How can I determine a reasonable amount of pay raise to ask for?

Question

I'm looking for a comprehensive answer to this question, not short answers that just tell me one piece of the equation.

The ideal answer should include:

• How can I determine the average amount of pay raise for my position?
• What statistics affect the sort of raise I can ask for? (performance, company's financial health, your current salary, etc)
• Do employment benefits play a role in the amount of raise I should ask for?
• How much of a difference would it make between getting a raise from promotion or just asking for it?

This question may sound very familiar to this one, and that is intended. I'd like a canonical answer that anyone can reference to, be it for their annual reviews or they want to get paid more.

Answer 1

To me, you must take three elements into account when asking for a raise. The case of promotions is a bit different, and is very company specific in my opinion, so I will voluntarily not talk about them in this answer.

1. How much money does your role generally get, at your level of experience ?

The sources of information that you can get on the topic are your colleagues, your relations, and the publicly available information (Example : Glassdoor). Be mindful - depending on your country, this could be a taboo subject. In some countries, people are strongly reluctant to disclose their actual income.

2. How much is your company able to offer?

Not all companies are able to raise you by significant amounts on a yearly basis. I know a company, for instance, that refuses to recruit top-school students, because they just ask for too much and the company policy cannot make them happy.

If your company doesn't have transparent guidelines on the salary policy, you may get that kind of information by comparing the salaries of the company to the market average. If your average JoeJunior, JoeSenior, and JoeBoss are all paid 10% less than their respective markets, the company just pays 10% less than the market and you can calculate how much your company is willing to pay for your role.

You indeed want to look at the financial situation of the company. Did they stop recruiting ? Are some top-management people leaving ? What are the business news for your company compared to your market ? A company which faces difficulties is often going to freeze their salary policy.

3. If you want more than the average, why would the company give it to you ?

Let's go through point 1 and 2 with a fictional example. You are working in SectorX in a big city, with 3 years XP, and the market for that level of experience is 60,000/year. Your company pays 5% more than the market for SectorX positions, so you can expect 60,000*1.05 = 63,000/year.

If you ask for 70,000, you need to justify that you're more valuable than what the company would normally give at that level. Do you have a special skill ? Do you have a key position ? Are you objectively better than most people in the job ?

On the other hand, you might currently be at 56,000. That means you are underpaid compared to your company's willingness to pay for that kind of job. Are you good enough to justify the average income the company can offer ? The question is harsh, but half people are better than average and half are worse, and you need to consider if you're actually in the top half.

In conclusion

Once you have determined how much your job is worth on the market, how much the company actually pays for that job, and how much you actually deserve, you can find a reasonable raise.

Answer 2

I had to go through this process very recently - in fact I'm expecting the results this week. Here's what I did:

Decide what figure would make you happy

Account for personal circumstances and ambition. Figure out what others pay. This is where you decide if the next few months are better spent improving yourself in this job (if needed), or looking for another job.

Make it clear you're looking for a raise

Last April I received a raise of 4%. The very next day I had a meeting with my manager, where I made it clear that the raise was unsatisfactory, and I asked him what I can do for the company so that the company can offer me a better salary, in the next 6-12 months or so. I got this advice from a question on this site, I'll link it here if I find it.

This is a good time to ask about what you can realistically expect (which I didn't do).

Know your Worth

I wanted to delicately imply that I'm gonna leave if I don't get a satisfactory raise, but without looking unreasonable, or a flight risk. The phrasing I used was very similar to this:

I love working at [company] and would like to continue to do so. I also believe my market value has grown, and I don't like leaving money on the table.

I don't know how well-phrased this is but it is the best I could come up with.

Would you like a promotion with that?

In my case it's easier to ask for a promotion than a raise. I phrased it as:

[I believe] my current title has a salary cap I'm looking to surpass

All In

The figure I arrived at is the UK median for my profession after removing the Junior prefix. I took a deep breath, added 5K to it and sent the email. I don't expect to get anywhere near it, but I thought whatever figure I asked for, it could only go down from there. This might have been a mistake, I'll update this answer accordingly in the coming days.

Read Other Answers

This is a rookie's experience asking for a raise for the first time. I hope it adds some perspective, but do take it with a pinch of salt.

Answer 3

How can I determine the average amount of pay raise for my position?

In some cases, "this year's target average increase" becomes generally known. In companies where I worked, it was rather common knowledge that "the number is 3% this year" for example.

You can ask around. Perhaps your colleagues are willing to share the amount of their raises over the past few years. Sometimes your manager will tell you if the raise you are granted is more or less than the average.

For some companies, salaries are public. Tracking them over a few years can tell you the recent raises.

And in some cases you can look at external sources like GlassDoor (although I've found them to be very unreliable).

What statistics affect the sort of raise I can ask for? (performance, company's financial health, your current salary, etc)

You can ask for anything you like.

But raises are typically granted based on many factors

• Your performance over the past year
• Your department's performance over the past year
• The company's financial situation and in particular the budget for the upcoming year
• The market rates for your position
• The competitive pressure in the labor market for your locale and position
• Where you are in relation to your salary bracket for your job level
• And many others

Companies (particularly larger ones) spend a lot of time and money analyzing labor markets, preparing budgets and assigning an expected increase in labor costs. Those budgets are cascaded down to departments and affect the size of raises that managers can give without seeking exceptions. In some companies, exceptions can be extremely hard to achieve, often requiring many levels of approval.

Do employment benefits play a role in the amount of raise I should ask for?

Not usually. Unless there is some drastic change in the level of benefits being granted in the upcoming year, benefits don't typically affect annual raises all that much.

How much of a difference would it make between getting a raise from promotion or just asking for it?

Promotions and raises don't necessarily have a direct correlation.

In some companies for some roles, you could get promoted without getting a raise at all.

In other companies or for other roles, a promotion would automatically result in a very large raise completely aside from any merit raise you may deserve.