by Most people entering an interview for a new job will eventually hear the magical words: "What compensation are you seeking?"
This seemingly straightforward question can be quite difficult to answer. You don’t want to ask for too little and end up potentially selling yourself short. However, you also don’t want to ask for too much and scare off your potential employer if they have a lower budget.
In this article, we break down how to figure out what your expected compensation range might be. We will also provide tips for what to say when you need to discuss salary in an interview.
Compensation expectations meaning
By "compensation expectations", employers mean your desired salary and benefits package for the role.
So, if you are expecting a certain amount and the employer is offering less, this question is designed to find out if your needs are compatible with the company’s budget.
The expected compensation is a central element of the hiring process because each position in a company has an allocated budget. The employer doesn’t want to lead you on if they can’t meet your requirements.
Compensation refers to the total rewards that an employee receives for their work, beyond just the base salary.
Here's what each of these components means:
- Base salary. This is the fixed amount of money an employee earns on a regular basis (monthly, biweekly, etc.), regardless of performance. It is the most straightforward part of compensation.
- Bonuses. These are additional payments that are typically based on achieving certain goals or company profits. For example, an employee might receive a yearly bonus for meeting sales targets.
- Commissions. They are often used in sales roles and are payments based on the amount of business or revenue the employee generates. For example, a salesperson might earn a 5% commission on every product sold.
- Insurance. Many organizations offer health and dental plans as part of their compensation package, covering medical expenses for employees and often their families. This reduces the out-of-pocket medical costs.
- Retirement plans. In the U.S., a 401(k) allows employees to contribute part of their salary into a retirement fund, sometimes with employer matching. A pension is a company-funded plan that provides a fixed income after retirement.
- Stock options or equity. Some companies, particularly startups, offer stock options or shares of the organization as part of compensation. This allows employees to own a piece of the company, potentially benefiting from future growth.
- Paid time off. This includes paid vacation days, sick leave, and sometimes personal days. It allows employees to take time off work while still being paid.
- Flexible working arrangements. This is the ability to work from home or adjust working hours to fit personal needs. It provides greater control over work-life balance.
- Professional development. These are programs that support employees in advancing their skills and career, such as training, workshops, or tuition reimbursement for courses related to their role.
When employers ask about annual compensation expectations, they’re not just asking about how much money you want. They need to understand your broader requirements, including the non-monetary aspects that are important to you.
Answering "What compensation are you seeking?" effectively can set the tone for future negotiations. It’s essential to have a clear understanding of what you want before entering the discussion.
Create your professional Resume in 10 minutes for FREE
Build My Resume
Determining your compensation requirements
Before you can confidently answer the question of compensation expectations, you need to determine your own requirements. This process involves a combination of self-reflection, market research, and strategic planning.
Understanding your worth
The first step in calculating your compensation requirements is to assess your skills, experience, and value to the company.
- Start by asking yourself:
- How long have you been working in this field? Are you a recent graduate or an experienced professional?
- What type of training or certifications do you have that make you valuable to employers?
- Identify what makes you special. Do you have technical skills that others don’t? What leadership qualities do you bring to the table?
- Have you won any awards, increased sales, improved efficiency, reduced costs, or led any successful projects in your previous jobs?
Conduct market research
Once you have a sense of your own worth, the next step is to research the market. You should understand what other professionals in similar roles are earning.
Here are several ways to gather this information:
- Salary websites. Platforms like Glassdoor, PayScale, and LinkedIn Salary provide salary data for specific job titles, industries, and locations.
- Industry reports. Some industries release annual salary surveys that break down compensation by job function and region.
- Networking. Speak to colleagues or mentors in your field to get a sense of typical compensation for roles similar to yours.
- Job listings. Review job postings that include salary information for comparable positions.
Note that pay varies by geographic location, the size of the company, and the requirements of the job. For instance, a software engineer in San Francisco might earn much more than his counterpart in a smaller city. This is due to higher costs of living as well as a demand for talent.
Financial needs and career goals
But, beyond the market-research perspective, you need to assess what your own financial needs and career goals are. What you want your compensation to make possible for you?
- Ask yourself:
- What’s the cost of living where you’ll be working? How does the salary you’re seeking stack up against the cost of living, in terms of housing, transportation, healthcare, and other expenses?
- Do you want a job where you’ll have long-term growth through promotion, bonuses, or equity? How important is career advancement to you?
- Does the job come with flexible hours or any options for working from home? Would you trade a higher salary for greater flexibility?
- Are there other perks that you care about, such as additional vacation time, the opportunity to do professional development, or a great company culture?
How to respond to what are your compensation expectations
Once you have determined your desired compensation, you then need to figure out how to convey those needs in a job interview.
This part of the conversation can be tricky. You want to ensure that your expectations align with the employer’s budget without underselling yourself.
1. Delay the conversation
If this topic arises early in the interview process, it’s often better to delay giving a number until you have a better sense of the position.
You can say something like:
"I’d love to learn more about the responsibilities of the role and the overall benefits package before discussing specific compensation expectations."
