How to negotiate a job offer (5 actionable tips)

If you've done the work of putting together your resume and preparing for an interview, you may be ready to accept a position the minute it’s offered. But there's one more challenge to overcome before your first day: learning how to negotiate a job offer. 

If you’re excited about the job and eager to get started, you may be tempted to take whatever an employer proposes. But negotiation is the wiser option. It ensures you get what you’re worth and allows you to tailor compensation and perks to better meet your needs.

Agreeing on salary and compensation doesn’t have to be stressful. To prepare for the conversation, you’ll want to know what you need while remembering what you have to offer. Choosing specifics to focus on makes it far easier to navigate a deal. 

With a solid understanding of both parties' priorities, you’re more likely to get what you want so that you can offer your best work. By preparing the right info and honing certain skills, you'll know how to negotiate a job offer with confidence.

The basic process to negotiate salary and benefits

Every offer negotiation is different. Benefits that are critical to you might not matter to someone else. So, how do you know if a job offer is a good one? Examine the highlights, and decide how much each factor matters to your decision. 

If you decide to negotiate, determine which points of the offer you want to improve. Often, these will be salary and total compensation, but not always. Your life circumstances will help you determine where to ask for adjustments. Remember, most aspects of a job offer are open to negotiation. To successfully negotiate a job offer, you must present the right information and keep an open mind.

1. When the job offer comes in, take a moment to assess the major points. Your offer letter will likely cover the following components:

• Salary (fixed and variable)
• Benefits
• Start date
• Workplace expectations
• Flexible work arrangements
• Manager and department information
• Roles and responsibilities

2. Once you have an idea of the major points and how they fit your needs, consider your options, such as: 

• Accepting the offer as presented
• Declining the offer of employment
• Negotiating for better terms

3. Approach your hiring manager with your counter-offer or requests for their consideration. Here are some tips for approaching a negotiation that may improve its success:

• Know your worth: Understanding the job market before negotiating can give you a big advantage. Research what other, similar employees are paying, taking added benefits into account.
• Be direct and concise in your counteroffer: Clearly outline the points of the contract you feel need improvement and your rationale, if appropriate. For instance, you can present salary info for your area and industry as part of your request. 
• Understand that the hiring manager might need time to respond: Often, approving adjustments must pass through several layers of decision-makers. 
• Negotiate for the benefit of all parties: Understand that there are limitations to what employers can approve. You may need to find ways to compromise and get closer to your goal.
• Be prepared to (politely) walk away: Sometimes, negotiations don’t pan out. If you feel the offer is weak, evaluate whether continuing your job search elsewhere is better. Thank them for the opportunity, and leave the door open in case something changes on their end.

What are the negotiable components of a job offer?

Money talks, but conversations about new jobs should cover a lot more. Beyond compensation and benefits, soft perks and time off are important parts of the total package. Each facet of the job offer is an opportunity to negotiate for assets that work for you. 

Some of the main components of the deal to consider include the following:

1. Salary and compensation

While money isn't everything, it's a big part of a job offer. You're likely motivated (at least in part) by finances. For this reason, how you approach salary negotiation is important. 

Be prepared to discuss your salary requirements with the hiring manager. Ideally, you’ve begun asking about salary ranges during the interview process. With the right preparation, negotiating an entry-level salary can be productive rather than adversarial. The initial offer is just a place to start.

There are several aspects of a financial compensation package to consider, including:

• Direct compensation: Most negotiations start with a discussion of hourly or annual pay. Remember, a solid first-year salary has long-term implications. Your starting salary can also help you negotiate a better future rate since wage increases are often calculated as a percentage of current pay. Over time, a few thousand dollars difference at the start will compound. 
• Bonuses: Beyond base salary, your compensation plan may offer a performance bonus. The company may tie bonuses to personal performance or company-wide achievements. These incentives offer you a chance to earn income based on your contributions.

Even if a bonus isn't offered, there may still be a chance to negotiate. If the salary in a job offer comes in low, countering with a signing bonus may make up the difference. Up to 40% of employers offer sign-on bonuses, so don’t be afraid to propose one. While it may be a one-time thing, it provides the chance to get in the door if the salary is lower than you prefer.

