How is base salary different from the rest of my compensation?
It is important to understand that negotiating your salary is a perfectly normal part of the employment process. There are various components of an offer—base salary, additional compensation, total compensation, benefits, and perks. Each component should be considered and valued as part of your employment offer.
What's the impact of base salary on earnings?
Your starting salary can have a significant impact on your career earnings. This is because any raises you receive will be in relation to your starting salary. Compounding returns happen in investments, but also with base-salary.
The higher the starting point in salary, the more benefit from compounding over your working life. In most cases, your base salary is more important to negotiate than other types of compensation in terms of long-term importance and value.
If in doubt, always negotiate for an increase in base salary more than anything else. Consider the compounding of earnings of the two (sample) base salaries, given a 5% increase each year, over 3 years in the below:
| Base | $47,000 | $52,000 |
|---|---|---|
| Year 1 | + $2,350.00 | + $2,600.00 |
| = $49,350.00 | = $54,600.00 | |
| Year 2 | '+ $2,482.50 | + $2,730.00 |
| = $51,832.50 | = $57,330.00 | |
| Year 3 | + $2,606.00 | + $2,866.00 |
| = $54,438.50 | = $60,196.00 |
Additional types of compensation
Beyond base-salary, there are other variations of compensation that add value and can be negotiated as part of your offer. This includes those listed in the table below:
| One-time signing | Additional vacation time |
| Relocation bonus | Flexible work schedule |
| Guaranteed first-year bonus | The ability to work from home |
| Bonus percentage(s) | Tuition reimbursement |
| Bonus structure/timeline | Professional dues |
| Stock options—ownership | Dates—acceptance or start |