Salary negotiation strategies everyone in tech already knows — but you don’t (2024)

First, a reality check: there's a lot of money in tech. New grads at big tech companies will routinely earn $150k+ starting salary. With a bit of work, you can reliably achieve $500k total comp, even as a frontline individual contributor.

Millions of dollars change hands in salary negotiation — you owe it to yourself to understand compensation.

Understand tech compensation

There’s a lot outside of salary that forms your total compensation package. Your "total comp" includes at least:

• Base salary — the money you’re paid every pay period.
• Equity — ownership stake in the company, could easily be half your total comp or more.
• Benefits — in the US, health insurance alone can easily cost your employer $500-1000/month. Benefit packages also includes things like vacation days, free food and other perks. This is (mostly) not taxed, so you’d rather have these benefits than the equivalent in cash.
• Annual bonus — percentage bonus on top of your salary based on performance, common only with public companies. The recruiter will likely quote you a "target bonus" (e.g. 15%), which is what you can expect if you meet expectations. Generally also comes with additional equity (a "refresher").
• Signing bonus — one-time bonus paid out either when you sign or the day you start. Might come with a clause that you must pay it back if you leave after X months. Quite common in large tech companies, can be anywhere from $10k–$100k. Highly negotiable.
• Other perks — a whole suite of one-time or ongoing cash perks, like relocation package, phone stipend, commuter benefits, car allowance, etc.

The biggest input that controls comp is "level", a number that express your seniority. For example, level E3 at Facebook is new grad, E4 is for hires with a few years experience and so on, up to E9 (after the first few levels, experience becomes less important).

The more expensive/higher level you are, the more complex your comp mix becomes and the more it'll skew towards equity.

Understanding & valuing equity

Womenearn half the equity men do– equity is complex and ripe for bad outcomes.

Equity is an ownership stake in the company. Your stake in the company converts to money only if one of two things happens: the company is purchased or it becomes listed on the stock market (an IPO).

An equity grant is generally for a 4 year period — you’ll get X number of shares over 4 years and you'll progressively earn (or vest) over that period. Vesting will generally be subject to a 1-year “cliff”: you don’t earning anything in the first year, and on your first anniversary, you vest ¼ of the shares. This formula (“4 year vest, 1 year cliff”) is nearly universal in tech.

The company will never give you stock directly, because you'd have to pay taxes on it right away. Instead, companies have designed roundabout mechanisms to delay taxation. The two most common are RSUs and stock options.

When a company offers you equity, they’ll quote you a value: X,000 shares over 4 years, “which is worth $X00,000.” (if they don't, ask)

That value is based on what investors have paid for the company in the last financing round. If the latest investors paid $1M for 1% of the company, the company's valuation is $100M and therefore a 0.1% stake is "worth" $100,000.

Depending on the stage of the company, that number is anything from “as good as cash” to pie-in-the-sky voodoo.

In all cases — congrats! Whether you like it or not, you're now a startup investor. Investor Harj Taggar has sometips on how to pick the right company.

Figure out your worth

Don't accept a lower salary because "you don't really need the money" —what you’re paid has nothing to do with your costs.

Similarly, negotiation arguments around your life costs (mortgage, student debt, etc.) will be unconvincing to recruiters. Your skills have a market value, what you do with that money has no place in the compensation conversation.

Please, please, don't rely on Glassdoor

Payscale,Glassdoor,Comparably —they're all wildly inaccurate for tech. These sites heavily mistreat equity (a major component of tech compensation) and are often very out of date. It routinely causes people to accept less than they deserve.

Your options:

Unfortunately, the best and most up to date information is a moving target but common knowledge among HR professionals. The easiest way for you to tap into that is through third-party recruiters — they'll gladly take your call.

Ask the right questions

First, delay the salary conversation until both of you are convinced this is the right job. Never, ever share your previous salary. In Californiaand many other US states, it's illegal from an employer to ask about your current salary.

They can still ask about your salary expectations or salary requirements (and often will early in the interview process), respond politely but firmly that you're not comfortable sharing at this stage.

Every employer will ask about expected salary and every experienced professional knows to not answer. This is a standard part of the hiring dance, don't be afraid to stand your ground.

At some point later, the recruiter will let you know they would like to extend an offer and they’ll schedule a call. It might not be made explicit, but this is the money conversation. For us, this is going be a fact-finding conversation.

