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The Difference Between “What I Need to Make” and “What I’m Worth in the Market”

Posted                                  | 0 Comment(s)                       |  by Gerriann Fagan

When the topic of money comes up for a client in career transition, I often hear, “I need to make at least x.”  Let’s elevate the money discussion – take it from good to great.  In thinking about salary, it’s not a bad idea to think about what you “need” to pay your bills or to put away for children’s college education and your retirement.  But a better idea, a great idea in fact, is to research the market and think about what you are worth to the prospective employer.

Ask yourself: how will I help the employer accomplish his goals?  How much is that worth? 

Here’s a sales example that requires a little math:

You are pursuing an opportunity to sell widgets and you’d like to make $100,000 a year plus benefits.  The owner expects to spend $5/case for sales.  If you subtract 35% from the $5 for your employer-sponsored benefits, that would leave you with $3.25 per case.  You would need to sell more than 30,000 cases to hit your target of $100,000 in cash compensation.

What is 30,000 cases worth in profit to your employer?  What is your strategy for selling?  Will 30,000 cases be enough or does she need 50,000 cases to meet her target?  Are management skills important?  Will you be responsible for the production of others?  Have you shown her how you can sell better/faster than other applicants?  Have you given her any ideas to help advance her business?

Now for an example using an administrative position:

You are an executive assistant and you’d like to make $40,000/year or $19.23 per hour.  You are interested in an opening posted at $15.00 per hour.  If you plan to negotiate up to $19.23 per hour, what will the employer get for his 28% increase in wages?  Will you be more efficient or proactive than the $15 applicant?  Will you be able to learn quickly?  Can you take on the responsibilities of other jobs so he doesn’t have to fill them?  What is your unique value proposition?

Money is rarely the most important factor in career change, but it is almost always in the top five.  If you want to be successful in salary negotiation, put the prospective employer’s needs first.  What you need matters but what he or she wants and needs matters more.

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