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We have an open salary calculator[1]. This is how we've decided how to calculate salary in a totally remote setup[2] [1] https://buffer.com/salary/ https://buf

We have an open salary calculator[1]. This is how we've decided how to calculate salary in a totally remote setup[2] [1] https://buffer.com/salary/ https://buffer.com/salary/ [2] https://buffer.com/resources/salary-formula-changes-2019/ https://buffer.com/resources/salary-formula-changes-2019/

jeanlucas 6y ago
Awesome as always
langitbiru 6y ago
I am also building a similar tool. It's not a salary calculator. It's a tool to predict the salary range from the job opportunity. https://predictsalary.com https://predictsalary.com So if I wanted to predict the salary range from the job opportunities in Gitlab, I would have to take the "location" of the user into account. That's interesting.
WA 6y ago
"Hey if you were to live in SF, that would be your pay. But since you live in a shitty rural area, we deduct 15% of that." I mean, thanks for being open, but I don’t get this at all. Cost of living depend on so many factors. Why take it into account at all? Why charge customers based on value you provide, but pay employees by what their own expenses are?
- thaumasiotes 6y ago
  > Cost of living depend on so many factors. Why take it into account at all? Why charge customers based on value you provide, but pay employees by what their own expenses are? To be totally fair, companies that sell in more than one market universally charge higher prices for the same thing in areas with higher cost of living. That's pretty much what "higher cost of living" means.
  - Thorrez 6y ago
    Yeah, but usually the reason products are more expensive in a higher cost of living area is due to production and distribution costs being higher. Real estate for stores costs more. Onsite employees cost more. With a digitally distributed product and fully remote employees, none of those factors come into play.
    - hobofan 6y ago
      [deleted]
      - vladvasiliu 6y ago
        I'm not sure how that works in practice. Even with the CoL adjustment, people from lower CoL area still cost less. Say a company has a choice between engineer H from a high CoL area and engineer L from a low CoL area. They are otherwise comparable in their skills, experience, etc. Why would they hire H when L is expected to be able to do the job to the same standard? How is this eliminating competition based on location? People would move to a lower CoL area, so they could get an advantage.
        hobofan 6y ago
        Yeah, you are right, that didn't make much sense...
        Thorrez 6y ago
        > Even with the CoL adjustment, people from lower CoL area still cost less. How so? If the CoL adjustment is high enough, they should have equal costs. But I do see your overall point that with a CoL adjustment people in a low CoL area would in theory be able to be hired easier, because in theory they wouldn't need to be held to as high of a hiring bar.
      - Thorrez 6y ago
        I wasn't talking salaries, I was talking about prices for selling products, same as thaumasiotes. I mentioned salaries only because payroll is a component of the production cost of a product. And when it comes to location, I was talking about the location of the buyer. You're talking about the location of the employee. With a physical product being sold by onsite employees, the location of the buyer and the employee are the same. But with a digital product the location of the buyer and the employee are not necessarily the same, so something purchased in a high CoL area could have been produced by an employee in a low CoL area, and vice versa. So it doesn't make much sense to change the price of a product based on the location of the buyer in that case. Typing this out, I realized there's an error in my previous comment, I didn't need to say "and fully remote employees". A digital product is sufficient to uncouple the employee's CoL from the buyer's CoL. The employees can all be onsite and the CoLs between the buyer and employees would still be uncoupled.
- hobofan 6y ago
  If they were to pay their employees based on the value they provide (and factor in the labour market), they would probably not arrive at SF salaries, and couldn't afford anyone from SF. That's why they benchmark it against SF and then go down from there. 80% of a SF salary is still plenty! So while it's not perfectly "fair", the outcome for most people involved is still pretty great.
- Jare 6y ago
  > Why charge customers based on value you provide, but pay employees by what their own expenses are? This is incorrect. Costs and salaries are market based, shaped by supply and demand.
  - vladvasiliu 6y ago
    That explains variations in the case of people having to show up daily at the office in some location. The market is that location and you have to pay a rate expected in that area / market. But in the case of remote, isn't the market the whole area to which you're open? If a company is open to hiring from the entire US, the market becomes the whole country. So if you decide on hiring engineer E, why would you pay more if E decides to live in SF instead of [low COL city]? E is the same exact person and whatever work they do is not dependent on where they happen to be. The only variation I could see as "fair" would be dependent on how taxation varies. I'm not familiar with how these things work in the US, but if there's variation in payroll or income tax due to the state where the employee actually works, I can understand that for a given cost the company, the employee's after tax salary may vary.
