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I applied for a bunch of software positions and when they asked me for what I was looking for in a salary range, I went for basically undercutting their average salaries I saw online by about $30k. Did I do the right thing?

I'm okay with making significantly less than the median if it means I can beat other applicants that might have asked for more. I live by myself, I have relatively low financial obligations, etc., so money isn't a big deal since I can pretty much live on minimum wage already.

Does this signal something bad to the company I interviewed with? Is offering a lower salary looked down upon by them?

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    What country are you in? – jn1kk Apr 28 '15 at 15:19
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    What exactly is the average salary? If the average salary is 40K and you are offering to work for 10K, you are probably an idiot. If the average is 150K and you offer to work for 120K, that's totally different. – nvoigt Apr 28 '15 at 15:22
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    @Blam I think the question was whether giving a low requirement changes your chances of even getting an offer in the first place. The general answers seem to think no, it does not help. And it may hurt your chances. I suppose it's kind of like buying a house. If I found a really, really cheap property that seemed to good to be true, I don't know but as a buyer I would still have a suspicion that there's something wrong with it. It's a major investment, so you have to make the best decision, not the cheapest one. – Brandin Apr 28 '15 at 15:34
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    @Brandin And it was a comment not an answer. I contend "between $80K and $110K" does not come off as desperate as "$80K" and has the same net effect. – paparazzo Apr 28 '15 at 17:12
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    Besides startups and small companies, no company is going to need to pinch pennies on an employee's compensation. So they don't care what you ask for as long as it's not grossly high. – 2rs2ts Apr 28 '15 at 22:00

14 Answers 14

163

Asking for that much less says:

  • "I'm desperate PLEASE GIVE ME A JOB"
  • "I have no idea what salary these roles are"

Neither reflect well.

The former is pretty obvious why its bad. The latter says, "I am applying for a position I'm not qualified for."

Hiring managers have a range they can offer applicants. Let's say, $60k-80k. They want the best candidate they get. Salary is a secondary issue, generally, if people are within the range. Given two candidates that are otherwise equal? Sure, lower salary might matter. But if you are the better candidate generally a manager has minimal incentive to not hire you and instead prefer a lower paid, but less desirable, candidate.

Making a mistake hiring is far more expensive than paying a bit (or even a lot) more for a better candidate.

It's also important to consider ratios. If the amount less you put is 5% less it will be much less negative than 50% less.

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    Good coders are hard enough to find without requiring them to know about the current job market as well. – user8365 Apr 28 '15 at 17:55
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    @JeffO good coders are assumed to be part of the current job market. Asking for a salary outside of established norms exposes you as not part of the current job market... and possibly signal that you're not in fact a "good coder"... but just want to be one. – Digital Chris Apr 28 '15 at 20:41
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    @DigitalChris: At least in Finland, the salaries for developers vary a lot between two companies. It's not uncommon that one company pays even 50 % (yes, fifty) less than another, for the same job with the same experience in the same city/region. Because the market is saturated with unemployed developers, they can "afford" to lowball the salaries, since there is always someone willing to accept a low salary. – Juha Untinen Apr 28 '15 at 21:12
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    Another aspect is that if they bring on an employee at significantly less than what they can get elsewhere - the employer is going to wonder how long it will be until they jump ship. It's hard to say no to a new job offer that pays 20-50% more. – Rob P. Apr 29 '15 at 11:53
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    @JeffO Good coders are not in demand any more than good hammer users. Good problem solvers are in demand, and good problem solvers don't ignore vital statistics to solving problems that they can easily find using the exact same skills (google-fu) they use multiple times a day in their job (programming). – corsiKa Apr 29 '15 at 14:30
87

Generally, yes, this signals something bad and lowers your chances of being hired rather than increasing them. It suggests that you don't truly understand, or qualify for, the job. Especially very early in the process when they know nothing about you, this is the easiest and safest conclusion to draw. The sooner you do it the more dangerous it is.

If you get through the whole interview process and someone asks you, fairly late on, what you want to make and you say "I know that I'm worth about $100,000 a year but to be honest I really want to work here, so if for some reason you only have $70,000 to offer me, I'll take it" that still would probably not be seen as a positive. There's a chance it might, but it's more likely to be seen as being desperate or in some way unhirable.

