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My contract is ending very soon. The company I was working for likes my work as a developer and is trying to convert me to perm employee. Management asked me what my expected salary is. I gave a high number, above average, b/c the work I am doing for the company is considerably above average.

They countered it to an unreasonably low price (less than 40% of my asking salary).

In the next few days, we are going to have a follow up negotiation. What is the best way to approach future negotiation and why?

Their main argument are:

1) Our budget does not allow your asking salary <-- 100% not true

2) There are others on the market just as qualified with lower salary expectation <-- Not true b/c they expressed the need for another developer months ago, have been rigorously searching, still haven't hired anyone.

  • 2
    You cannot claim to know point (1) unless you work in accounting. And if (2) is true, why worry? – Ekevoo Jan 23 '14 at 0:46
  • You're right, I am not 100% sure, but for the purposes of argument, assume this is true. The company is wealthy, trust me on this one, my salary expectations were not unreachable 'out of budget' for the company. – AnchovyLegend Jan 23 '14 at 0:49
  • Are you negotiating from a position of strength? i.e. do you have another contract opportunity lined up which you can take if they are unwilling to meet your price for a permanent role? – Carson63000 Jan 23 '14 at 4:49
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    Are they offering you a salaried position? How much did you ask for relative to your contract rate? I would expect to convert at around 1600 hours/year, so $50/hour => $80k. That depends on how many hours/week they expect from salaried employees. – kevin cline Jan 23 '14 at 17:17
  • @Carson. Yes I am. – AnchovyLegend Jan 23 '14 at 18:54
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It's a salary negotiation. Sometimes it just doesn't work out.

If that price you quoted is what you need and what the market will support, then stick to it. No one is "owed" free or reduced rate work.

As I see it, you have three options:

  1. You can offer to continue as a contractor at your current rate, if it is acceptable.
  2. You can accept the lower rate.
  3. You can decline and seek other work.

This very well could be amateur brinkmanship on their part, but you don't want to bluff on #3. If you choose that option, expect to lose the position entirely.

  • Just to add: sometimes it can be a matter of bravado on the part of a hiring manager. I've experienced this in domains where software development is important, but not exactly the precise domain area that the company markets, such as finance, physics, gaming, etc. In these cases, if developers are incorrectly valued a priori, managers can sometimes have considerable hubris about "getting a great developer on the cheap" and you just can't win arguments with these people. If you can negotiate up to a level you're happy with and like the other aspects of the job, take it. Otherwise, just leave. – ely Jan 27 '14 at 15:04
  • However unfair or suboptimal this kind of hiring hubris is, it's going to be months or longer before there's any impact within the firm that actually causes anyone to wish you weren't gone. And in true Moral Mazes fashion, most managers will simply define that problem away: they'll claim you "were not a good fit for full-time work" or some other excuse, and by the time your lost productivity impacts them, that hiring manager has been promoted and the whole team you would have worked for has changed, etc. etc. Such is bureaucracy. – ely Jan 27 '14 at 15:05
  • @EMS - This isn't about the company getting their "Karmic Comeuppance." This is about the developer getting a fair wage. Managers like that are usually ferreted out, eventually. Life's too short to work for bad bosses, anyway. – Wesley Long Jan 27 '14 at 15:45
  • @WesleyLong I completely agree -- except that in my experience, managers like that are promoted and have extremely long, lucrative careers. They are rarely ferreted out. – ely Jan 27 '14 at 16:03
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If you think they will not give you what you want, then you should just ask them to extend your contract and start looking for a job elsewhere : why? for the following reasons:

1: your future employer will ask you why do you wanna switch jobs "saying I am a contractor and looking for a full time will save you a lot in your next interview."

2: if you go for what they wanna give you (40%) less, then you won't be happy and it makes a big difference to you but not to the company.

3: There are a lot of jobs for developers with hands on experience. So it's their loss and it's the corporations greed after all.

2

The best approach is to set a lower limit under which you won't go with your salary (given that's the only negotiated factor), to demonstrate willingness to walk away and to do so if necessary.

This way there is no way they can push you below your limit and the only option they have, if they really need/want you for the team is to meet your price.

In the worst case you found out you're wrong and they either can't or don't want to afford you and you go ahead and find someone who does.

  • +1: Negotiate from a position of strength: Be able and willing to walk away. – Steven Jan 26 '14 at 6:08

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