#1 You are leaving money on the table
Let’s say you are offered $50,000 in your first job out of college and don’t negotiate the offer because either you are so excited to get your first real job, or are too scared and lack the skills to negotiate for more.But what if you had negotiated a $55,000 starting salary? Not only is that $5,000 more in your pocket this year, but every year afterwards as well.But the real difference is in cumulative earnings.
Assuming you receive 5% raises every year for 20 years, the difference between the two scenarios is $166,000!
Over 40 years the gap grows to $604,000 in lost earnings.
Negotiating just one time in the beginning of your career earns you $100,000s in additional money.
#2 Your employer expects you to.
Employers expect employees to negotiate, and almost never start with their best offer. Look at it from the employer’s perspective. Employee costs are often a business’ largest expense, accounting for as much as 60%-80% of total costs, depending on the industry. A business’ goal is to maximize profits and will do all they can to keep costs low.
So if they can get away with paying you a little less, they will. They are going to start you off with a bit of a low-ball offer. Businesses have full-time HR staff and compensation professionals whose job is to determine the market rate for the positions in their company. And if they don’t have full-time staff, they will have expensive consultants or survey data to enhance their negotiating position. Companies know investing tens and hundreds of thousands of dollars in salary data and knowledge will pay off in the long run if they can get a save a little bit on each employee’s salary.
If you fail to negotiate, you are almost always accepting less than the employer was willing to pay.
#3 Because most people don’t.
Less than 1/2 of men and less than 2/3 of women negotiate their salaries following a job offer. Since the majority of people take themselves out of the running for salary increases in this way, there is less competition for you in securing a raise. Companies have finite resources and the less competition you have for their dollars, the better.
#4 Because you almost never receive without asking.
You miss 100% of shots you don’t take, and it is very rare to receive a raise (at least a significant one) unless you ask for it.
#5 Your future boss will respect you more.
If you present your case well, your employer will see you as smart, professional, someone who takes initiative, and someone who makes data-driven decisions. By showing off your research and negotiating skills, you will expand your influence with your employer.