Sure, you have low expenses right now. Nobody cares. They won't care later when you have high expenses. Ask for what you're worth and save up money now while your expenses are low. You can use that money later to put a downpayment on a house, or take time off while your children are small, or retire a decade or two before the rest of us. Trying to use your low expenses to make it more likely to be hired is simply not going to work.

What I want is to hire someone who will do what I need. Saving a little money on that person is good, but hiring the wrong person is very very bad. If two candidates are the same I might take the cheaper person, but if they are not the same I will take the better one almost all the time. If the better one wants more than my budget, then perhaps I will reject them, but if the better one is in budget the fact someone else is under budget won't matter to me. To offset that, when I try to imagine why you are willing to work for so much less, I am far more likely to believe that it's because you have no clue what the job really entails, or are desperate for a job and for some reason nobody else will hire you. That minor suspicion is probably all it takes for me to choose someone else.

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    If you truly don't need the extra amount, you could also donate to a charity of your choice. Find a cause that you find personally fulfilling and support it with a monthly contribution that you find reasonable. – Brandin Apr 28 '15 at 15:29
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    Absolutely this answer in every way. Plus the comment about the charity. There's always something productive you can do with that extra money, so at least ask for the minimum in your range, otherwise you do indeed hurt your chances of getting hired. Even if they're for some reason excited to save a few dollars on you (30k is nothing to a company), in their eyes it increases the likelihood you will jump ship for a higher salary in the near future. – thanby Apr 30 '15 at 12:17
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    Never sell yourself short is some of the best advice I've ever been given. If you don't need the money you can see it gets to those who do need it. Donate to troubled schools, charities, etc. I know if you go to a troubled school and drop 20-30K on them specifically for improving the school's facilities and equipment you'll be making a world of a difference. Plus if you plan to live in that area for any length of time you're investing in making sure the people who will handle your community in the future are better prepared to do so. – RualStorge Apr 30 '15 at 18:14
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To add to the other answers (related to being more or less hireable now), there's a future reason not to do it. You may have low expenses now. In two, three, five years time, when you find you have rather higher overheads, what do you do? Do you really think

"Hey boss, you remember I accepted well under the median salary when I was hired all that time ago? Well, that no longer suits me. How's about a $30k raise?"

will go down well? If you pitch low, even if it works you will probably stay low for your time at this company.

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    Agreed. This plus you're now do the job for far less compensation than it's worth. Your "raise" is going to be based on the starting salary. Can't bend the curve later. Only time I see this potentially being beneficial is if you don't have a matching skill set or you're in a position to potentially learn from the job. – Dave Kanter Apr 28 '15 at 16:38
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    It can also mean you will ask for and get less in subsequent jobs. If I make 60K and want a big raise 80K might sound territfic. But if I make 78K i might not be will ing to move for less than 95K. This can impact your entire career earnings and the amount you havea available in retirement funds when it is time to retire. – HLGEM Apr 28 '15 at 17:09
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    @HLGEM - That happened to me - I was severely underpaid for the first 8 years of my career, because I took an underpaid job first. Then a company offered me an almost 50% raise to work for them, and now I'm back in the middle. I really lucked out. – Bobson Apr 29 '15 at 16:04
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You are missing a couple of rather important points with your current line of reasoning.

First - Taking a lower salary during your career doesn't just effect your earnings while at that job. A low salary will likely effect every future job. Studies have shown that a 5k difference in an early salary will potentially cost you 600k over the course of a 40 year career. You're single and have a low cost of living right now - but that doesn't mean this will continue for the rest of your career. Assuming that the 5k to 600k effect remains stable as you increase/decrease the starting salary (which is a leap I'll admit), you're potentially looking at a difference of 3.6 million.

Second - I don't see you stating where this job is or whether you would have to relocate. 100k in Austin Texas is very different then 100k in the Bay Area. One is a decent wage, the other requires multiple room-mates in order to survive. That you are thinking this will improve your changes seems to suggest that you haven't considered that the salaries being offered are reflective of the cost of living in the area in which they exist. You can afford your current lifestyle in your current area on 30k less a year. But can you afford to survive in the area of the job on that amount?

