How would you negotiate a PM salary?

Backstory: I joined my current software dev company (20-man now 16-ish) about 10 months ago as a ‘trainee’ with no CS background. After 3 months of bouncing between legal/marketing/research, I was moved to Product Development, and have stayed there since.

Apparently, I’ve been doing a decent job and was ‘promoted’ to Product Manager in December (although I was the first real Product hire) and been asked to fill the Project Manager role on top of the PM role in April, which I’ve been training for with the departing Project Manager for the past 2 months.

I’m not quite sure how to explain the value I bring without sounding braggy, but basically all functional requirements are written from scratch by me, been the PO on certain projects, and devs/design looks up to me for day-to-day direction, and owners for strategic decisions. I feel like I have senior-level responsibilities but with trainee pay, think 1.5x minimum wage.

So as fellow Product Managers, how would you go about that? Considering that you’d also be expected to be heavily involved in getting things done as a Project Manager/ Scrum Master.

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I got my start in product working in a small startup, maybe I can try and provide some perspective.

Given your background, lack of experience as a PdM or PM, and the size of the company you’re at, you’ve really been given an opportunity to learn a few roles with valuable skillsets.

I think that you’ll have a hard time moving to a PdM or PM role at another company right now (will be much less of a problem in 6-12 months of you performing in the role you’ve been given now).

If that’s the case, you’re probably not in much of a position to negotiate your wage much higher. At startups, more than anywhere else, your price is determined by what people are willing to pay you. However, you have been handed a tremendous value to build your skill-set, resume, and jump-start your PM career.

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Excellent advice and I wanted to add: your rate is the highest someone in the market is willing to pay you. If you think you can get more elsewhere, find a competing offer.

Do you want to be in product long term? If so, then as @CathrynCui mentioned this is an excellent opportunity to learn, show value, and build your resume. Build up your skill set enough to grow your market value above your current pay (i.e., the ability to take your skills to another company).

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In terms of opportunity and where I’ll be in 6-12 months, I completely agree. Career-wise, I’m confident I’m on the right path.

My primary concern is that I do not have much negotiating power, because (1) I’m based in a very small country where there are only a handful of tech companies/startups, and (2) the company I’m at is the largest and the best at mobile app development.

Also, I guess on a personal level, it’d be nice if the ‘good jobs’ were being matched with some sort of ‘material’ compensation, as a token of genuineness (if that makes sense). And I feel like because of this, (a) I’m not doing as much as I could to help the company thrive, which is slowing down my growth, since it’s harder to care, and (b) I’m not receiving more responsibilities, which I’m looking for, since they feel like they are getting enough bang for their buck.

I went about the ‘raise’ issue in January and requested clear KPIs to keep my salary prospect’s objective, and to gauge how much the bosses would take advantage of that lack of competition. In return, I was given some broad goals like ‘replace the PM’ and ‘implement agile methodologies’, nothing quantitative, and was told to be patient.

In terms of the ‘money’, I don’t need it right now. So, the plan (due to the covid stuff), might just be the bite the bullet and just leech as much value as I can from this opportunity.

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Wait… You’re getting paid 1.5x minimum wage? Even if that’s $22.50/hr where you live, that’s WAY underpaid for any kind of PM role.

As the others have stated, check out LinkedIn and Glassdoor to see what the salary range is for PMs with your level of experience in your area.

If you feel like you’re in the top tier and can back it up, then I’d start with asking for the numbers at the top of the salary range.

Keep in mind, with the economic difficulties the world is currently facing, this might not be best time for you to request a salary increase.

In addition, don’t worry about “sounding braggy”. That’s how it’s supposed to be. Don’t come across as overly braggy, but state facts, numbers, etc. and explain why you’re so important to the team.

A lot of what I said depends on your education and prior experience, so keep that in mind. Try to look at your skills and experience objectively.

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Few things you should know as well:

  1. I’m from a very small country with few tech companies; so in terms of salary range for Product Manager and Project Manager, it’s practically flying in blind. Also, little competition = little bargaining power for me. I was even the first Product hire for the company I’m in, which is basically the largest around.

  2. In terms of education/prior experience I agree that on paper I’m not great. But from the work I’m doing, and the feedback that I’m getting, it seems that I’m doing a fantastic job, or people have their expectations very low (due to lack of previous exposure to some structure). I’d prefer getting evaluated on the value that I bring, rather than the highest number the next competitor is ready to pay for me, but then again, I’m probably being naive.

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There’s two ways to show your value:

  • Show how much the market values you
  • Show how much value you bring to the company

If you must go the route of the second bullet, you have to define either (1) how much revenue you’ve created (easy for sales, hard for Product), or (2) how much costs you’ve cut. If you can go to your boss and say ‘features I’ve designed have resulted in the company doubling revenue and halving costs, I’d like you to double my salary.’

