From the employer's position the "I think you're likely to botch it" bet is not a bad one: employees don't know the employer's value function for the work, but the employer can have a pretty decent model of the employee's value function for steady income (tip: eliminate your short-term need for steady income and many negotiations become a lot easier).

For the employee, hoping for an accidental or poorly-informed over-offer is rarely justified. Employers usually have many past negotiation experiences and many sources of information for what other employers are paying, whereas employees usually have few. Similarly, the employer's side of the exchange is primarily liquid and easily quantified (cash+benefits) whereas the employee's side is poorly quantified and illiquid (the employer usually can't directly "sell out" your past labor and partially recoup if he decides it was worth less than he expected).

Expecting employers to err on the side of overpaying with any sort of frequency seems theoretically hard to justify, and that is certainly not in line with my experience. Unless you know the employer wants you specifically (as opposed to any instance of the class you represent), I think it's almost always better for employees to open with what they consider a high number and let the employers try to talk them down.

I make a good salary. I very know quite well what a top level salary for my position in my area is because I have a large network of friends doing the same thing and it is a clearly defined role (as most technical jobs are). I would want to put my number out there first because we're going to be negotiating in a very specific range. I still want to hold off until after they've decided they want to hire me (that helps my leverage), but when push comes to shove I want my number out there first.

My friend works in marketing. Definining her salary is much more difficult. Marketing titles can really vary - what is an associate? What is a specialist? What is a product manager? What is a brand manager? There are some brand managers making six figures and some making $25k. In her case, she wants to change jobs because she is horribly underpaid. Almost any salary would be an improvement. Her throwing out a number first could only be detrimental and so she will wait until she hears the number on the table.

As a side note, always compare total compensation not just salary. In the two examples above, we both want to get MBAs. Having our next company pay for the MBA would be worth a lot of money. I would take 10,000+ a year less for a place that will pay for an MBA over one that doesn't. Don't forget about bonus, healthcare, 401k matching amount & vesting, overtime, vacation, flexibility, etc etc etc. And negotiate it all at once.

That's a strong statement. How do you know this to be true?

Pricing herself out, or under. He just defined the problem; the discussion on finding out relevant / points of reference for the salary negotiations.

However, in marketing (as some below have noted points of "pain" in relation to "increased X sales %, saved $ with cost savings streamlining X" etc., may be more definable with her previous experience. More information would be helpful though, as the fields fascinating (marketing).

You say: "I want $100,000."

They say: "Oh, well, we were thinking more like 60,000"

You say: "Ok, how about 80,000?"

They say: "Done."

If they were willing to pay 100k, you've just lost 20k. They know what they are willing to pay, you don't. You're at a disadvantage and need to gain more info. The one who speaks first loses. Instead:

You say: "I really am impressed with this company and I'm sure you will offer me a very competitive salary."

They say: "60k"

You say: "That's great! I was thinking anywhere from 60k up to 130k."

Now you've set the range and the negotiation will more likely end up where you want. You won't lose money doing this. BUT you might gain money if they say, "90k" right off the bat and you didn't expect them to offer that much. Then you can offer the 90k-120k range and even if you only gain 5k after that, you're much better off than if you spoke first.

On edmunds.com there was a fantastic undercover used-car salesman expose where they talked about this. The salesman would always ask people what they wanted to spend each month on a car. No matter what they said, (say, $300) the salesman would then counter with the question, "up to?..."

Inevitably people would be embarassed or confused and offer a higher number. The article said the tactic worked so well that the salesmen would jokingly greet each other in the hall by saying "up to?.."

So think about the range.

If I had asked for $100K in the salary-negotiation stage for any of these jobs, I would not have considered $60K a serious counteroffer. Either the company had a serious misunderstanding regarding my skills and responsibilities (maybe we need to discuss further what I am bringing to the table), or the company doesn’t have a lot of cash and is offering extra-sweet equity packages instead (that might be a good offer for some people, but not for me), or they’re just lowballing everyone (FAIL).

