Sales Salary Negotiation: An In-Depth Guide for Employers

Negotiation is found everywhere in business. And a sales rep’s salary is no exception. 

According to recent data from G2, “69% of men and 51% of women say they would enter into salary negotiations with an employer.” So this is something you should be prepared to do.

By understanding a few core principles and applying best practices, you should be able to hire rockstar sales reps, while staying on budget. Let’s get right into it. 

Start with Job Salary Research

Just like with nearly any type of negotiation, whoever is armed with the most knowledge tends to have more leverage. So the first step is to figure out what the average salary is for sales reps in your specific industry. 

Say, for example, you’re in SaaS. These reps earned, on average, $48,250 per year as of October 2020. However, those in the bottom 25% earned just $38,000, and those in the top 75% earned $59,000.

Having clear data gives you a baseline of how much you should pay a potential candidate based on their knowledge and experience and provides you with something concrete to point to if a candidate wants to know how you came up with your figure. 

Assess the Candidate’s Value

Next, you need to determine just how badly you want a particular candidate. Maybe you’re dealing with a next-level salesperson with an outstanding track record for success. Someone you’re personally headhunting and are certain would be a massive asset to your company. Or, maybe they look solid, but it wouldn’t be the end of the world if things didn’t work out. 

Assessing a candidate’s value and having a clear view of what they bring to the table will impact your negotiation and how high you’re willing to go. So go ahead and figure that out ahead of time, ideally quantifying with a 1-10 ranking of what their value is. 

Pinpoint a Salary Range

Once you know the average salary for a salesperson in your industry and how much you want a particular candidate, it’s time to pinpoint a salary range. Here you’ll need to determine what your ideal salary is and the maximum amount you’re willing to pay a salesperson. 

Say, for instance, you’ve found an A+ rep who could be a legitimate game-changer to your sales team. The ideal salary may be somewhere around $46,000. However, you may be willing to go as high as $55,000 if that’s what it takes to land them. 

So here’s what your salary range would look like. 

Having this articulated before beginning formal negotiation gives you a firm, quantifiable reference point so you 1) increase the likelihood of reaching a favorable agreement and 2) ensure you don’t go beyond your limit. 

Don’t Start With Your Best Offer

Up until this point, the steps of the sales salary negotiation process have been preliminary, involving research and analysis. From here on out, the following steps will revolve around the actual dialogue between you and a candidate. 

Perhaps the most important thing to remember when you’re throwing out an initial number is to not start with your best offer. You by no means want to lowball them with a ridiculously small salary, as this can create friction and derail your efforts. But you don’t want to offer your max salary right out of the gate because this leaves you with no wiggle room and can result in spending more than you need to. Besides that, an elite candidate may feel you’re not all that interested in them if you’re not willing to go higher than your initial number. 

I personally suggest starting at or around the low end of your salary range. So, if it was $46,000-$55,000, you’d want to start around $46,000.

Anticipate a Counter

In some cases, a candidate may go ahead and accept your initial offer right off the bat. That’s certainly possible. 

However, it’s not something you should expect. As in the art of any effective negotiation, you should anticipate a counter and know how to react. 

Remember that making a counteroffer isn’t something that should be seen as rude or disrespectful. It’s simply something any smart, savvy candidate will do. This shows they know their value, and it can factor into them being a successful rep if they’re ultimately hired. 

And given that 74% of employers have room to increase their first offer by 5-10%, a good chunk of candidates will look for more. So be prepared when they push for a higher salary. 

This brings me to my final point. 

Know Your Limit

There will likely be some back-and-forth where you each throw out numbers, moving from the two extremes of salary figures to something closer to the middle. While you’ll probably end up going higher than the initial number you threw out, you definitely need to know your limit. 

Again, this goes back to the salary range you identified earlier where you’ll want to consider the max salary you can pay and not exceed it. Based on our example, $55,000 would be the limit, where you would need to walk away from any further discussion at that point. 

When you get in this territory, it’s important to be transparent about what your company’s budget is and set a firm limit. From there, it’s up to the candidate whether they want to accept or reject it. If all goes well, you’ll be able to come to an agreement that works for both parties. 

Finding A+ Salespeople with Sound Negotiation Skills

Although negotiation won’t be part of every hire, it’s something you’ll likely encounter at some point and should be prepared for. Understanding what the basic process looks like and best practices to follow should ensure you enter negotiation with maximum leverage to increase your chances of striking a fair deal and adding top talent to your roster. 

Learn how HireDNA can help transform your sales hiring and attract the best and brightest reps in your industry. 92% of recommended candidates become top performers within their first year, and 96% of hiring mistakes can be eliminated with HireDNA. 

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