Last Updated on November 20, 2020
If you’re like the majority of people, the very thought of negotiating over money makes you utterly uncomfortable.
The bargaining is something you try to get over with as early as possible. However, if you neglect even just a step of haggling, it’s possible to miss out on a golden opportunity. Disregarding crucial negotiation steps may also short-change your true worth.
A study made by a job search website revealed that seven out of ten employees think their income is not at par with their performance. Many of them feel that they do exceptional work compared to average workers.
In reality, it is very unlikely for every employee to do above average work. There is always a distribution among workers varying from the sub-par to the most exceptional.
Pay carries a significant effect on your work performance and job satisfaction. Your income is a vital part of an incentive inducement program. You build certain presumptions, and when you feel your payment satisfies your worth, you’re gratified in that regard.
There are other aspects that play to your job satisfaction and overall performance. These include interoffice communication, day-to-day operations, and general feedback from superiors and clients. However, payment is the key motivator.
Be a Skilled Negotiator
Asking for a salary increase is not something you should be ashamed of, especially if you know you deserve it. To make sure you don’t ruin the opportunity or make the awkward situation more uncomfortable, practice your skills in negotiating.
Here’s how to do it.
1. Focus on the person, and not on the position.
This is one of the key factors to achieve a favorable outcome through negotiation. When you speak to your superior about a possible pay raise, focus on his underlying interests.
Find a common ground with him and start from there. Avoid magnifying his position as your superior, because then egos will come to play. And if there’s too much pride, nothing good will happen. Remember, the other party is a colleague, an associate. He is not an enemy.
2. Bring several factors into the negotiation.
While money is a key factor in the whole bargaining process, it’s not the only one. If you make it all about money, then the process only has a single measure of success. Several factors should be discussed.
These include communication preferences, deadlines, output methods, daily operations, and a list of other dynamics that affect your overall performance. The more factors you use to negotiate, the bigger chance you and the other party will feel like winners.
3. Practice your negotiation skills with someone you trust.
Practice makes everything smoother and easier. Think back to the time when you first rode a bicycle. It was like touch-and-go at every bump, at every turn. But now, you can just ride your bike around with barely any stress. What made the difference? Practice.
When you practice your negotiation skills all the time, you efficiently turn a rather difficult situation into a routine.
Ask a friend who is sharp and proficient in haggling to help you practice your own skills. Enact all the possible negotiation scenarios to help you prep for proper answers and rebuttals.
Ask him to be brutally honest and poke your proposal at each turn. This shows you how to negotiate even when the other party is rude or a hard-hitter.
4. Avoid giving the first number.
It’s a tested and recognized wisdom that naming the first number is a bad form of negotiation. Simply because, most of the time, the other party has a lot more inside detail than you do.
If you’re asked to name a price, phrase your answer like this: “Between the two of us, you’re the authority and the one in a position to know my value to the company.”
5. Note the first offer.
Naming the first number in a negotiation is called anchoring. This has a serious effect on the rest of the mediation.
The first offer is the base foundation of the whole conversation. This is one the reasons it’s smart to wait for the other party to name the first number. If you offered a less favorable rate, it can anchor the negotiation to your disadvantage.
When you negotiate, especially for a salary increase, make sure that you’ve thought about and planned for the situation. Be assertive when dealing with your boss. Don’t let your emotions get the best of you, especially if it doesn’t go your way.
Get Paid for Your Worth
Are there ways to tell if your salary is not at the point it should be? Yes, there are. Here are some of them:
1. Through Public Data
A good way to figure out how much you need to be paid is through the Bureau of Labor Statistics (BLS) and websites like Payscale. These sites can determine the average wage for workers in your position and industry. BLS covers countrywide, statewide, and local data. You may also view incomes within selected sectors and evaluate salary data by the hour.
Alternatively, Payscale offers nationwide and local pay information. In addition, you can learn about how much workers get paid in your position at different experience levels, skill sets and education levels. You can also have a look at the average overtime compensation for your position. Payscale also provides information about bonuses, commission rates, and profit sharing.
For example, according to a BLS statistic, being a cashier is the second most common work in the US. Using BLS data, you’ll learn that the average wage of a cashier is $9.82 per hour. Through Payscale, you can establish that the average salary of a cashier is between $7.27 and $10.68 per hour.
The average pay is $8 per hour. Cashiers with more experience earn higher, typically between $7.51 and $15.89 every hour. Cashiers working in New York City earn roughly $1 more than the average salary of cashiers nationwide. If you’re a cashier, you can figure out if what you’re being paid is comparable to the others.