Sorry - the real world just isn't this simple.

First - if you are talking to a company that really is trying to screw you down to the lowest possible number - ask yourself why you would want to work for such a company? If they are going to start off the relationship by nickel and dime-ing you, what do you think they are going to do once you're in the door?

The reality is that any company that is worth working for is going to want to bring in good developers at a salary that works for both parties. It is way more expensive in the long run to bring in a developer for less than they are worth and have them leave in a year when they realize it, than it is to just hire them at the right salary in the first place.

If a company hires good developers and treats them well, not only are they going to produce more for the company, they are much more likely to help you bring in other good developers.

I don't know about you - but I prefer to work with good companies who are looking beyond the next P&L statement.

I prefer a more honest approach. 1) Do your homework. Talk to people you trust and figure out what you are worth in the market 2) Do your homework (part 2). Figure out how much you need and how much you would like. This (and step 1) will give you solid salary range to work with. 3) Do your homework (part 3). Decide where you are flexible - maybe your spouse has good benefits and you don't need any, maybe you're willing to trade salary for equity (or flexible hours, or something else).

The bottom line is - no tricks or tips are going to give you better results than knowledge and preparation will.

Once you've done your homework you don't need to rely on tricks to get what you want. There isn't anything wrong with putting a number out there first if you've done your homework. Sure you anchor the conversation - so go ahead and anchor it in your favor. You know what you need and what you want - so use that information to benefit you. If you know that you need 100K but are ideally looking for 120K, and know that your market value is around 115K, then use that information to inform what you put out there as your first number. If you think you're talking to someone you trust, then maybe you just put your numbers out there. If you think the recruiter is going to negotiate down from your number then add X% to your real numbers.

The other real answer is that nothing works better than having a real plan B. Don't just talk to one company. Go out and get several offers. Let the other companies do your work for you ;-)

In larger companies, it's likely that the people that want to hire you are not the people doing the salary negotiation. The "company" is probably not trying to pay you the lowest amount, but the HR person doing the negotiation might be.

In that case the HR person has a low number and a high number he can give you without authorization. You don't know what those numbers are. You are at a disadvantage, and your goal should be to get information about those numbers.

Perfect example is a recent hiring for my deputy, where HR didn't make a lowball offer, but offered the low-end of what we were willing to pay. HR would have been crazy not to. The candidate countered with something much higher. We really wanted to hire that person, so we countered with the highest we were willing to pay. All "plays" in this game were completely rational, but the candidate found out what our highest offer was by not mentioning the number first.

Turns out that our highest offer was STILL not enough for that candidate so she declined. But notice how the whole time she held all the cards and was able to find out our best possible deal. That's the best you can do in a negotiation.

Now, if it actually were an advantage to state a number first, companies would be falling all over themselves to do it. You'd walk in the door and they'd be shouting numbers at you. That never happens.

Clam up and find out your actual value to that company. That value might be well above the going market rate. Put the shoe on the other foot and see how nice your life would be if the MAXIMUM you had to pay your employees was the average market rate.

I definitely agree that the scenario you are in exists, and isn't necessarily uncommon. My wife is a recruiter - and I have been both sides of the technical side of the hiring table - so I have a pretty good idea of how it works.

I just disagree that refusing to give the first is really either all that effective a tool.

First - I think the two best things you can to as a candidate are to (1) do your homework so you're not at a knowledge disadvantage and (2) do the extra work to have several competing offers.

With your example, it sounded like the candidate had a solid understanding of what they were worth. What would have really changed if they had simply named their number first? The candidate clearly had confidence in the number (since they walked away from your best offer) It might have saved both of you some time if they had been up-front about it.

Anyway - I think I was making two primary points:

1) The best way to improve your negotiating position is to do your homework so you have knowledge and options. Knowledge and options will give you way more power in the negotiation than any trick will.

