What pricing strategy should you follow?

Question

As you market yourself to employers, the salary you demand is essentially your personal price. Keeping that in mind, what pricing strategy should you follow (penetration, skimming, or competitive)? Why? Issues to consider:

Who is your target market?
How would you position your price to this market?
What are the psychological pricing considerations?
What are the image considerations?
What are the promotional considerations?

Be creative as you prepare your strategy—a novel approach could give you an edge in a competitive job market.

Answer 1

Although our employment strategies usually do not permit price skimming (high starting salary, then lowered in order to keep job), that is something to be considered when jobless rates are high, when contract competition demands lower costs, when competition is fierce, etc. ... Some companies are notorious for hiring new graduates, using them until they "burn out" or become technologically obsolete, then hiring new grads to replace them (at a lower rate, of course).

 

The penetration strategy (initial low price to "capture the market") relates to salary in that you want to become more costly to replace than to keep.  The hiring manager may think, "Where can I find this kind of talent at such a low salary -- and without spending time and money recruiting?"

 

The competitive salary considers both the supply (who qualified is available) and the demand (what the business needs).  When there are far more applicants than available jobs, don't ask for a high salary unless you have multiple "discriminators" (factors that make you better than the competition).  This is where jobless rates, salary surveys, and special training and abilities are important.  A frequent question asked by employers in recent years is, "Why should we hire you?"  If you can't answer that, don't expect them to do the research.

 

Now,

Who is your target market?  The hiring manager(s).  Know their customers, stakeholders, etc., but market yourself to them.
How would you position your price to this market?  Competitive, based on salary surveys, local competition, changing market, etc.  Ask, "How difficult would it be for the business to hire someone else who is just as capable?"

Your personal salary history and demands are considered (sometimes only to determine how long you will stay), but whether you will grow in this job and whether the business will do well with you in this job are the primary considerations (somewhat like "Who should be our next President?")

What are the psychological pricing considerations? Now, later, and when you leave this job -- will this have been a good story for your resume and for the company's history?  Remember, the business pays more for a reason (and it is not just because you want more money) -- there is added responsibility, added pressure and stress, added opportunity, ...   Have you considered how very much more some CEO's get paid and why?
What are the image considerations?  Your personality, family, friends, etc. may react to hours, uniforms, status, etc.  Every job has an image -- does it fit you?  Do you fit it?
What are the promotional considerations?   Will you be wanting/needing more money/responsibility/etc. and when?  If this is a first job, try to create a multi-year plan for expected training and promotions -- this will be your career path plan (note: many people don't have a written one).

Answer 2

This is a very good question, so I'll just leave one thing here to consider. Figure out your best alternative to no agreement (BATNA) and be prepared to walk away from the table if the employer offers you anything that doesn't exceed your BATNA.