This affords you a chance to learn more about the role and to craft an answer that takes this into account.
2. Provide expected compensation range
When the topic of salary arises, it’s best to offer a range instead of a specific figure. This gives you some wiggle room in negotiations and shows you are open to discussion. The salary range should be based upon your research, and be realistic for the position.
Here’s an example of how to phrase your response. “Based on my research and experience, I’m looking for a salary in the range of $70,000 to $80,000. I’m open to discussing this further depending on the full compensation package, including benefits and other perks.”
Giving a range shows that you’ve done your homework. It also gives the employer an opportunity to meet you halfway if they can’t afford the higher end of your compensation expectations.
3. Focus on the value you bring
When discussing compensation, it’s important to frame your expectations in terms of the value you bring to the company. Rather than simply stating a number, highlight your skills and experience to justify your request.
"With my five years of experience in project management and a proven track record of leading successful initiatives, I believe a compensation package in the range of $90,000 to $100,000 would be appropriate for the responsibilities of this role."
This makes your request feel more based on merit, and therefore more impactful to the employer.
Sample answers
Entry-level candidate
If you’re just starting your career and don’t have much professional experience, it’s important to show that you’ve done research while remaining open to learning opportunities.
Sample answer:
"As an entry-level candidate, I’m excited to begin my career and contribute to your team. Based on the research I’ve done and industry standards, I believe a salary in the range of $45,000 to $50,000 would be fair. However, I’m open to discussing the full compensation package, including benefits and opportunities for growth. I’m eager to learn and develop my skills in this position."
- Why this works?
This response shows that the candidate has done the research, but it also leaves room for negotiation. It emphasizes enthusiasm and flexibility, which are key qualities in an entry-level employee.
Mid-level professional
For professionals with a few years of experience, it’s important to communicate the value of your skills and how they translate into the job at hand.
Sample answer:
"With over four years of experience in marketing and a proven track record of increasing brand engagement and lead generation, I believe a compensation range of $60,000 to $70,000 aligns with my skills and the responsibilities of this role. I’m confident that my ability to lead successful campaigns will contribute to the continued success of your team. I’m open to discussing the full benefits package to ensure it’s a good fit for both sides."
- Why this works?
This answer links compensation expectations directly to the candidate’s experience and accomplishments, showing they’ve thoughtfully considered what they bring to the company. It also signals openness to further discussion.
Senior-level professional
For senior professionals, highlighting extensive experience and leadership qualities is essential when discussing compensation.
Sample answer:
"Given my 12 years of experience in project management, where I’ve led multiple high-budget projects to successful completion, I’m seeking a compensation package in the range of $120,000 to $130,000. This figure reflects the market rate for someone with my level of experience. I’m also interested in understanding more about the full benefits package, including performance bonuses and stock options."
- Why this works?
Senior candidates need to highlight their wealth of experience and leadership skills while demonstrating that they understand their market value. By mentioning performance bonuses and stock options, this response also signals a strategic, long-term mindset.
When you want to delay the discussion
If you feel that it’s too early in the interview process to discuss salary because you need more details about the job, you can diplomatically postpone the conversation.
Sample answer:
"Before discussing specific compensation expectations, I’d like to learn more about the role and the team I’ll be working with. I’m confident we can find a package that reflects both the responsibilities and the value I can bring to your company."
- Why this works?
This answer tactfully delays the conversation without avoiding the question about your compensation expectations. It shows that you’re focused on understanding the position fully before getting into financial specifics.
When you’re open to non-monetary benefits
In cases where a company might not meet your salary expectations, being open to negotiating non-monetary benefits can strengthen your position.
Sample answer:
"I’m seeking a salary in the range of $80,000 to $90,000, which reflects my experience and industry standards. However, I’m also very interested in discussing other aspects of the compensation package, such as opportunities for professional development, additional vacation time, and flexible working options. I believe a comprehensive package that balances salary and benefits would be ideal for both of us."
- Why this works?
This response shows flexibility and willingness to negotiate beyond base salary, positioning the candidate as pragmatic and understanding of the company’s potential budget constraints.
8. When You’re Negotiating for a Promotion
If you’re seeking a raise or promotion within your current company, emphasize your contributions and use that to justify your request for a higher salary.
Sample answer:
"Over the past three years, I’ve consistently exceeded performance goals and taken on additional responsibilities. This includes managing a larger team and leading major client projects. Given my expanded role and proven impact, I believe a salary increase to $95,000. This will be in line with current market standards for this level and would reflect my contributions. I’m also open to discussing the full benefits package, including potential bonuses."
- Why this works?
This answer emphasizes the candidate’s internal achievements, justifying their request for a raise. It ties the salary increase to specific contributions and opens up the possibility for further negotiation.
Create your professional Resume in 10 minutes for FREE
Build My ResumeConclusion
Deciding what to ask for is a delicate combination of self-assessment, research of the market, and communication.
Knowing your worth, understanding the industry standard, and being able to talk about your total compensation expectations in an interview will place you on the right track.
Ultimately, being well-prepared for this conversation can help ensure you land a position that rewards your skills and experience.
