We’ve all heard the advice when it comes to accepting a new job offer. Negotiate; don’t take the first offer. However, you may be wondering, “is it really worth my time to negotiate?” Negotiating can be complicated, and you may think there are downsides to this process. For instance, maybe your new team will think you are uncooperative, or perhaps you don’t believe you actually deserve higher compensation, or it could be the mission is more important to you than the salary. At Moonchaser we’ve spent years thinking about software engineer salary negotiation and after guiding clients through hundreds of negotiations, I’m here to tell you that it is always a good idea to negotiate. Across 500+ negotiations, we’ve seen an average increase of $45,000 per year. Some clients have had their offers increase by more than $1M across the 4-year value of their offer package. It’s the highest dollar-value per hour of work that you will ever do.
To help make this real, let’s use Google as a case study. When comparing compensation, you always need to compare apples-to-apples. So, to understand pay disparities you need to look at the intersection of company, role, level, and location. We recently worked with two Senior Software Engineers (level 5) at Google in the Bay Area. After finishing the first negotiation, our client had an offer of $200K base salary, $600K equity over 4-years (vesting 33/33/22/12), and $75K signing bonus – this is ~$475K in year 1 comp. When this second client signed up, her initial offer was $150K base salary, $150K equity, and $0K signing – this is $200K in year 1 comp. For the exact same position, same job expectations, same everything. If this second client hadn’t negotiated, she could have been paid less than half of what she is worth. The negotiation took 2 weeks and increased her comp by more than spending 5 years working at Google will.
This is also particularly important for underrepresented groups and people coming from outside the tech industry. You may be wondering if there is actual data that supports the claim of pay disparity. There is. According to a study published in the national partnership for women & families, women get paid 83 cents for every dollar a man makes. For ethnic minorities, as per the Pew Research center, African American men earn 73 cents for every dollar a white man makes, and Hispanic men make 69 cents.
The tech industry is fairly new and rapidly evolving. Some roles did not exist ten years ago, and there is a lot of variation in supply and demand. Major companies like Facebook, Google, and Apple have tried to standardize their compensation structure, but there is still a ton of variability. For instance, all compensation components (e.g. base pay) for a specific level are a range rather than a particular number. Also, while there may not be a lot of room to negotiate the base salary, companies are more flexible with stock options/RSUs. In addition to that, you might be eligible for an up-level at the new job. All of the above options are available, but you need to make sure you fully understand them. If you would like to learn more about negotiating, you can learn more about salary negotiation strategies and get 1-1 support on our website.