That’s it. Share your excitement about the new job, but control every urge to react to the numbers, share your previous salary, argue or try to make your case. If the salary offer is higher than you expected, don’t act surprised or let it come across.

Our goal is to collect information and retreat to a place where we analyze all the details with a cool head. Follow up with these questions:

• What level is the job offer? What are the requirements for this level vs. the level above it?
• What is the salary band for this level? This is 100% completely reasonable thing to ask. In California, an employermust legally provide thisif asked.
• How much is the equity worth currently? You can also ask: what percentage of the company does the equity represent? What is the valuation of the company?
• What is the vesting schedule? Is there a 1 year cliff? Are there quarterly vesting deadlines I should know about? Confirm whether the equity was quoted to you on a yearly basis or over 4 years.
• For options: what is the strike price? (the price you'll pay for the shares) How long after leaving do I have to exercise the options?

The salary negotiation

Remember: the company just spent 10s of thousand finding you, vetting you, etc. They’ve wasted time wading through a glut of unqualified candidates. The recruiter has quotas to fill. The hiring manager needed the job filled months ago and now, finally, they have you. Everybody wants this deal to happen.

Determine if the level is right

The biggest lever that controls compensation is level. Each level has a salary range and they overlap: if level 4 is $125k-$155k, level 5 might be $145k-$160k. There are seperate bands for base and equity.

However, a higher level isn't just a free higher salary: it comes with higher job expectations. It’s better to be on the high end of lower level band. You should target a level you’re confident you can be promoted within 1 year and target the higher end of the band.

However, if you’re speaking to a major tech company (Facebook, Google), it’ll be quite difficult to move your level, especially for technical hires. Level is generally set independently by a hiring committee based on your "packet".

The committees tend to be very conservative and would rather you join at a lower level and promote later.

For smaller companies and especially non-technical roles, you'll have more leeway: leveling is loosely based on you work experience and your previous level/seniority.

If you want to move your level, master the art of listening carefully and repeating. Earlier you asked the recruiter about the qualifications required for the level, when you ask about about a level change clearly connect it to the requirements laid out by the recruiter.

Negotiate for the upper end of the band

Once you’re convinced level is right, you need to negotiate compensation. Target a total compensation number that’s in the upper half of the band for your level.

Once you have your number in mind, be firm and specific. Only negotiate if you mean it: you should be genuinely willing to commit if the other side can get to your number. If you still have reservations about the company, deal with that first: you're not ready to negotiate.

The most reliable way to get more money is through competing offers. Consider interviewing with your 2nd or 3rd tier choices or getting a counter-offer from your current employer.

It’s sometimes even possible for recruiters to make offers above the upper bound of the band, but that generally requires additional level of approval only granted to candidates with strong competing offers.

If you can’t get what you want, offer to shift between compensation components but don’t back down on total compensation. In order of difficulty: base salary, equity, signing bonus. Offer to shift some base to equity first and as a last measure, ask for a larger signing bonus.

Email the recruiter and say you've had a chance to think through the offer and would love to discuss. They'll schedule a phone call.

The playbook

Open by emphasizing just how excited you are about the team and the role: it's very important that you communicate that you're a serious buyer.

Then, set a clear total comp goal. When you get pushback on a particular comp mix, always come back to the total comp number.

Good salary negotiation isn't an adversarial game of counter-offers —make it clear you're a team working together to overcome a common hurdle.

Move downwards from salary, equity, signing bonus until you can put together a comp mix that hits your total comp. If you can't, be ready to walk back, continue interviewing and follow up over the next few days. Time can help you get more leverage.

Mention you have other job interviews lined up, but you'd really love to join the company. Make it clear that if the recruiter can get your total comp number, you're in.

Followup with an email.

Next steps

Hi Mike,

Incredibly excited about the role. Summing up our chat: you mentioned you'd look into additional equity and a signing bonus. Would love to be able to get us to $250k total comp.

I have an onsite with Facebook next week but would love to be able to commit to this. Let me know when you hear back.

If you don't hear back, followup after a few days. Make sure to keep the relationship warm. At some point, the recruiter will likely schedule another phone call.

Just remember: set a clear goal and politely but firmly ask for for what you want.