2. Through New Employees
The pay your company gives new employees is often an excellent salary indicator. To lure the top talent, most companies promote a position’s salary within a job posting. Browsing the website of your company plus some of the popular job search sites may deliver a posting for a position like yours.
If you discover your company is promoting a starting salary more than your pay, this may suggest you’re being undervalued or underpaid. The operative word here is “may.”
Remember, a few years can create a significant difference within the employment market and the time you were hired. Also, your company could have demanded a unique skill set in exchange of a higher salary. In both the engineering and technology industries, this transpires frequently.
If you learn your pay is considerably less than that of a new worker, ask your employer for a meeting and inquire what you can do to get a salary increase.
Do not use any rationalizations related to fairness when the meeting takes place. Instead, focus on improving your value to the company by participating in new projects and acquiring accreditations by developing new skills.
3. Through Colleagues
An alternate way to determine if you’re being properly compensated is to compare your salary with that of your colleagues with the same position as yours. But keep this in mind: it’s a bad practice to ask your co-workers about their salary.
Most companies have salary clauses that prevent employees to talk about their wages. However, if you’re already aware of the information – such as when a colleague voluntarily provides the info – you can use that for your personal evaluation.
If you’re privy about your colleague’s salary, remember this information is still a private matter. Do a personal analysis to compare payments – do not talk about it in a group discussion. Also, remember that other factors, like education level and skill set, differ for each employee.
If a colleague with a similar position is earning twice your pay, start worrying. Otherwise, minor differences can likely be due to normal, justifiable distinctions.
Negotiating as an Entrepreneur
It’s not a secret that in any industry, the job market is often ruthless and chaotic. You’re competing with a lot of people who may be more skilled than you. You have to wait for days before knowing if you’re hired or not. When you finally get the job, you have to play the game of company politics, or maybe deal with your difficult boss.
If you don’t want to be a part of the crazy corporate world, you can start your own business. Become an entrepreneur and directly negotiate your rates with your clients.
Quit Underrating Yourself
As your skills and expertise as an entrepreneur grow, among the best strategies to boost your revenue is to increase your rates. Since you’ve tremendously improved on what you do, you can provide more value to your work for the same amount of effort and within the same timeframe. This alone is a good enough reason to have your rate increased accordingly.
However, this is easier in theory. It’s not due to your clients disapproving of a potentially higher rate, but because YOU simply won’t demand it. Many businesspeople are accustomed to valuing themselves at a certain level. When you consider asking for more, doubt and hesitation flood in.
“What if they no longer want to do business with me?”
“What if they reject the new rate?”
“What if they’re disappointed?”
“What if I can’t give them their money’s worth?”
All too often, you allow these doubts to rule, which underquotes your value. And so regardless that you’re providing top-notch service, you’re still losing loads of possible revenue since you’re practically under compensated.
Ask the Right Questions
When you think about increasing your rate, there are two questions that typically top the list:
“What are my customers willing to pay?”
“What is the average rate of my competitors?”
While it’s accurate to say these questions come into play once your client considers your offer, you can’t just depend on them when you’re planning your new fee. If you do, the answers will minimize your revenue.
They will also keep you from discovering and exhibiting your own value. Also, the answers put imaginary boundaries on your customer’s buying power, when it’s likely those limitations only exist in your head.
Instead of focusing on these thoughts, ask yourself these questions:
“How much money will make this work worth my time?”
“How much time will my work save my client?”
“How much money will I make for them?”
“How much will their business, lifestyle, or mindset improve because of my work?”
“How much pleased will they be once I’ve completed my work?”
When you deliberate the answers to these questions, it can be uncomfortable initially. The awkwardness results from feeling like you’re being unfair to your clients or being fearful that they’ll walk away. However, these are the questions you need to answer truthfully.
Remember, it’s not just about your time and effort to do an exceptional job. It’s also about the benefits and advantages that your work gives to your customers.
Raise Your Value
What if you feel like the value you’re offering is less than the rate you want to charge? Still, don’t drop your asking price. As an alternative, increase your value.
To do this, you set up a Skype meeting with her for the rate of $80 (which is your typical asking price for this kind of work). But just asking her to tell you stories doesn’t feel like it’s enough. You want to give her real value that satisfies the payment she’ll give. Instead of dropping your rate, offer her something more.
You can teach her how to tell a story in a way that attracts the attention of possible clients. It’s an additional skill that she can use in the future. By raising the value of your rate, you can justify the rate with no guilt.
Whether you’re an employee or an entrepreneur, money plays a huge part in your work. Have an honest assessment of yourself – your skills, talent, and work performance. When you feel that an increase is necessary, don’t hesitate to take this next step.