Before you begin your salary negotiation, it is imperative that you calculate your market worth first.
Your market worth is what you should be making for your skillset, competency level and industry.
Salary.com is a good place to start. This free resource gives you a guide on market rates per industry. What’s not immediately obvious when you are looking at their recommended salary range is that you need to know how to interpret it. “The 25th and 50th percentiles typically show the level of pay appropriate for employees who are still becoming proficient in a given position. Incumbents who are paid at the 50th percentile are normally fully proficient in their job.”
Your recruiter is also a good resource to help you calculate your market worth. Recruiters are a goldmine of helpful information. A recruiter has first-hand knowledge of which industries are hiring for specific positions and how much those jobs are paying. They can help set your expectations based on your skillsets and competency level AND they can help you calculate the transition of your wages from normal employment to consultancy. For example, did you know that you should add in the dollar value of all of your health and financial benefits to your salary before determining your hourly rate?
Why would you want to be a consultant when a normal employee has such great benefits? One obvious reason: Consultants are paid better.
According to a 2014 article in Forbes, “Staying employed at the same company for over two years on average is going to make you earn less over your lifetime by about 50% or more.”
Here are some fast stats that support this eyebrow-raising statement:
- Most employees can expect an annual raise of 1.3% or better.
- The average yearly raise is around 3%.
- The average high-performer is rewarded with a 4.5% annual raise.
With the inflation rate hovering around 2.1%, company loyalty could just be costing you the majority of your raise, year after year.
If you leave your company for a competitor, however, the average raise is between 10% and 20%. This is mainly because the hiring company is bringing your salary back up to market wage rate, but it’s also as a little incentive to ease you into your new position.
Now that you know how to calculate your market worth and you have some information on how much you can reasonably expect to receive during a raise period, you have your basics down for salary negotiations.
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