Get the product design salary you deserve — part 1

Negotiation basics, understanding your compensation package: salary, equity, and perks.

This is two part article to give you an insight into how compensation works for product and UX designers at tech companies and startups. We’ll cover the basics here and dive into negotiation techniques to try in part 2.

Before making big moves, get the context on your compensation. Photo by Anne Nygård

Negotiation Q&A

When we think of negotiation we think of it as the final step between you and the job. The reality is that we’re always negotiating. Sometimes you’re not even in the room. Your work, your portfolio is the piece that’s negotiating on your behalf especially in the beginning — so be sure to make it strong.

Show that you’ve achieved outstanding results in the companies you were with and this will lead to proper leveling and help the employer set the right expectations for a salary range.

What do I say when I get a call congratulating me?

Stay positive and convey your excitement for the role. The next step is to get the offer in writing so you can pore over it in detail. The employer wouldn’t expect you to commit on the spot and it’s reasonable to ask for time to think things over.

I’m not sure if I want to work here…

If you’re still on the fence about taking the job, get answers to your questions first by interviewing your future teammates. As part of your interviewing you can also ask about job expectations and careers ladders. How does success look like? Who is a good example of a strong designer there? Return here when you’re mostly certain.

52% of all designers negotiate their salary —Comparably

I’m lucky to even get this job, should I negotiate?

Yes! It pays to ask. According to Comparably, only 52% of all designers negotiated their salary. Not negotiating is a guarantee that you won’t get more. Studies also show that women also take the first offer at face value whereas men see it as negotiable.

At least starting the conversation opens up the chance that you’ll get a bump and you won’t regret leaving money on the table. Your subsequent promotions and raises will be in-part based on that number. There’s no shame in asking and no shame in later accepting the original offer.

How do I get more?

Aside from polishing your skills, the next step is to collect data to understand the market rate for designers. The goal isn’t to squeeze every penny out of the company. Rather you want to make sure there’s a good match between your level of skill and the money that you’re getting. You don’t want to end up in a place where you drive a hard bargain, get the money, end up not performing and getting let go as a result.

How do I find out how other designers are compensated?

The best resource is real compensation from other designers. Ask your friends or even friends of friends to get a rough estimate.

Hired’s Salary Calculator and W2 filings are also good resources for actual salary data. If you’re going the startup route, take a look at AngelList as jobs come with a transparent equity and salary ranges.

Levels shows how design responsibilities differ company to company

Levels.fyi is a great resource as it has a granular side by side comparison of salaries across (mainly large) tech companies. Similar to Hired, Levels is starting to verify salaries through official documents. It also graphs ranges for tech salaries based on level helping you better understand how different companies do compensation.

Lastly, less reliable info comes from self-reported salaries on sites such as Glassdoor, LinkedIn Salary, and Comparably. Your best bet is to look at aggregate salary data per level there.

Snapshot of your written offer

Your compensation package will consist of multiple levers you can pull:

Compensation — combination of cash, equity, and sometimes a starting bonus with a promise of a performance bonus

— combination of cash, equity, and sometimes a starting bonus with a promise of a performance bonus Title — consists of a series of levels that determine your salary range

— consists of a series of levels that determine your salary range Benefits — medical and voluntary insurance. This is a major perk that can help you save major $ compared to buying it yourself.

— medical and voluntary insurance. This is a major perk that can help you save major $ compared to buying it yourself. Vacation — some companies offer unlimited, others allows you to sell your time off, and some tie vacation to employee band

— some companies offer unlimited, others allows you to sell your time off, and some tie vacation to employee band Perks — these can be some nice to have extras such as free lunch at the office, flex work hours, learning budgets, etc.

If you have multiple offers, it helps to do a summary of all the financial benefits that you get in order to do a side by side comparison.

Remember though, the most important things (e.g. industry experience, access to expertise from mentors) won’t be stated in your offer and are hard to quantify. These are personal, so be sure to take stock of intangible benefits that are valuable to you. Small things like a culture of remote work or work from flexible working hour policy add up quick.

