Editor’s Note: This story originally appeared on The Penny Hoarder.
After all the hard work you’ve put into designing your resume, crafting your cover letter and acing your job interview, you might be tempted to cash in on the first job offer a company gives you.
Most people do.
But putting in a little extra time to negotiate a higher salary might be the easiest and quickest way to earn more money at your new job.
Plus, hiring managers are often ready to negotiate. Are you?
What Are Salary Negotiations, and Why Are They Important?
Salary negotiations are one of the last steps in the hunt for a new job. They aren’t exactly synonymous with asking for a raise, though the two share a lot of similarities.
The key distinction is that negotiations for a higher salary happen sometime after your interview and before you sign the employment contract — not during a performance review for a current job.
Salary negotiations are crucial for a few key reasons. They show the company you’re confident in your skills, you’ve done your homework and you’re not going to dart off to another better-paying position as soon as it’s available (because you’ll have the better-paying position).
Negotiations are also the time for you to think about your financial needs and to use the labor market to your advantage to score a higher starting salary.
The moment you say yes to a job, your sway over your benefits package and starting salary drops. If you don’t negotiate, you’ll have to wait six to 12 months to ask for a raise — money you could have been pocketing all along.
So, don’t be afraid to speak up … It’s free money.
How to Negotiate Salary
Job interviews are nerve-racking as it is. When you add in salary negotiations, it’s enough to send most people into full-on panic mode.
Those anxieties could be enough to keep you from getting what you’re truly worth. Don’t let them.
Our step-by-step guide will help allay those initial fears and get you into the right frame of mind to not only ask for what you’re worth, but also to emerge from those salary negotiations with a better offer.
Step 1: Research Salaries for Your Role
One of the best ways to calm yourself and to approach a salary negotiation with a level head is to do your homework about the company and your role. Don’t stress over manipulation tactics and strategies.
“If we go into a negotiation worrying about [that] … then we miss out on the most important feature of negotiation,” said Lisa Gates, a leadership and negotiation coach for businesswomen and one of LinkedIn’s top 10 voices in the workplace. “It’s a conversation. A human conversation.”
Gates advises a good place to start is by searching what others in your position are earning. That could be by asking your colleagues (no, it’s not illegal, she said) or by looking up salary information on websites like Dice, Robert Half and Payscale.
With these tools, you can establish what the national median income is for your position, what your local economy is paying and what your potential employer typically pays other people with the same title.
Consider where you’re located and where the company is located. For instance, if you are working in Nebraska, the local median income for copywriters is much lower than copywriter salaries in New York. However, if you’re relocating to New York for the job, definitely use that salary range in negotiations. In that case, your salary history from Nebraska is irrelevant.
Likewise, this range is useful for establishing a fair salary for work-from-home jobs.
Again, if you are a copywriter in Nebraska who is applying for a remote position in New York, you can negotiate a salary that’s in line with what New Yorkers earn, or at least you will have the wiggle room to tap into national rates.
Step 2: Know Your Work’s Worth
Once you’ve established a healthy salary range based on your research, you then have to plot yourself somewhere on that line.
“If you are a median performer … shoot for the median,” said Gates. “But chances are you’re amazing at what you do, and you want to shoot for a salary between median and high.”
When asking for above-average salaries, it needs to be a matter of showing rather than telling. If you believe you deserve the top of that range, then you’re going to need to fall back on something more substantial than “I believe I’m worth $70,000.” The obvious follow-up question to that statement is “Why?”
To be able to answer that question confidently and convincingly, “you need to make a list of all your contributions and accomplishments — and quantify them,” said Gates. “For example, if you are a customer service manager and you revamped your new-hire onboarding, what impact did that effort have on the bottom line?”
In terms of negotiation, your argument will be much stronger when it’s based on research and numbers rather than emotion. If you really do need that extra $5,000 for child care costs, relocation costs or rent, that’s OK to mention. Just don’t let that be your whole argument.
Instead, show them exactly why you’re worth that extra five grand.
Step 3: Respond to the Initial Offer — Politely
This stage is ripe for fumbling.
You just got the job offer (congratulations!) and your emotions are running high — good or bad. It could be that the company offered you exactly what you wanted and you’re ecstatic. Or, it could’ve lowballed you by about $10,000.
In either situation, it’s easy to respond on impulse. Check yourself first.
Take a deep breath and do not give your decision immediately, even if it’s a great offer. Likewise, it may not be the best time to negotiate, especially if you’re a bit offended at that low offer.
Think It Over
“Responding graciously is the most important action to take when you first receive an offer,” said Loren Margolis, CEO and founder of Training & Leadership Success. “I recommend you state that you are grateful and excited, and then take a pause.”
Margolis is a career-training expert and a member of Forbes’ Coaching Council. Margolis has worked with several Fortune 500 companies. She said that even if you know your answer or are ready to negotiate immediately, it’s good to ask for some time to think over the offer.
“If you negotiate on the spot, you run the risk of being influenced by emotion,” she said. “And you want to be logical and clear-headed when you talk money.”
The amount of time to ask the employer to think over the job offer could be anywhere from 24 hours to a week. Between 24 and 48 hours is typical, as employers may be in a pinch to fill the job quickly.
You can also ask the hiring manager for a deadline. That way, you won’t be caught in a guessing game and will have a clear amount of time to review your salary research and prepare.
Step 4: Plan Your Counteroffer
At this point, you’ve done quite a bit of legwork on salary research. Now, you need to pore over the details of your offer and establish what are known as a reservation point, a target salary and an anchor salary.
