What Is a Salary Range and How Do Employers Use It?

Updated June 9, 2023

During the interview process, hiring managers may ask what your desired salary range is. This helps them better understand how much they should budget for your compensation. When determining your proposed salary range, it's best to research online using a salary calculator and factor in elements like your experience, education and region you work in.

In this article, we discuss what a range salary is, the factors that affect it, how employers determine salary ranges and how to negotiate your salary with hiring managers.

What is a salary range?

A salary range is the payment amount between a set of low to high numbers that you want to receive if you're hired by a company. It includes a low, mid and maximum salary point. For example, if you say that your salary range is $40,000 to $50,000, this means you'd like to receive a salary within those numbers. A salary range can be a good negotiating tool for employers and interviewees alike.

When are range salaries used?

Salary ranges are typically used during the interview or offer phase of the job search process. It is an approximate estimate to help employers understand what you hope to receive and how you value your worth. Your low point should be high enough to allow you to remain financially stable.

Related: How To Talk About Salary in a Job Interview

Factors that affect salary range

As you determine your salary range, you should research and consider various elements before giving a hiring manager any figures. Factors that affect salary ranges often include:

  • How long you've worked in the field or industry

  • Your education or advanced certifications

  • Number of employees currently employed in the position

  • If the company is trying to recruit you and plans to offer more than what you're making at your current role

  • Strong recommendations from your previous employers and references

  • Relevant skills and expertise

  • Cost of living in your region

  • Common pay rates within the market

Job applicant versus employer salary range

While the salary range for a job applicant is the estimation of pay they'd like to receive, it has a different meaning for an employer. If an employer is providing a salary range, they're giving the range of pay they can provide an employee from lowest to highest.

The range features the starting or minimum pay rate. To set the maximum pay rate, the employer factors The maximum pay rate will include element.The employer factors in raises, promotions and pay bonuses they plan to give an employee as they continue working for the company.

For example, if the employer offers the employee a role and establishes their salary range as $50,000 to $60,000, this means they're budgeting that amount to pay the employee. $50,000 is what the starting salary offer is, and $60,000 is what they plan to eventually pay the employee after granting pay raises after a few years working in the role.

The width of the salary range can vary depending on the role in question. Executives applying for leadership roles usually receive a larger salary range than an employee applying for a lower-level position.

Related: What's the Average Salary in the U.S.? (Demographic Data)

How do employers determine salary ranges?

When employers are deciding the salary range to offer their employees, they often research online to determine an accurate amount. They may look for salary calculators that gather how much the average employee within that field makes. This information is based on market surveys that report common salary ranges for specific job titles in different areas. They also consider factors like experience, education and how many people are applying to these roles.

Employers take this information and use it to form estimates based on their company's budget and the candidate's qualifications. They also balance this amount with the benefits they plan to offer the employee. Hiring managers may also analyze their company's values and culture before deciding on a payment amount. If the company prides itself on valuing its employees, then it may use compensation to show employees how much they appreciate their work.

How to negotiate a salary based on salary range

During the interview and job offer process, employers may present you with a salary that you may want to adjust according to your financial and personal needs. Follow the steps below to negotiate a salary based on the salary range you provide:

1. Analyze your skills and expertise

Before negotiating with the hiring manager, plan your talking points so you can confidently explain your negotiation terms and why you deserve them. You can do this by evaluating the qualities and experience you have and presenting them to the employer. Write down the skills, experience, education and any other qualifications you have that make you worthy of the salary you desire. Practice and prepare these talking points before speaking with the hiring manager.

2. Research common salaries for your role

Conduct online research to ensure you are negotiating for an appropriate amount. Look for credible salary calculators that provide an average amount of salary an employee may make in the role you're applying for. Try to find a calculator that estimates how much someone may make in your specific area as well. Keep these calculations in mind when negotiating with the employer.

Related: 13 Tips to Negotiate Your Salary and Job Offer

3. Determine your salary range and confidently present it to the hiring manager

Once you have gained a clearer idea of the salary to ask for, determine your salary range and present it to the hiring manager. It's best to determine your desired amount and use it as the midrange. Make sure the minimum pay rate in your range is enough to keep you financially stable.

Once you've determined this range, bring it to the hiring manager and present the information with confidence. If they seem hesitant, explain your prepared reasons why you believe you deserve this amount.

4. Try to negotiate additional benefits

If the hiring manager offers you a lower amount, ask them what benefits they will provide. They may have strong benefits to offer in place of a higher salary. These can be extra vacation days, more paid holidays or effective health plans. Evaluate what you value most in the compensation you receive. If vacation days are more important to you than higher pay, ask for that instead of a higher salary.

Related: 3 Things To Know About Unlimited Vacation and Paid Time off Policies

5. Show your gratitude and appreciation

Once you both agree on satisfactory terms, show courtesy by expressing appreciation for the role and salary offer. Since you'll be working with them every day, it's best to start your relationship on a professional and respectful note. If you're meeting in person, shake their hand and thank them for their time and salary offer.

Related: Why Interview Etiquette Calls for a Thank You Email and How To Write One

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