2) Negotiating for salary is fundamentally different than other types of business negotiations. A salary negotiation is (hopefully!) the beginning of a lasting relationship. I think it needs to be approached - from both - sides with more focus on "win-win" than would be appropriate for other negotiations where a more hard-nosed approach would be appropriate. Personally, I am wary of both potential employers and potential hires that don't approach it this way.

Sorry - one last point from talking with my wife...

A recruiter is not simply trying to get you in the door at the cheapest salary possible (neither, really, is a good company). There are definitely companies and recruiters that work that way. A good recruiter/employer is trying to get great developers in the door for a salary that will make them happy. A good recruiter/employer will know that having to re-hire someone in a year because they left for a better offer or because you low-balled them at the beginning and didn't adjust is much more expensive in the long run.

When negotiating with the recruiter - don't think in terms of convincing the recruiter. Think is terms of given them the ammunition they need to convince the person who will approve the offer. Give them facts, data. information - help them build the narrative that will convince the hiring manager/director/etc that has to approve the offer that they need to hire you for the amount you want.

To me, going in with knowledge about what you need and what you are worth and being prepared to help the recruiter sell you to the decision makers is a much better strategy than anything as simple as "clamming up" :-)

In the first example, if the company was willing to pay 100, why would they say 60? As the article mentions, typically the person on the other side of the table is much less invested in your salary than you are. If that's the case, I can't see them going from 100 to 60.

I dunno. I think there are a lot of ways to approach this and the main thing is not getting caught doing the dumb stuff patio11 talks about, like shying away from the entire process. But these smaller issues like mentioning the number first could more likely go either way.

Because you've told them you want 100k, and they think by offering 60k, they might be able to (easily) get you down to 80k. If they were willing to pay 100k, this is a win for them.

Because if the company can get away on spending under budget for you, they can either spend more of that fixed number on someone or something else - anything from the manager's own salary ("Hey, I saved the company 25% of my budget this year, give me a raise!) to adding additional staff to buying that long needed server.

If you aren't spending as little as possible on all your costs, you're doing the business thing wrong.

I think the recent trend in hiring software engineers is to pay what they ask, because if you don't (e.g. offering $60k instead of $100k), you're going to have to hire again in 6 months to a year when they leave. Just searching for a software engineer can cost $30-50k in downtime, recruiter's commissions, and learning curves.

This needs to take into account the costs of turnover (including the cost of training a replacement) and hiring. There is an inverse relationship between the salaries that a company pays its employees and turnover costs.

I've come across a number of interesting positions that are available only through these guys. But we never get 15 minutes into a conversation before they're asking about salary history. The implied message is that the number you give is going to decide if your resume gets passed onward or not. So going too high, say 2X, would certainly kill your chances.

I've tried the "let's get to a fit before negotiating salary" and I actually had one recruiter say "sorry, this is how we roll". I dumped that guy, but it keeps coming up.

I know the OP's advice was to avoid this route and get to the hiring manager. Just curious what to do about these people.

Believe me, if your salary seems impossible to achieve the recruiter will tell you, probably pretty bluntly. And if it is possible to achieve and the recruiter helps you get there she'll be thrilled. Recruiters get a cut of that number!

(Though, remember, take recruiter advice with a grain of salt: Their tendency will probably be to talk you down. As with buyer-brokers in real estate, the recruiter's incentive is to make the deal go forward, not to hold out for the best possible price for you. Alas, in the end, the responsibility for holding out for a good price is almost impossible to delegate: The buck stops with you.)

Of course, the take-home lesson is that if you aren't comfortable setting a high anchor point for your salary you shouldn't deal through recruiters. Which probably helps to explain why companies seem to love using recruiters.