That’s why when you’re looking for work, it helps to start with the end in mind. When you have a vision for the next step in your career — it aids you in narrowing down options and make tough calls based on factors critical for you while not getting distracted by shiny but meaningless things.

Breaking down the compensation package

When you receive your compensation package you’ll be leveled at a band which comes with a range, e.g. associate product designer makes $100K–110K base salary compared to a product designer who might make $110K–125K. In general the company that you’re considering should have an objective standard for determining salary ranges and you can always ask how they’ve arrived at their decision.

Years of design work serve as a rule of thumb when it comes to compensation but years of experience doesn’t always equate to expertise. Ability to ship products that led to phenomenal outcomes does. If you can prove that you can perform at a certain band and have deep expertise that the company doesn’t have — you’ll get compensated appropriately.

Base salary

Base salary is usually shown as a pre-tax annual number. If you’re moving to a new area — be sure to factor in your cost of living plus various taxes. According to Hired’s State of Salaries 2019 report, the average tech salary is highest in the SF bay area at $145K. However Austin, TX wins out as it has a better cost of living and so the same salary brings more purchasing power.

Austin

In addition to your base salary, it’s helpful to understand how often the company does performance reviews as these are additional opportunities to recalibrate your salary. Typically they either happen once or twice a year.

Bonus

You may also get a one-time signing bonus usually conditionally if you stay on for the full year. Sometimes you may also get a promise of a performance bonus at the end of the year which can give you a ballpark of how much potential extra money you might get. Take that with a grain of salt though — these bonuses are not a guarantee.

Benefits

When we think of compensation, benefits don’t immediately come to mind. However getting benefits like medical insurance coverage can quickly add up helping you save $15,000 or more for individual coverage.

Some other perks that you might encounter:

401K budgets to help you manage retirement

Learning budgets that you can spend on workshops or conferences

Snacks and lunches at the office saving you both time and money

Discounts with other partner companies

Quantifying benefits and their financial impact can be tricky but you can always do some back of the envelope calculations to rough size the money and time you can save.

Equity

In addition to offering salaries, companies, especially startups offer equity as another form of compensation. Typically early stage companies weigh heavily on equity but pay lower in base. Just as an FYI this isn’t legal or investment advice so always check with your lawyer if you have questions ;-)

Generally you’ll encounter these equity types:

Public stock — although the stock price of a company will vary over the course of time, the benefit of public stock is obvious, it’s real money that’s worth something today.

Restricted stock units (RSUs) — you wait to get the shares and once they vest, you don’t need to buy them.

Incentive stock options (ISO) — you get the right to buy shares in the future with a preferential tax treatment. Your offer will state how much you will have to pay per share (strike price) but you will have to fork over some cash to get your equity.

To understand how much your equity is worth you’ll need to understand how much you’re getting out of a total pool of options outstanding and how much the company is currently valued at. You’ll also need to have conviction that this value will rise over time (hopefully in part due to your efforts).

You don’t get equity all at once but instead accumulate it over time, aka vesting. A typical vesting schedule is 4 years which means you’ll get all of your shares in 4 years. Usually there’s a one year cliff where you get 25% of your equity package at the end of year 1. After that you get 1/48th of your equity vested every month until you reach year 4.

While it’s exciting to work for startups, the chances of making it big are rare. The reality is that nearly all startups fail, some break even and get acquired, and a select few hit it big. Even with the select few, 2019 has been a year of lackluster IPOs as companies’ stock has significantly decreased after going public. That said even Facebook’s IPO wasn’t an early blockbuster success either. So treat equity as a nice bonus not as a 100% sure thing.

If you want to learn more about how equity works take a look at Holloway’s equity compensation guide. Candor also has an article on equity education and they provide a nifty equity calculator to help you calculate how much your equity is worth.

What’s next?

In this article we covered some of the basics around your offer. While usually the first thing that sticks out is the starting base salary—be sure to consider other factors that are important to you.

Next we’ll dive into how to approach negotiation on a strong footing to get you the salary that you deserve.