Negotiating Salary and Justifying Salary

BrokenArrows

So I'm currently negotiating an internal transfer within my company.
The manager really wants me to join his team as they are vastly understaffed and I previously worked in that department and can be productive from Day 1.

Its a position where i can calculate the amount of revenue i will generate to a reasonable level of accuracy.

They have a few years of backlog and each job is directly chargeable to a customer. So due to the backlog the amount of downtime of doing non chargeable work should be minimal.

So i estimated that I can generate between 2.5-3 times my salary request per year in revenue based on doing 3-4 days a week of customer chargeable work based on working 222 days a year. 222 days a year takes into account my holidays, bank holidays and a few sick days.

Is 2.5-3 times my salary request in revenue generation good for being a software engineer? Its hard to tell, and depending on the company you work for its can be hard to estimate.

Also my current salary was negotiated when i didnt live in London. So im negotiating the new salary based on the fact i will be working and living in London.

Graham

BrokenArrows wrote: »

Is 2.5-3 times my salary request in revenue generation good for being a software engineer? Its hard to tell, and depending on the company you work for its can be hard to estimate.

It wouldn't be unusual for a SE earning £40k - £60k to be charged out to a customer at £600 - £1200/day depending obviously on the skill set/location/customer etc.

As you say, very hard to estimate so I'm not sure I'd make the amounts the key pillar of your salary negotiation. I would point out that you'll be revenue generating from Day 1 and you expect your chargeable utilisation to be at least xx%

Trojan

BrokenArrows wrote: »

Its a position where i can calculate the amount of revenue i will generate to a reasonable level of accuracy.

...

Is 2.5-3 times my salary request in revenue generation good for being a software engineer?

I don't think the specifics of the figures will make a whole lot of difference in your negotiation, unless the company already takes revenue generation into account. For most companies, positions outside of sales will not have a direct revenue figure linked officially.

However, the general fact that you will be generating more revenue in your new position than in your old, that is something that I'd be using in the negotiation. But I'd stay away from specific figures (I would think that in most industries, software engineers would be generating total revenues of significantly more than 2x salary, that's one reason I wouldn't bring it up).

Read up on negotiation, there's some good books out there (one author I can recommend is Roger Dawson).

BrokenArrows

Trojan wrote: »

(I would think that in most industries, software engineers would be generating total revenues of significantly more than 2x salary, that's one reason I wouldn't bring it up).

Ya i would think so too.
But in the nature of the role it is all one off developments for specific customers. So where is no reoccurring sales revenue. The customer just pays for design and development time.

Graham

BrokenArrows wrote: »

But in the nature of the role it is all one off developments for specific customers. So where is no reoccurring sales revenue. The customer just pays for design and development time.

That's not unusual. Figures I mentioned in the previous post were with that type of work in mind.

As Trojan alluded to, 2ish x salary is at the lower end of revenue generation for a SE.

BrokenArrows

Graham wrote: »

That's not unusual. Figures I mentioned in the previous post were with that type of work in mind.

As Trojan alluded to, 2ish x salary is at the lower end of revenue generation for a SE.

Well in reality if someone is on 60k a year they are being paid around £270 a day based on a 222 day working year (260 days - holidays, bank holidays and sick days).

So based on your 600-1200 per day rate they would be generating 2.2 -4.4 times their salary per day. And thats assuming that they work 100% chargeable days.

But my calculations actually took into account the true cost of an employee (salary + employer tax obligations + benefits + cost of their office space/equipment, mass amount of free coffee ). A 60k salary employee actually costs the employer 80-90k.

So i really dont see how this type of work could expect to generate much more than 2.5-3x salary while still being paid well.

Graham

BrokenArrows wrote: »

So based on your 600-1200 per day rate they would be generating 2.2 -4.4 times their salary per day. And thats assuming that they work 100% chargeable days.

2ish multiple being at the lower end, no?

Also significant is the end of the 600-1200/day range the SE is being charged at.

BrokenArrows wrote: »

So i really dont see how this type of work could expect to generate much more than 2.5-3x salary.

Which does beg the question, why did you ask?

FYI, it's not unusual to see utilisation at or above 100% depending on the nature of the work/project.

If you really want to see yourself as an independent cost/revenue centre you should consider contracting/consulting.

14ned

BrokenArrows wrote: »

So based on your 600-1200 per day rate they would be generating 2.2 -4.4 times their salary per day. And thats assuming that they work 100% chargeable days.

But my calculations actually took into account the true cost of an employee (salary + employer tax obligations + benefits + cost of their office space/equipment, mass amount of free coffee ). A 60k salary employee actually costs the employer 80-90k.

So i really dont see how this type of work could expect to generate much more than 2.5-3x salary while still being paid well.

For a London office, I'd expect each employee to cost at least twice the salary paid to them. London is very expensive. Even here in rural Ireland, my declared tax income is about 55% of gross earnings.

Therefore don't go overboard when estimating your worth. 3x your salary is likely the minimum a company can charge your time for and still make a profit if they're in London.

Niall