There isn't an objective measure available what an employee is worth to a company, especially at the hiring stage, especially in startups. If engineer lvl4 with

There isn't an objective measure available what an employee is worth to a company, especially at the hiring stage, especially in startups. If engineer lvl4 with the criteria you're hiring, is paid x in y market at z stage of the company then you pretty pay bit more or less depending how good you think they are compared to the average. Basically companies base their compensation bands on the 50-90th percentile what the market is. People are also anchored their previous compensation, it's hard to get people to accept drastically lower compensation even if you think they are overpaid in their current job. So it all comes down to finding a compensation that both parties are willing to engage in at (the market). The market is still not fully liquid, uniform or not all talent is the same so the pay differs in different markets. You could obviously game this too by saying to pay what people are they are "worth" but you just happen value SF experience more than other experience, essentially.