Third - You seem to think that a reputable company will be excited to hire someone with a lower salary. Sure there's always some number crunching involved but there's actually a couple of problems with that. For starters you having a lower salary will lower their metrics around average salary for software developers which can make it harder for them to compete for talent. Additionally if you come into a position at X under market rate and in, say, two years move on (as you should early in your career), now they have a job whose budgeted for X under market rate. Talent won't be interested in that position until the rate has been adjusted. Companies are also aware, rightfully so, that if you come in under market rate you're less likely to be satisfied at that company and your job. You're more likely to move on faster and, as a personal anecdote, you're more likely to bring down the morale of your peers. No one wants to know the lowest paid dev in the company works on their team.

Finally, as other answers have pointed out - companies want to hire the best talent they can. 30k sounds like a lot to people because, well, it is. But for a profitable company 30k should be a drop in the bucket compared to the value you will bring to the table. As someone involved in the hiring process I would much rather bring in talent then save money. Sure there's a limit - that's what the salary range is for. If you're outside that range then I, and others in the hiring process, will assume it's because you don't fit with what is being hired for.

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    "As someone involved in the hiring process I would much rather bring in talent then save money." Yes. The value of a good employee's work may be multiple times that of a bad employee's. The bad employee may be a net loss. – Nathan Long Apr 28 '15 at 20:54
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    "No one wants to know the lowest paid dev in the company works on their team." <- I doubt anyone cares. I've worked with some of the highest people paid in the bank, and they're often crap. And the juniors can be more enthusiastic and less know-it-all. – monkjack Apr 29 '15 at 20:39
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    You're mentioning studies not linked in your answer. Would you mind including those when possible? – Mast Apr 30 '15 at 7:51
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Does this signal something bad to the company I interviewed with?

Probably. It likely signals that you aren't a good fit for the position being filled.

When I post a new position, my internal recruiters are given a salary range for that position, along with a job description, job requirements, etc.

They attempt to find candidates who might fill that position, so that I can interview and hopefully hire them.

In all the years I have been a hiring manager, I have never - not once - told recruiters to "find me the cheapest person possible". I'm not looking for a low-cost provider, I'm looking for an excellent employee. Excellent employees are worth good money.

(Note: this does not apply to some contract positions, just for potential employees.)

Is offering a lower salary looked down upon by them?

I would never give any weight to a candidate who touted "I'm low cost" as one of their attributes.

Perhaps in other contexts, in other companies, or other locales, the conditions might favor the "least expensive". That has never been the case for me.

18

Did I do the right thing?

You're doing science -- trying something, and observing the results -- and you're asking us to tell you what the outcome of your experiment was; you're the one who knows that, not us. Did you get the job with this technique or not?

If you did not, then something didn't work; teasing out exactly which cause might be difficult.

If you really want to do science then randomly assign half the applications to the "lowball" pool and half to the "normal" pool and see if there is a difference in the number of offers you get. Write an article on your results; I'm sure people would be interested. (Not here; this is for questions.)

I'm okay with making significantly less than the median if it means I can beat other applicants that might have asked for more.

The hypothesis underlying your strategy is, I take it, that the employer will reason as follows:

  • Every worker is going to increase revenues / cut costs to the tune of $200K a year.

  • Average Worker X costs $100K a year

  • Cheap Worker Y costs $70K a year

Worker Y is the clear best choice; they will do just as good work for less money.

Employers do not reason this way. Here's how employers actually reason:

  • The difference in productivity between software workers is orders of magnitude.

  • We can typically expect that a software worker will drive revenues or decrease costs to the tune of about four times their salary; truly great workers drive profits much more than four times, and truly terrible workers drive profits much less.

  • Average worker X costs $100K per year and will drive $400K in revenues, for a win of $300K.

  • Worker Y costs $70K a year, and is probably way, way below average. They probably will not even drive $280K a year in revenue, so our net profit will be probably less than $200K if we hire this worker. Worse, they will probably be making messes that other workers have to clean up, decreasing everyone else's productivity; the net win is likely to be quite small indeed.