Even if you go this route, you’ve explained what your value is, but not why you should be given a raise. Your employer can come back and say, ‘Yes @Mario, you’ve have done very well, but we are paying you the same rate that everyone else at your level/position earns, so we think you’re correctly compensated.’

This is why market data points are so important.

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@NathanEndicott, the issue is that it is hard to quantify my value with respect to revenue. I was actually thinking of the cost cutting approach, e.g.

“You made the remark that since I joined, projects have been moving noticeably faster. Devs were attributing that to clearer structure, clear PRDs. If I’m being conservative, I would say the team is at least 15-20% more productive.

If we translate that to the HR costs, which I actually know, then my direct contribution should be 15% of that. If I’m asking for only a third of that, my contribution justifies my salary being increased by 300%”

I’m using real numbers that I just roughly calculated. What do you think?

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I think that’s a good approach, but you need to be very specific. Estimations are not good here; especially when you (should) have data in JIRA. Here’s an example (I made up the numbers):

I pulled the numbers - From April 2019 through October 2019, we had 10 developers delivering on average 2 user stories per 2-week sprint and reworking 1 of every 10 user stories. In the 6 months since then, we’ve had the same developers delivering on average 2.5 user stories per 2-week sprint and reworking 1 of every 20 user stories. My development team believes this is the result of better understand our user needs, resulting in clearer PRDs.

If developers make on average $25/hour, working 40 hours weeks, you can run the numbers and see that were paying roughly $111 for each story from April 2019 through October 2019. In the last 6 months, we have been paying roughly $75/user story. That equates to roughly a 32.5% decrease in costs.

I think I’ve been doing a great job, and I’d like my salary to reflect the savings that I’ve generated. Can you give me a 30% raise?

Key takeaways here:

  • You must be extremely specific. I’ve had these conversations before, and one of the reasons it fails is because I haven’t been able to quantify my value. The minute you make assumption, your manager may question it.
  • Even if your manager agrees with it, s/he may have to justify it to someone else in the organization (may have to ask HR for addition budget, or reallocate existing budget, etc.). It’s possible that this person may not buy the explanation.
  • Be prepared to have someone try to poke holes in this. “Well, the user stories from 6 months ago were less complicated than the ones you’ve worked on recently, so it makes sense that they’d take less time” Or “how do you know the developers aren’t improving too? Maybe that raise should be split 11 ways between your team?” - Be sure to have a couple friends play devil’s advocate to poke holes in your explanation, so you have responses ready.

I know this isn’t an option for you, but I’ll stress it once again in case someone else reads this in the future… it’s a lot easier to show your value by using the market as an indicator. It’s a lot easier for your manager to choose between a 30% raise or losing you than it is to decide between a 30% raise or just not giving you a raise.

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I would forget about what you’ve already achieved. I would focus 90% of the conversation on what you’re going to achieve, how much you will save the company in the next 6-12 months, and how much you will improve the team’s productivity. The past is done. Your managers don’t care that you think you should be paid more for already-done work. They care about what will be delivered next, and next, and next (and what that will mean for their slice of the pie, if I’m being cynical).

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Can you give some insight about the geography you’re in?

Glassdoor and Levels.fyi are decent resources to benchmark your salary. But once we know your rough location, we’ll be able to give better advice here.

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I’d deliver solidly for a quarter. Have the results to back you up. And then ask for the raise.

Basically, your worth is defined by your market value at lower levels - how much would you make if you walked right now? I don’t think you’ll get a PM job anywhere else easily.

If you do solid work for a while and then leave, you’ll make more money. So, you are in a much better position to negotiate then.

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Easiest thing is to get another offer for a PM role, and ask your current employer to match it.

At the end of the day, the market dictates your value. Use that to your advantage.

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@BethanyGrey, cannot disagree more. If you get another offer, just take it. Using it to leverage a raise is not good. IMHO.

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As others have said, it’s great that you’re getting this responsibility and seeing some success with it. Keep it up and this will turn into big bucks in the 12-36 month horizon.

However, you’re a trainee-level hire, less than 1 year in, at a small company with a shrinking headcount. Is that 20% attrition (!) because of money problems? My rough guess is that asking for more money (regardless of how well you’re doing) is unlikely to pan out in the short term.

Say you found yourself in a salary negotiation at your current firm anyway.

What I would say is “I have taken on the full responsibility of a product manager including PO, strategic, and roadmap responsibilities. I am still junior, admittedly, but I am getting good feedback and I feel that this role is a great fit for me. A junior PM salary is normally around $XXX in this area. I think it would be fair if I could be compensated in that range.”

Be willing to take no for an answer if it does happen.

Don’t push for more money until you have at least one significant and acknowledged (by the person deciding on your salary) win under your belt. Taking on responsibility is great, but results are what justify your pay, ESPECIALLY at a small shop.

The simplest way to get more money is to stick it out for another 6-12 months and get some good quantiative results under your belt. Put that all on your resume, brush up on PM stuff in general, and start applying for high 5, low 6-figure jobs (if you are in a high COL area, anyway).