How to Set Your Salary Expectations

If you’re heading into a job interview soon, you probably have a whole list of things that are causing you anxiety. One of them may be how to answer the question, “What are your salary expectations?”

And the question will come up — sometimes before you’re ready to answer it. It’s not unusual for hiring managers to ask candidates for their salary expectations early in the hiring process. If you’re not ready for it, you could find yourself blurting out a salary range before you’ve had a chance to do your homework … or even to find out enough about the job to determine a reasonable figure.

Whether employers should make candidates name their price before they’re ready is another matter. Many career experts argue that it’s against even the company’s best interests to do so. They might get a deal, sure — but only until the candidate realizes they’ve been shortchanged and moves on.

“It is unprofessional and immoral to ask job-seekers to supply their salary details and/or salary history but to keep your approved salary range confidential,” writes Liz Ryan at Forbes. “That’s why I recommend that job-seekers keep their salary details private.”

And that’s the first thing to know about setting your salary expectations: while you should have a salary range in mind before you begin the interview process, you absolutely do not have to divulge that range until you’re ready.

But more on that in a minute. First, let’s talk about how to determine your salary range.

How to Set Your Salary Expectations

Your goal when setting your salary expectations is to come up with a range that’s appropriate for your skills, experience, role, and location. It’s not about how much money you need or want — at least, not at first. It’s about how much money you can command, based on what you have to offer.

If you’re in a tight job market or a hot job or have in-demand skills, you’ll be able to ask for more. If there are few employers with open positions in your metro area or your field is crowded with talent, you may have to set your range lower (or up-skill yourself into a better position in the market).

1. Do Your Research

Your first step should be to do your research. That doesn’t necessarily mean asking your colleagues or friends how much they’re earning. You can start there, but you should keep in mind that not everyone is strictly truthful when talking about salary. Plus, you might miss some of the nuance – a certification that boosts your former coworker’s pay, for example.

It’s better to set your salary expectations based on data. Take the PayScale Salary Survey and get a free salary report that shows what your colleagues and competitors are earning right now.

2. Make a Budget

salary expectations
Sharon McCutcheon/Unsplash

OK, we just finished saying that setting salary expectations is not about what you want or need. However, it’s a good idea to know how much money you need to survive before you go into a salary negotiation.

Even if you need more than you’re likely to earn, you still need that information before you can move forward. You may discover that you need to cut expenses … or start making steps toward a career that will enable you to earn more. Or you may find the motivation you need to negotiate for a higher salary range within what’s appropriate for the role.

There are plenty of free tools out there that can help you set a simple budget. Your salary bump will feel a lot nicer when you know how much (if any) is going toward discretionary spending.

3. Set a Floor

Now that you have your salary report and a personal budget, you can set a salary floor. This is the lowest salary you’d feel comfortable accepting for the role. Below this number, you’d be agreeing to do the job for less than market value and/or for less than your expenses require.

Obviously, you hope that you won’t have to worry about your salary floor during negotiations, but it’s a good idea to set one anyway. There are times when you may have to budge on this number — during a recession, for example, or occasionally after relocating for a partner’s job or educational commitments. But at least you’ll be aware that you’ve made a temporary compromise and can keep your eyes open for opportunities to upskill yourself or move on.

4. Remember That Compensation Is More Than Just Salary

Compensation isn’t just the number on your check. It’s what your employer pays for your services – and that includes non-cash payments as well. For many professionals, compensation includes benefits like health insurance, retirement plans and paid time off. Typically, you might have some choice about those benefits — an HMO or a PPO, for example — but not much. You obviously can’t go to your boss and say, “I don’t really like our 401k. Can we have a pension plan instead?”

That said, there are benefits you can negotiate for during the hiring process. You might able to get an extra week of vacation time or a flexible schedule or telecommuting privileges. Those options might boost your bottom line and your work-life balance.

But regardless of whether you negotiate your benefits, you should consider them when you’re determining your salary expectations. It might be worth it to accept a lower salary for better perks, especially if they save you money.

5. Consider Negotiating a New Job Offer

In most cases, you should plan to negotiate your salary when you take a new job. For one thing, most hiring managers expect it — according to a survey from staffing firm Robert Half, 70% of hiring managers said they expect candidates to negotiate. However, our survey shows that only 43% of respondents have ever asked for more money at a job in their field.

Clearly, a lot of us are leaving money on the table — and that money can add up to a lot over time. In an earlier article for PayScale’s Salary Negotiation Guide, Audrey Bach takes the example of a $5,000 raise:

If we break it down to a single paycheck, it’s not really that much. But if we look at the bigger picture, the value grows. Remember that each salary acts as a benchmark for your future earning potential. According to Fast Company, a 25-year-old who is offered a salary of $50,000 and negotiates it to $55,000 will earn $634,000 more over 20 years.

…[That’s] enough to take a sabbatical and travel the world, enough to send your kids to the private school of your choice or pay for their college education, or enough to buy a house in almost every city in the United States. If you focus on the lifetime earning potential of your next salary negotiation, and you have a goal for what to do with that extra money, you’re much more likely to actually negotiate.

6. Choose the Right Time

salary expectations
Brad Neathery/Unsplash

Earlier, we talked about how candidates don’t need to give their salary expectations right off the bat. If the hiring manager asks for your salary range early in the process, you can counter by saying that you want to learn more about the duties and responsibilities before you determine your expectations. If they press, you can ask for the budget.

Ideally, you would be able to wait until at least the second interview before setting a range. At this point, you’ll know more about the job … and the employer will know more about you and why they should be trying desperately to get you on their team.

Of course, job searching isn’t always an ideal process, so you may find yourself giving a number before you want to commit. That’s where doing your research early on comes in handy. If you know a reasonable salary range for the role and metro area, considering your experience and skills, you can at least avoid throwing out a number that you’ll regret.

7. Decide Whether to Divulge Your Salary History

Yes, some employers still ask for salary history during the hiring process. This is a bad idea for them and a bad idea for you. Your worth isn’t determined by how much your previous employer paid you. In fact, some cities have even enacted legislation making this question illegal in order to protect candidates (especially those who are female or people of color) from getting boxed into a low salary for their entire careers.

That said, if you’re asked, you may want to answer — if you’re female. PayScale’s report, Is Asking for Salary History … History?, shows that women who withhold their salary history when asked suffer a pay penalty. Per our research:

A woman who is asked about her salary history and declines to disclose earns 1.8 percent less than a woman who discloses. If a man declines to disclose, he gets paid 1.2 percent more on average.

This is a disturbing double standard that may be the result of ingrained gender bias. Are women who refuse to disclose their salary penalized because they’re seen as unpleasant? And are men who refuse seen as confident?

Just in case you though the gender pay gap was a thing of the past.

In any case, it’s up to you whether you decide to share your salary information. Just know that it’s not required — and consider whether or not it’s in your best interests to do so.