  • Rock star worker Z costs $200K a year and will give us new revenues to the tune of $1M, so our profits minus their fee will be about $800K.

Worker Z is the clear winner and worker Y is the clear loser.

Does this signal something bad to the company I interviewed with?

Yep.

Is offering a lower salary looked down upon by them?

Yep.

  • In my case, I have fairly excellent reviews and rather good places of employment previous. I left because I wanted a change of industry but I felt that I could just get something quicker from my list of companies if I gave a lower salary. Money was fairly irrelevant in the decision honestly. – Jreed Apr 28 '15 at 18:33
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    @JoeStrazzere: Shops would be filled with rock stars if there were rock stars available to fill the shops. The United States currently has hundreds of thousands of open IT positions that are going unfilled by average candidates, much less rock star candidates. That said, your point is well taken; many shops have hiring processes which preclude rock star hiring, and many shops have business models where no matter how many rock stars you throw at the problem, the new revenues driven will be limited. – Eric Lippert Apr 28 '15 at 18:40
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    @JoeStrazzere: Another confounding factor is that the rock stars simply do not participate in the normal "look for postings, submit an application" process. They use their industry contacts and talk to VPs or CTOs directly, or are contacted directly by recruiters. – Eric Lippert Apr 28 '15 at 18:42
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    @JoeStrazzere: To clarify this discussion somewhat: when I was at Microsoft, revenues were roughly four times developer salaries. You say that a good strategy would be to hire as many of those people as possible as early as possible, and then roll the profits back into hiring more. Microsoft has done exactly that; starting with two rocks stars, Microsoft has hired a hundred thousand more and Bill Gates is the richest man in the world. You are correct, it is an extremely sound strategy. – Eric Lippert Apr 29 '15 at 22:32
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    @JoeStrazzere: Microsoft would love to hire more rock star developers. Microsoft heavily lobbies congress to allow more to be imported; there simply are no longer enough high-quality American developers to go around Microsoft, Facebook, Google, Adobe, and so on. Now, of course doubling developer salaries does not automatically double profits; that would be silly and I did not intend to imply that. Rather, we see empirically that developers who command high salaries do so because they drive revenues at a large multiple of their salaries. I assure you this is how Microsoft reasons. – Eric Lippert Apr 29 '15 at 22:52
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One other thing to consider is that the good companies to work for are going to be the ones who rule you out for being too cheap. The companies who are thrilled to get someone at the lowest rate possible tend to be the very bad places to work group.

8

If you really want to low ball, be sure to package it well:

Boss: How much are you looking for?

You: The going rate now for (---) level programmers for this type of work is around $(---) to $(---) .
I'm just starting out, so I know I will be in the lower range as I contribute more and more value to your company.
- or -
I have three years experience so I should be in the midrange.
- or -
I have six years experience with a very similar technology so I should be somewhere in the upper range.

Basically you want to 1) Appear to be well informed on salary, 2) Give them some breathing room for negotiations later with a range instead of a hard number, 3) Have a good reason (instead of desperation) for why you are low balling, middle of the roading, or high balling.

If you low ball and they bite, they may feel embarassed during the interview and ask "We can offer $---, which is low of course... wondering how you feel about that?" And here is where the rubber meets the road. The programmers here will be a little ticked off that you went down the low ball road (and they laid out some pretty good reasons why), but this is your life, not theirs! If you do it and you have any integrity, you will have to be gracious and say something like "It's good, I've heard good things about your company --- and I believe there's value in just working here. If I do a great job for you, perhaps we can talk again about this during a performance and salary review later?"

The trick to all of this, of course, is to prevent a pointy, hard question about a number from stopping the flow during the interview. Change it up into openness, reasonableness and a willingness to keep the conversation going to a mutually satisfactory conclusion.

5

When ever possible, do not tell a perspective employer how much you want. Your job is to make them decide that they want you for the job, and then give you an offer. Often it is much more money than I was going to ask for. The next step is to ask for a little bit more. It is a lot of work for a manager to generate and get a job offer approved. They have decided to hire you, and will gladly give you more than the first offer amount to avoid having to go back and start over interviewing more people. I got 2% more than the original offer amount on my first job out of college. I simply asked for more. My class mates thought I was crazy. The worst thing the employer will do is say no, and you still have the offer for the original amount.

