Set a Goal in 2020 for a Big Raise
A new year is upon us, so this is the perfect time to consider what objectives you’d like to set for yourself in 2020 – both professionally and personally, and commit to them in writing. Goal setting doesn’t just help focus our energies in a specific direction, but studies show that the mere act of writing down a goal makes you 42% more likely to achieve it. So get those goals on paper, now.
One of the most common goals I hear from acquaintances in the pricing industry is “I want to make more money.” Are you earning what you’re worth right now? If you’re unsure, check out the SV Pricing Recruiting Salary Survey 2019 data to compare your earnings and get a better idea of where you stand in your market. If you see room for improvement, I recommend setting a solid goal to get a raise in 2020.
As we learned through the SV Pricing Recruiting Salary Survey results, over the last 2 years the pricing salaries have gone up by roughly 7% yearly, but it is trending to 14% in the last few months. This means that many pricing professionals who have been in an established role for some time are being under-compensated compared to those securing new jobs. Demand for pricing professionals is very high now, too. In December 2019, there were approximately 400 job openings and virtually no unemployment in the pricing industry. With all this data available, this the perfect time to reevaluate your earnings and make the request for a raise. Based on our data, a good starting point for a raise request would be 7-10% above where you feel you are in the 2019 salary survey. Do you think you should be compensated in the top 25%? Or are you at the top of your field, or have you been at your level a while and just waiting for a raise? Use the quartile information where available to help make your case. Don’t forget this is market for 2019 and you want to be fairly compensated for 2020. So with the market doing 7% annually and trending up to 14%, a number 7-10% above that is very defensible in a raise conversation. Take all that into consideration as you calculate a new raise request.
Asking for an increase needs to be handled correctly to ensure your best chance at success. There are many factors at play to consider and for which to prepare. After many years on both sides of the pricing industry, here are my best tips as you ready yourself to request a raise:
First, understand your audience and their knowledge of the pricing market.
If your manager is also a pricing professional, then you’ll be preaching to the choir since they deeply understand how to quantify the value of your job description, title, efforts, and results. They may have even already seen the salary survey results since they’re intimately acquainted with the market. If you are underpaid, the good news is that it will be easier to convince them that a raise is appropriate in your circumstances. However, if you’re already over the market, it could be a tough sell. Be sure to go in armed with as much evidence as possible so you’re prepared for any pushback.
If you’re approaching Human Resources about an increase, you’ll have to do some educating to fill in their knowledge gaps. Prepare to inform them about the difference between the pricing market and the other teams your compensation might be lumped in with, such as marketing, finance, product, et cetera. Compare Glassdoor.com or other sites to the SV Pricing salary survey to help make a case for your local pricing market being above those other, much more standard, salaried groups.
If you’re negotiating with a manager from Marketing, Finance, or another group, then the conversation will be similar to that with HR. You’ll need to go in armed with the knowledge necessary to showcase the differences between the groups to your advantage.
Next, and regardless of with whom you’re discussing the possibility of a compensation increase, I highly recommend using your pricing background to your advantage. Before the meeting, calculate the money you’ve generated, and create an ROI on your salary, including benefits and other forms of compensation. Present this information during the meeting, leaving a copy of it behind with them if possible, because it could be helpful for them to reference as they consider what to offer you. Be sure to highlight everything you did in the calendar year. Self-promotion is the name of the game here. It’s something I find pricing professionals often lack enough experience in doing, and a talent I learned to acquire the hard way. Early in my career, I once got a lower raise than I deserved because I didn’t write much on my annual self-evaluation. I had been working closely with my superior so he knew was doing the most work on the team. I kept my review brief, essentially saying that “you know what I’ve been doing”. That lack of effort in self-promotion cost me a raise as he ended up giving another team member a higher raise. I know because he told me directly why he did that. It was a painful, but important learning moment for sure. So be confident, and it will inspire others to have confidence in you.
Another valuable piece of the puzzle is to inform them about the time and cost required to replace you, if you decide to leave for a higher-paid job elsewhere. Most companies end up spending a lot more money on a new candidate because they don’t understand the demand for pricing professionals. Reference the SV Pricing data that salaries are trending 14% higher in the last 6 months for pricing professionals taking new jobs to help make your case. Remind them that filling pricing roles is much tougher than traditional finance or marketing roles, and that most pricing roles stay open for 4-7 months once someone leaves a position. The higher the role, the longer they tend to stay open. And don’t forget to mention your institutional knowledge, as well as the time it would take for someone else to get up to speed in the role. Think back to when you started, and use the amount of knowledge you’ve gained through experience with your company as an example. You can also talk about the valuable lessons you’ve learned in the role, in terms of how knowing what not to do is sometimes more valuable than knowing what to do in pricing. Combine that with the money you generated in your ROI calculation to come up with a lost revenue number for the company. For example: Say you generated $500,000 in the year, and then you leave the company. If the role stays open for 4-7 months, the company will be losing $167-292K while trying to fill the role, and probably another $40-80K while your eventual replacement gets up to speed in the position. Details like this can be very powerful tools in your negotiation if you use them in the right way. You need to be careful with them, since if used improperly, they can come off as threatening. Try to stick to using these details in an informal setting, and in support, rather than leading with them.
Lastly, don’t settle for the minimum. Companies will often offer a standard raise, but you can always push for more, especially if you’re below market in your current compensation level. Your manager is the key person as it pertains to a raise. Even if you don’t want to be pro-active and would rather see what they offer, the best way to counter it is through your manager. They don’t want to lose you and are the best person to help push the needle. Stepping in to help is something I’ve done for my teams, especially if we’ve had a great year and I don’t want to risk losing them.
I know that negotiating a raise is a sensitive topic for many professionals, and the process is often laced with anxiety and uncertainty; but in the immortal words of Hillel the Elder, “If not now, when?” Hopefully, these tips will ease some of your discomfort about how to approach the subject and give you the confidence to go in strong and come out successfully. Make 2020 your year by negotiating compensation that reflects your value as a pricing professional. Commit this goal to writing, today, and follow through!
Are you planning to request a salary increase this year? Do you have any tips to share as well? Let me know your thoughts.
For Pricing Recruiting Help reach out to Chris Herber the President of SV Pricing Recruiting at Chris@svpricing.com