Burn Rate

Negotiation: A Quick Primer

I love to negotiate. Some people don’t. I guess they see it as nervewracking or even rude. I find it fun. When else can you make $5,000 simply by taking a few meetings and making a few points?

The core principles of negotiating are the same whether you’re haggling over a scarf in a Hangzhou market or deciding on pay for your new grad job. Let’s list them:

  • The number you give will serve as a corresponding maximum/minimum.

If you say 100 RMB for the scarf, that will automatically become the lowest possible price you can demand. You can’t go from there and ask for the scarf to be 80 RMB. The merchant has seen your hand. Likewise if you say your ideal salary is $120,000, you are unlikely to go up from there. Your recruiter has seen your hand.

With salary negotiation, have the recruiter give a number. Avoid at all costs giving your current salary or any real quote.

  • Always ask for more than you want.

Once the initial numbers are on the table, you need to respond. Your response needs to be a lot more than you actually want.

If you want to pay 100 RMB for a scarf, ask for 50 RMB. If you want a $120,000 salary, ask for $150,000. This is usually where people get nervous. These numbers seem unreasonable. These numbers are unreasonable. But they’re not the end numbers. They’re just exaggerated claims so that when everybody settles on a final number, it evens out.

In haggling the numbers the merchant offers are usually ridiculous as well. You should give an initial price that is 30-50 percent of their price. Not 30-50 percent off, but 30-50 percent of the original price. If they quote you 200 RMB, ask for 80 RMB. Heck, 50 RMB might not be bad.

  • This is all a ritual. Play the game.

In haggling there is a very specific ritual to the process. They give a price, you give a price, you offer different prices, they claim that they can’t afford to sell at this price, that their families will go hungry1, yadda yadda. Eventually you walk away and they run after you and give the true final price.

Salary negotiation is also a ritual. Unfortunately people don’t know it’s a ritual, so when the recruiter starts going through the motions, they get freaked out and worried that they’ll lose the offer or that the reccruiter is offended.

In the salary negotiation ritual the recruiter gives a price; you pause and say that you’ll need to consult with your family; the recruiter will make some excuse on why you need to respond quickly; you politely decline. If they insist, simply say that you need to talk the offer over with your family.

Next meeting, you create some excuse as to why you’re reticent to accept the offer. Rent’s really high, you have another offer, you have a unique set of skills, etc. You can highlight what you bring to the company. They’ll likely respond with more money or you’ll have to come up with a number.

If they provide a second offer, you can decide if it’s worth it. Compare the offer to others on levels.fyi. Try to be above the average offer on there, as old offers make the average lower than current offers.

If you provide an offer, try to provide one that is slightly unreasonable. The worst case scenario is that they accept it immediately. That likely means you could have asked for more. If they balk at it, then you’re probably in the ballpark.

  • Your recruiter doesn’t care

I attended a great talk2 on salary negotiations at Brooklyn JS. One excellent point the speaker, Matthew, made was that the recruiter is likely way less invested in this than you. They’re not negotiating their money. To some extent they’re rooting for you. Recruiting a person already costs in the tens of thousands. They’re not going to blink at a few thousand more.

Remember, this is their day job. A significant portion of their job is to negotiate. A recruiter getting offended at negotiation is like a cook getting annoyed at chopping onions.

  • Any outrage is therefore either fake or unprofessional

If your recruiter acts outraged or betrayed then they’re either trying to guilt you or they’re not a very good recruiter.

If they’re guilting you, lose any compassion for them. They can be your friend after negotiations. They’re trying to win a game and you need to respond accordingly. You don’t let your opponent win in a game of tennis because they’re your friend.

Of course you should still be polite and nice. Don’t play dirty.

If they’re truly outraged, then you’re dealing with a bad recruiter. I don’t have great advice here, but likely a bad recruiter is a sign of a bad company. If the company only hires people who they can bully and guilt, then that’s a terrible sign.

  • Salary isn’t the only factor

A high salary is always nice, but a proper compensation package will include several parts. If salary is a no-go, maybe you could ask for a signing bonus? You could add to your vacation time or negotiate paternity leave.

Stock is often where they’ll budge. Giving away stock is in many ways cheaper for the company and incentivizes you to stay longer. However, beware of the golden handcuffs. If you realize the job isn’t a good fit, this can mean either forgoing the stock part of your compensation or being stuck at the company for a few years.

  • Get another offer

Another offer is a great way to light a fire under your recruiter. A higher offer is even better but again, salary is not necessarily the most important factor. You could love the other company’s culture, the technical fit, the free bananas, whatever. As long as you can make the case to the company that the other offer is really attractive, you have a bargaining chip.

This should be higher, but I couldn’t figure out a better place to put it. Seriously, another offer is a great way to show you mean business.

  • But another offer isn’t necessary to negotiate

That said, another offer isn’t the only way to negotiate. You could go back to school. You could stay at your current job. You don’t even have to offer an alternative. Hiring is such a pain that recruiters will give you more money just to avoid the possibility of recruiting another person.

  • Make the call

After a couple back and forths, you should decide whether to accept the offer or not. While the point of negotiation is to optimize your compensation, you shouldn’t let that take over your actual decision. Sometimes in the process of negotiating, I convince myself that the offer is totally unreasonable and that I am entitled to a higher comp. That can be a good mental technique for staying firm while negotiating, but it’s not a healthy mindset long term. You’re still likely making far more than the average college grad.

I’ve accepted a lower offer before because I knew that the company would provide a better tech fit and really cool opportunities. Sure, sometimes I wonder about the money, but the enjoyment and learning I’ve gotten from my work has far outweighed the money.

I won’t say that money doesn’t matter. It does. But it’s only one aspect in a much larger, much more nuanced discussion of how you plan on spending 40 hours a week.

  1. This may seem callous but when you see it done multiple times, you start getting skeptical. 

  2. Not the exact same talk but the Brooklyn JS one isn’t on YouTube 

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