• Profit sharing: Profit sharing distributes some of the company's earnings back to you. Profit sharing is often calculated as a percentage tied to company performance metrics. While not the same as a merit-based bonus, it aligns you and your coworkers around company success.
• Equity: Some employers incentivize new hires with an equity stake in the company. While equity has no immediate impact, it can pay off if the company goes public or goes through a merger in the future. Most often, equity is granted through stock options. These can be exercised and converted to stock at any time once vested. Startups often offer equity as a way to preserve cash while rewarding early employees.

2. Benefits

Salary is the starting point for negotiation, but adding the right types of employee benefits can positively impact your life. According to the Bureau of Labor Statistics, benefits can make up as much as 30% of total compensation. Remember to negotiate for benefits, not just salary.

Each employer offers a different mix of benefits, so it’s worth spending some time understanding what might be available to you. Common employee benefit options include the following:

• Health insurance: Consider the coverage offered through employee health benefits. Be sure to calculate the monthly premium and how much of the cost your employer will pay. Look at deductible amounts and coverage limits that might increase your out-of-pocket expenses.
• Flexible spending accounts: Also called an FSA, a flexible spending account is a pre-tax contribution to an account for healthcare expenses. You can use it for medical bills, medical devices, and even consumables like contact lenses.
• Dental coverage: As with health coverage, evaluate offered dental coverage and costs. Calculate how the plan will affect your finances and how much value you might get from using the benefit.
• Vision protection: While less common than health and dental, vision insurance is a great perk. Vision protection can save you hundreds on exams, glasses, and contacts. Many plans cover corrective lenses, protective coatings, and more.
• Mental health: The focus on mental health and emotional well-being is prompting many employers to offer coverage. These plans can help you manage your mental health and prove invaluable through tough times.
• Coaching: Some employers offer access to professional career coaching as part of their benefits. This professional development asset can be a valuable perk, especially early in your career. 
• Retirement and savings: About half of companies offer some form of retirement plan. This might be a 401k, standard IRA, or Roth IRA account. Find out what your employer offers and if they offer a savings match. The good news is, 85% of employers offer at least some level of matching. Matching can add thousands of tax-free dollars to your retirement savings.
• Life and long-term disability (LTD) insurance: Preparing for the unexpected is important. Many companies offer protections like life insurance and LTD as part of benefits packages. Basic coverage may even be free to you as an employee.

3. Paid leave

Paid leave is one of the differentiators employers use to set themselves apart. Paid time off (PTO) allows you to pursue interests and find work-life balance, which can help you focus better at work. The best companies offer ample leave, sick coverage, and other forms of PTO. 

Your potential employer might offer various forms of paid time, such as:

• Vacation: Paid leave should provide enough time to rest and recharge. Negotiating vacation time is a great option if salary or other benefits fall short. Take note of so-called "unlimited" PTO plans. While they sound great, be sure the parameters for use are clearly outlined. Unlimited vacation is only a perk if it's easy to use.
• Sick time: While the Family Medical Leave Act (FMLA) guarantees leave, it can be unpaid. Paid sick time is a competitive advantage for employers seeking talent. While negotiating for sick leave isn't common, granting adequate sick leave is a sign of a strong company.
• Parental leave: Having or adopting a child is a life-changing experience. Many top companies recognize this and offer extended parental leave upon the birth or adoption of a child. Generous paid leave can have a profound impact during this important milestone.
• Caregiver leave: Some employers also recognize your need to care for extended family. This is especially true of the “sandwich” generation caring for young children and elders. See if your employer offers caregiving leave to use with loved ones or allows working parents to use sick days for dependents. It's a nice perk as part of an overall benefits package.