In salary negotiations, it’s important to stay within a realistic range based on your research. And, think back to your application. Did it ask, “What are your salary requirements?” If so, how did you respond?
If you answered “$40,000 to $50,000,” you have to work within that range.
For example, let’s say your initial job offer includes a $40,000 starting salary, health insurance, 401(k) plan and three weeks of paid time off. If you’re an early-career professional, this offer might sound pretty good, and it is technically within your range. Negotiate anyway.
“Always negotiate, if for no other reason than to demonstrate that you are capable of having a problem-solving conversation,” Gates advised. “That’s what a negotiation is.”
The only exception is if the company made a “firm” offer or has a “non-negotiable” salary policy. If that’s the case, you might not want to push your luck.
But those cases are rare, so unless it’s expressly stated, get to planning your counteroffer.
Crunch the Numbers
First, do the numbers:
- Set a reservation point above the amount they initially offered, perhaps at $42,500. This number is the minimum salary you will accept.
- Your target salary, aka the amount you foresee agreeing on after negotiations, will be higher than your reservation amount — somewhere around $45,000.
- Your anchor salary will be much higher. It’s the number you use to start the conversation and could be as high as $50,000.
It’s very possible the company won’t meet your target salary even after negotiations. But don’t fret — and don’t just look at the salary.
Review the entire compensation package, including paid time off and continuing education. Remember the expenses you’ll incur, too, like the cost of living in the new area and the commute.
Be prepared to negotiate elements of your benefits package, too. Do they have wiggle room on vacation time? What about a work-from-home policy? Learning stipends? Loan forgiveness?
Or, as Margolis put it, “Determine what perks would add some sparkle to your life.”
The important part of a counteroffer is to remain flexible and open-minded.
Step 5: Practice the Negotiation Conversation
You’ve come a long way. But now you have all of these numbers and nuggets of advice floating around in your head. Can you recall them on a moment’s notice while under pressure and (probably) sweating profusely?
Didn’t think so.
The conversation itself could happen in person or over the phone. In either case, it does need to be a conversation. No email negotiations — do it over the phone, via video chat or in person, so you can better interpret the hiring manager’s tone and response.
And, if the conversation does happen to take place in person, you’ll have to take into consideration much more than your tone. According to research from Robert Half, visual, and often completely nonverbal cues, can impact your interactions with others. Some of those cues may include:
- Eye contact
- Posture
- Handshake
- Hand gestures
- Facial expressions
- Fidgeting and nervous movements
This is why feedback is crucial. For the most part, you won’t be able to address any of those cues without someone else’s help.
“Practice negotiating with someone you trust. And ask them to make it difficult for you,” Margolis said. “Have them counter your assertions and challenge you so you can practice professionally pushing back.”
Write Down Your Top Perks
Margolis also recommended writing out the perks that mean the most to you in the negotiation.
Then, write down three things that distinguish yourself from the other applicants — they could highlight your experience, skills or ways you will add unique value to the company.
Forcing yourself to write it out makes your argument more cohesive.
Similarly, Gates recommended crafting an opening statement that lays out exactly what you want. She’s created a specific formula to guide the conversation that should include:
- Your strengths.
- Quantified results of those strengths.
- How you plan to produce those results in the future.
- An anchor number to start off negotiations.
Then, round off your opening statement with a question that sparks discussion. She recommended something along the lines of, “How can you help me make this so?”
Craft Your Opening Statement
Following this formula, your opening statement could look like:
“I’m a creative and witty copywriter who has produced several award-winning advertisements for past clients, which raised their ad revenue by 20% in one quarter.
“I believe with the resources and larger team in my new role here, I will deliver even better results. These achievements warrant a salary of $50,000. How can we come together on this?”
Your statement will obviously look different. Use language that’s natural to you and change it around as much as you like. Be sure to include your anchor salary and an open-ended question that invites the employer to speak.
When you’re practicing with a friend, try changing the question, especially if the response isn’t what you were expecting. Because you want to start a discussion, avoid yes-or-no questions in particular.
Practice as much as you can, and ask for feedback along the way. When all is said and done, thank your practice partner profusely. Drinks are on you.
Step 6: Negotiate a Higher Salary
After all that preparation, it’s not so scary anymore, is it?
Give yourself a pep talk, take a deep breath, and go get yourself a higher salary.
If you’re conducting the salary talks in person, remember to mind your body language. And if they offer you a beverage, take it. Having something to sip on will help smooth over those awkward pauses and can buy you some time to think of a response if you’re stumped.
If you’re talking over the phone, throw all that advice about body language out the window. That’s not important here. You’ll be able to have your notes in front of you, too.
Remember that your tone is what’s important on the phone. Speak clearly and slowly, and you’ll have a better offer in no time.
Step 7: Get It in Writing
You don’t want all that effort to go to waste.
After you rock your salary negotiation and come out with your target salary (or higher), be sure to ask for it in writing.
Sometimes hiring processes are long and involve plenty of people at the company. Things get forgotten or lost in translation.
Perhaps the negotiation was handled by a separate person in the HR department. Maybe that individual only had your initial salary offer on file and not the renegotiated amount. Or, there could be something more nefarious in the works. Let’s hope that’s not the case.
“Ask for them to at least send it in an email to ensure that you and the hiring company are both on the same page,” Margolis said.
And, when you finally sign your name on the contract, ensure it reflects what was sent in the email.
Now, all that’s left is to bask in the success of the single highest-earning conversation you’ve likely ever had.