But my general attitude regarding salary negotiations in the early stage is this: For any job that I apply for, I can go to salary.com, fill in the appropriate information, and get a range of expected compensation levels. Any recruiter or HR flapper can do the same thing. So I tell them that I expect to be compensated according to the market rate for engineers of my skill and experience level. If they’re not satisfied with that answer, then they shouldn’t be representing my interests, because either they’re stupid or they think I’m stupid.

If the company is sold on the candidate, it is feasible for the recruiter to negotiate another $10,000. If the company has other options or isn't clamoring, you may lose the offer.

But, most recruiters are bunk, and the difference between $80,000 and $95,000 can be a breakdown in the offer being pulled, ergo the "real estate" example of closing the deal at a lower price (salary) and cost of losing it all together. The cost of losing it isn't worth the extra $3,000 / company and $450 / recruiter.

With a recruiter, if you let them know your top-end range, they will typically be blunt with "that is too far out of the range of the position."

Recommended the above comment: Of course, the take-home lesson is that if you aren't comfortable setting a high anchor point for your salary you shouldn't deal through recruiters. Which probably helps to explain why companies seem to love using recruiters. http://news.ycombinator.com/item?id=3501730

Companies can sway this the other way, with using the recruiting firm as the "bad guy" of "well, he/she was submitted at $85,000, why are they pushing back for another $5 (or $10),000. This happens as well (incorrectly "getting a candidate in, and we'll renegotiate up, you don't want to price yourself out!" or, submitting too high, resulting in an immediate dequal.

Ug.

Edit: many companies don't necessarily have a sense of fairness, hence asking for salary history, to offer you the lowest possible (or even lateral) salary.

Recruiters can be useful because they should know the upper salary bound for the position that they are trying to fill. Just ask them directly how high the client can go, and they'll probably volunteer this information. Act underwhelmed and ask for a little more (or end the conversation there if it's seems like a waste of time). The recruiter will go back to whatever HR manager and either get a "yes there's some flexibility" or "no it's set in stone".

Most recruiters are the "putting warm bodies in front of desks" kind. This kind of recruiter doesn't really give a crap about you or the client, they just want to make the deal, but a high salary for you works out well for them also. Filling positions this way can be a sign that the client is desperate.

There is another kind of recruiter that doesn't work this way. They're rare and they only do talent search for hard-to-fill executive and consulting positions. They are more about building networks and relationships.

I can understand he wants to find A-type winners that are on a rising arc instead of slumming for a job, but that took a lot of balls to ask.

They want to hit somewhere above your minimum. They don't want to hit your minimum (since it may be volatile) and they really, really don't want to hit below your minimum. And they are okay with hitting their maximum.

In my location it costs 15-20k to find a senior engineer you want to hire. Once that happens, you really, really don't want to lose them in salary negotiations, or to another offer. So you don't lowball them. If they give you a number they can lowball themselves, but if they don't, then you offer something near your maximum.

Your advice is that you give them a number so high that you're sure it's above their anchor and that it gives them no information about your anchor. But that doesn't change their anchor, and not giving a number at all is pretty close to that, while being nearly risk-free to you.

Of course, once they've asked for a number, you've refused, and they've pushed on it, it may not be risk-free to fight anymore. At that point, I'd agree: Aim for the sky.

I don't think anyone is saying to not have an idea in mind ahead of time of what your goal number is. The point Patrick is making is to just not be the first one to state a number.

Just because they've attempted to anchor the discussion at a low rate doesn't mean that you don't already have another mental anchor known only to you of your goal number.

But the argument is that if you are the one to give your number first, you could lose out on money you could have gotten because you had no idea that they were willing to offer even more. It's hard to state you want $X/year and then ask for $1.1X a few minutes later. If you are the first to state a number and you ask for $100k/year and they were willing to offer $150k/year, you will never find out about that extra $50k/year.

That looks good in paper but doesn't happen much. Vast majority of the time you will be low balled.

The reasons are best explained here: http://en.wikipedia.org/wiki/Anchoring