4. Perks

Sometimes, soft benefits can be as valuable as insurance and savings. When looking for ways to get to yes, consider asking for perks with lifestyle benefits, such as:

• Remote work: About a quarter of Americans enjoy at least some level of remote work. Just over 10% work remotely full-time. Depending on your role and industry, remote work can be a great way to balance life and work. Consider, too, that remote or hybrid remote work could cut down your commute. It can help you save money and reduce financial stress.
• Travel or educational stipends: Conferences and education are an investment in your skills. Many companies are willing to make this investment as part of your compensation. When negotiating, consider asking for a stipend to cover travel to conferences. Another option is to ask for help with continuing education and certifications. These opportunities help you improve your current skills and make you more desirable should you change jobs in the future.
• Relocation: If you must relocate to work on-site, there's no reason to assume the costs of moving alone. You may be able to negotiate the cost of moving your belongings and locating new housing. Some larger companies contract with relocation specialists to help make the transition seamless. Negotiation to cover relocation costs related to childcare and your children's education may also be possible.

What information helps you negotiate a job offer?

Knowledge is power. The more data you have on your position and job market, the better your negotiating position. When considering a role, gathering company information can help you weigh your options. It can also inform your decision to decline a job offer. Here are five pieces of information that will help you consider an incoming offer:

• Company data: Get to know the company's vital statistics. Headcount, financial data, and partnerships can all inform negotiating salary and benefits.
• Reviews: What do others think of the company? Look for reviews from former and current employees. Keep an eye out for information that might inform your negotiations.
• Desired skills: How well do your professional skills align with the job description? Niche skills, certifications, or specific job experience make you better positioned to bargain. Consider both your hard skills and soft skills during evaluation.
• Salary range: Knowing the employer’s compensation ranges can help when you're considering signing an agreement. A salary report can give you detailed information to negotiate from a position of knowledge. Your state or country may require companies to post salary band information or provide it during the interview process. Other laws may protect you from having to disclose your salary history. These pay transparency laws aim to improve pay equity and level the playing field for applicants.
• Geographic market: Location, location, location. Do some research on the cost of living and average salary for the area. Consider how the price of a certain area will impact your bottom line. Also, look into whether the employer practices pay localization. Decide whether location-agnostic wages are important for your finances.

Top skills for a smoother negotiation

Effective, fair negotiation is a science and an art. Using the right negotiation strategies can help you secure the best terms from your prospective employer. 

During your job search, brush up on the following top skills for when the job offer letter arrives:

1. Research: Good deals don't start at the negotiating table. Knowing the details of the job market can put you in a better position to negotiate. Do your due diligence and get knowledgeable data on the company, its market position, and its goals. A well-researched opportunity helps you reach mutual benefit much sooner.
2. Communication: When you talk over the details, it helps to be clear and concise. Improving your communication skills pays off for every stage of work, from interviewing for jobs to leadership. Communicate your value, express your needs, and listen to your negotiating partner. Look for opportunities to find common ground and practice give and take. Be flexible in your approach and willing to compromise as long as it aligns with your goals and values. Good communication in negotiation translates to strong communication in the workplace.
3. Problem-solving: Negotiation is a creative exercise. If you approach the deal as a partnership, both parties are more likely to meet in the middle. Be creative and flexible in proposing solutions. For instance, if they can't meet salary expectations, look for other options to get your needs met. Negotiate for more vacation time, increased stipends, or other desirable benefits. This can preserve value while providing the avenue to "yes."
4. Patience: Cooperative salary negotiation takes time, especially if the decision involves a few stakeholders. Patience is important. It demonstrates professionalism and integrity and shows your commitment to the potential role. 
5. Empathy: The best negotiators can see themselves in someone else's shoes. When you negotiate for mutual benefit rather than to "win," more is possible. By approaching negotiations with a perspective that fits the company's needs as well as your own, you’re more likely to land a great job and start on the right foot. After all, an empathetic negotiator can be an equally empathetic coworker.

Learn how to negotiate a job offer with a career coach

You may want to improve your negotiation skills as part of learning how to negotiate a job offer. These same skills will also help you ask for a raise or secure a promotion. Whatever your goal, a career coach can help you hone your skills and provide salary negotiation tips. With a qualified coach in your corner, you’ll be better equipped to advance your career and earn more money.

BetterUp features a community of certified coaches, including career coaches ready to help. Get started with a coach today.