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    You should be careful with the details of this--if you verbally agreed to a figure, and then they came back with that as a formal offer, and then you try to up it, it can go very badly. In some cases, that means they have to go back through a huge process that they already thought was complete. And you risk that the hiring manager will be remembering that you put him in this position. Your two percent gain might come at the expense of three percent next time raises come around. – msouth Apr 29 '15 at 16:07
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Consider pricing in general. If you you have a price sensitive buyer you only need to be a few percent cheaper. You only under price significantly when you want to get people to buy up stuff they are not even shopping for. In the case of a job there is no need to under price significantly as they they are shopping. Pick a salary that is attractive but not desperate. Say the average is salary is $150K. I would come in at $130K - $150K. That totally says you will probably take an offer of $130K but it does not come off as desperate as $130K.

3

In my experience, most of the time it's HR that discusses salary, not the hiring manager (now if the company is so small it doesn't have HR, different issue). But you need to know what you are worth in terms of experience versus salary. In the beginning of my IT career I accepted basically anything to get in the door and get experience. I think there is actually one position that i over leveraged myself and asked too much given my lack of experience.

But typically recruiters (inside & outside) go into detail in your salary history (ie what did you make here, what did you make there). Therefore when you accept a low salary early on, the next position is like 'well you only accepted 50k here, so we're just going to give you 55k'. So moving up is very hard.

Also keep in mind once you get in the door, your salary is not going to move much at all in the current position. You'd have to get promoted to get a new salary range. At most expect a 2% raise every year. So when you lowball yourself it hurts alot. My previous employer i basically accepted what they were offering, which was well below market. Again to get the foot in the door. 2-3 years later I'm just a bit above that and well below market given my experience. I mentioned this to my superiors and they were like 'oh well'. So I indicated i was looking around due to this, and again they shrugged. SO I took the first good opportunity and finally 5 years later am at market price. So that's 5 years of lost wages, basically. However, I now have 5 years experience doing exactly what I wanted to do career wise.

  • Its not necessarily 2% raise a year. I started with minimum wage at one job, worked almost 4 years in that company and since I was able to prove them I am good enough (other companies constantly giving offers to work for them) I raised the wage 4.5 times. But need to be careful by proving just because other company is giving higher, you are worth. It might be that other company just overprices you and can later fire you. – Will_create_nick_later Jul 17 '16 at 18:22
2

This is a really bad idea.

Let's say they hire you despite the warning signs in the other answers.

How long will you stay knowing you're making $30k less than the other people in your group?

Also understand - if you do this on your first job, you will never catch up to where you should be.

1

There's a little bit of luck involved here depending on the personality of the owner. If it's a small company (e.g. if the interviewer is the owner of the company), it may be that they have very limited resources and hire you out of relief if you did a good enough interview.

However, don't make long term plans with a company like this. If they are penny-pinching on the salary then it shows they are willing to sacrifice quality for price. This reflects on their products, and ultimately the sustainability of their business, and I would say you'll find yourself overworked as they expect more results for less pay (quite possibly they also haven't hired enough employees). I speak from experience.

A possible exception is if they already have an experience workforce and just need someone to tackle the mundane left-over bits to do, though I imagine if that's the case then they'd have advertised for a "junior" employee and be offering fairly low anyway.

Edit

Another thing that just crossed my mind, some interviewers may be suspicious that you are trying to use them as a stepping stone - building up a bit of experience at their company for low pay before jumping onto a decently paid job somewhere else after a year or so.

  • I have an idea - to make company feel safer that you will not jump to other company after year - maybe agree that some part of salary will be paid only after you work like 2 years. And if you leave earlier, then you loose that money. – Will_create_nick_later Jul 17 '16 at 18:25
0

Regarding this matter I think that the most crucial thing is that a service has its proper price. If you ask for less money for your service that can mean from an employer point of view that you don't value your skills enough, personality wise you don't value yourself and don't have the self confidence needed for the job what is the wrong message when applying for a job. It questions if you are genuine or not as well. It's my opinion.

protected by Mister Positive Aug 6 '18 at 11:39

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