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Pay based on location & candidate, I have been doing it this way for years, it works and is the most fair and proper method. That doesn't mean you lowball peop
by davismwfl 6y ago
Pay based on location & candidate, I have been doing it this way for years, it works and is the most fair and proper method. That doesn't mean you lowball people or that you don't pay fair wages or that you overpay, it simply means that you are taking into consideration the local economy and cost of living differences in areas. It is an unrealistic notion to say everyone gets the same pay regardless of location. Basic economics tells you this is not a sustainable model.
Buffer and Gitlab are pretty open about their methodologies, where they use pay bands for a position and then the do a location & experience adjustment. Essentially this is how I have done it in the past (typically as the team gets larger), you set pay bands per country per position, then do location & experience based adjustments. You can see how gitlab does it if you check out one of their open positions there is a salary calculator and it shows you the basics (they even show how options work). That said, you shouldn't rule someone out just because their pay request exceeds your defined band/location/experience calculation if their experience/expertise justifies their ask. To me the banding is there to set a starting point and make things open and transparent to the best of your abilities without publishing peoples individual pay rates.
- zerr 6y agoFrom the opposite PoV: you bill Bay Area clients with Bay Area rates.
- davismwfl 6y agoNot sure I agree. When I ran my consultancies I priced my contracts as either a fixed weekly rate or a value price. So it didn't matter where the client was located or my employee(s). When we billed weekly rates it was a specified rate for a specific project role regardless of who the client was. When it was value based deal I didn't care if the client was in SF or Kansas, I based the price on the value it brought to the client and what I thought was fair but lucrative enough to take the project. I do know there are freelancers that change their rate based on the client but I honestly don't agree with it, typically to me it means you rate is too low or you are pricing improperly. Your rate should be moving up as you gain experience but it shouldn't vary much by client, unless you start value pricing or when you start dealing with enterprises who demand insane support and hand holding.
- zerr 6y agoOK, but now imagine if a Bay Area client tells you to lower your rate by 20% since you're based in Oklahoma and it should be more than enough for you...
- davismwfl 6y agoI see your point and respect your position but disagree with the logic. In one example you are an employee, in the other you should be running a business and the two are not equivalent in pay, process or responsibility, so trying to treat them as they are is improper. IMO freelancer is just a label for an employee with no benefits, no protections and full tax liability. Consultants (or dev shops etc) generally build real businesses and are treated considerably different.
- zerr 6y agoThose (including 400K employment) are just different names for what is essentially a business deal between two parties - as long as you provide the value satisfying the second party, and as long as the second party pays the agreed amount - it shouldn't matter whether any of you live in Thailand or rent a duplex on Manhattan.