 10% below your expectations, it could take over two years just to regain those baseline earnings. 

“It’s not just about your current paycheck, but your long-term earning potential,” says Sharon Belden Castonguay, an adult developmental psychologist and career counselor. “If you stay with the same employer, it’s likely your future raises and certain benefits, like retirement contributions, will be based on your salary. If you leave, new employers may try to benchmark your new salary to your old one.” 

When done correctly, negotiation will help you set your lifetime earning potential on the right track. Here’s what you should do.

Key Takeaways

• Negotiating a job offer can greatly impact your lifelong earning potential. 
• Before you initiate a negotiation, do your research. 
• Other elements of a job offer beyond salary are worth considering in your negotiation, such as remote work flexibility, title, and benefits. 
• Approach the conversation with respect, gratitude, and professionalism.

Why You Should Negotiate a Job Offer

According to a Fidelity study, negotiating works. While the research found less than half of Americans negotiated their current salary, among those who countered on salary, benefits, or other compensation, 85% got at least some of what they asked for. 

It is not a rude or unexpected gesture to negotiate your salary. In fact, one survey by global staffing firm Robert Half found that 70% of managers expect job candidates to negotiate. So, while the conversation may intimidate you, know that your future employer is likely no stranger to negotiations. 

How To Negotiate a Job Offer

1. Read the Room

You should only initiate a negotiation after you’ve received a written formal offer. If you’ve received an offer over the phone, it’s best to request a written document before initiating a negotiation. That way, you have the extent of the offer, including benefits and perks, for your reference. Do not initiate a negotiation during the early stages of the interview process. 

Additionally, make sure you’re negotiating with the right person. It’s best to negotiate with the person who will make the ultimate decision, such as a manager. Sometimes, you will interface with a recruiter during the hiring process instead of with the company directly–if possible, you can ask to speak with the manager directly about the role. Your relationship with a recruiter is also important, as they can be a good steward for your case. 

2. Gather Data

You should always enter salary negotiations as informed as possible. To get a realistic and up-to-date view of the compensation range for your role, you can use search tools like Robert Half, Glassdoor, or Indeed. These sites will provide the going rate for your role and experience level, and some allow you to adjust these figures for your region. 

You should also factor in geographic data. An employee in the Midwest will likely receive a lower salary than one in the same role based in New York City. If you live in an area with a higher cost of living, your compensation should support that. If there is a discrepancy between their offer and the standard rate in your role or region, that is worth mentioning to your employer. This can also provide a benchmark to determine what you ask for. 

There are several factors at play when determining what compensation you are worth. Cross-reference your own experience with the job listing. If the description requires three to five years of experience and you meet the higher end of that requirement, that’s more leverage for you to ask for higher compensation. Similarly, if the job description mentions leadership experience and you meet or exceed those requirements, that is worth mentioning in your negotiations. 

Tip

The company structure will also help you determine what is appropriate to ask for in your negotiations. For example, a management role will likely pay less at a non-profit than at a for-profit company.

3. Write out a Strategy

Before initiating the conversation, building a strategy is important to ensure you’re approaching it correctly. Brainstorm concrete examples of how your experience and skills will benefit the company. Make note of any certifications or technical skills that would enhance your ability to do the job so that you do not forget to mention them. By using concrete examples, you exemplify your worth as an employee, making a solid case for why you should receive higher compensation. 

Creating your own salary range will help you navigate an offer. “Before you start negotiating, you should come up with three numbers,” says Castonguay. “The first is the annual income you need to meet your financial obligations–think of this as a baseline. Then, you need to look at the market rate range you came up with based on your research. Your second number is what you feel is a fair market rate based on your experience, and the third is the high end of the range, a salary that would make you thrilled to accept.”

“If you name a range first, expect an offer at the low end of the range. But if you go too high, you risk pricing yourself out,” she says. 

Also, consider whether there are any job-related expenses, such as relocation, that you may incur upon accepting the offer. 

4. Address All Issues at Once

Note everything you want to negotiate in the first conversation rather than bringing it up in multiple talks. Addressing all your questions at once will ensure that the hiring manager can consider all factors before giving you an answer. 

It’s also smart to keep the negotiations direct. A reasonable employer is unlikely to withdraw an offer just because you tried to negotiate, but dragging out a salary negotiation can frustrate the hiring manager.

To avoid starting your new role off on a sour note, limit negotiations to a couple of discussions. If the company has not expressed willingness to meet your requirements after a few conversations, it’s unlikely it will budge.  

5. Consider Negotiating Things Beyond Salary 

Salary negotiations often include some give-and-take on benefits and perks. Sometimes, if it’s not in their budget to offer higher compensation, they may give ground on vacation days or a more flexible remote work schedule. You may also be able to negotiate stock options or a signing bonus. 

Other benefits, such as health insurance coverage and retirement savings plans, tend to be non-negotiable since those are more concrete company policies. Still, they will help you make an informed decision on whether the role is a good fit for you. 

6. Prepare for Questions

Your employer will likely ask a few questions to better gauge the situation. They may ask whether they are your top choice, whether you would accept the offer immediately if they raise the salary, and whether you have other offers. While these may feel intimidating, the best approach is to remain honest.

You should also have a few questions to ask your employer. You can ask about the budget for the position, what information you can provide to help guide their decision, and whether there are other negotiables beyond salary. 

7. Stay Positive

Most managers do not love to negotiate, either. It’s good to remember that your future employer is not your adversary. Leading with gratitude and kindness will help set the conversation off on the right foot. While it is important to be confident and organized, playing hardball will not be advantageous in the long run.

Remember that both you and the hiring manager have invested a lot of time into this process, so it’s crucial that you thank them for their time and the opportunity. Be sure to mention specific reasons you’re excited about the position or company.

Frequently Asked Questions (FAQs)

How Much Should You Counter-Offer After Receiving a Job Offer?

When negotiating a salary with a counteroffer, the general rule of thumb is 5-10% more than the original offer amount. Salary comparison tools will help inform this decision as well.

How Do You Politely Say a Salary Offer Is Too Low?

First, thank the employer for the offer and express your enthusiasm for the role. Then, you can ask how the employer determines the salary. If the pay is too low, you can politely explain why a higher compensation alights with your value and the market rate to the employer. This will likely not need to be done immediately–take some moments to yourself after receiving the offer and then communicate your concerns.

Is It OK To Negotiate Salary Over Email?

Generally, no. While it may make sense to spell out your requests in writing, it’s more polite to initiate the conversation over the phone.

The Bottom Line

You should not be intimidated to negotiate your salary. With the right preparation, negotiations can help you earn more money throughout your career. The best way to enter a negotiation is to be prepared and polite. Research what people in similar roles make to provide some context for what you should ask for. Your experience and education can also help inform your goals for negotiating. Having a clearly defined set of requests is key to ensuring a successful conversation. 

Since you’re likely talking to your future employer, you mustn’t treat your negotiating partner as an adversary during the negotiation process. A good attitude will go a long way.

Read the original article on Investopedia.