    - temp667 6y ago
      Fair is not relevant, supply and demand are. Those are geographically different in major ways. Compensation offers follow this including for remote work.
      - vladvasiliu 6y ago
        I agree that fair is irrelevant, but my point is that the supply and demand dynamic is different in the remote situation. Indeed, if all companies went full remote overnight, the demand wouldn't change that much, whereas the supply would be much larger. If the company doesn't expect the employees to be physically present in a given location, the supply of talent is increased since it isn't restricted to a given area anymore. So while I understand that people living in SF wouldn't appreciate having their salaries cut to the level of [low COL city], I don't see how companies would continue to pay SF rates when they can access talent for a lower price just because they live someplace else. And said talent could even be the same exact SF engineer deciding to live someplace else for personal reasons.
- Androider 6y ago
  Buffer doesn't compete for San Francisco talent and that's OK. Of their 85 employees, they have 1 engineer in SF. Maybe that person isn't making bank. But the 3 persons in Barcelona appear to be. Average engineer salary in Barcelona is $44K and Buffer is paying $100K+. Good for them! https://docs.google.com/spreadsheets/d/11s9VSyf4yaYUsqBKLaVH78NL8wdl8gXoj5BGAzjIFuc https://docs.google.com/spreadsheets/d/11s9VSyf4yaYUsqBKLaVH...
  - WA 6y ago
    Yes if that 15% is the maximum deduction, sounds good. I was afraid they so like -50% if you live in another country with lower COL.
    - GauntletWizard 6y ago
      Apparently it goes up to 25%... I'm not a fan, even at 15 (I know my worth, and even though I live in a high COL city, they're not willing to pay nearly enough)
- eric_khun 6y ago
  When talking to friends making almost double what I'm doing in California, I end up making more after tax. Added to that, I pay a lot less for rent, food, and entertainment, and I have the freedom to move anywhere I want.
  - tikhonj 6y ago
    Wait, how does that work? In California, the effective tax rate for an engineer is going to be in the ballpark of 40–45%. If somebody is making about double then their income after taxes is about the same as your income before taxes. Even with a relatively expensive house (and high property tax), the effective rate is still not going to go far above 50%.
  - smabie 6y ago
    That's not how taxes work
- bottled_poe 6y ago
  Because that’s how economics works. If one dev wouldn’t do the job for some salary, there would be another that would if they can support their lifestyle.
- raverbashing 6y ago
  15% off a SF salary for a much lower cost of living? Sign me up
- Arnt 6y ago
  Perhaps it seems more understandable if you ask a different question. How much of a surcharge do employers need to pay in order to attract people who live in SF? And is the talent pool there worth paying that?
  - WA 6y ago
    Part of my comment is exactly that. Buffer takes SF salary as the baseline and reduces from there. It’s framed as reduced salary. Not as a bonus for people in SF.
    - Arnt 6y ago
      Oh, I beg your pardon. I thought your subject was about the practice, not the framing.
- benhurmarcel 6y ago
  They don't pay employees based on what their expenses are. They pay employees based on what alternative employers would be willing to pay them. Someone in SF can get high offers from companies in that area, so you have to match to get him.
strogonoff 6y ago
Is it universally accepted in the industry that it’s OK to pay engineers who live in cheaper places less than those with high cost of living? I mean, the company is getting the same value in either case.
- spurdoman77 6y ago
  Is it universally accepted that it is OK for consumers to pay less for goods produced in cheap regions?
  - strogonoff 6y ago
    I paid a fair bit for an iPhone made in China, which is supposedly on the cheaper side…
    - onion2k 6y ago
      You pay a lot less for the Chinese built iPhone than you would for an American built iPhone.
      - strogonoff 6y ago
        If there was a very good and expensive phone produced in, say, Vietnam, I don’t think I would discriminate and consciously choose a more “appropriately priced” phone instead. Global trade & containers are to thank for that, I suppose.
      - raverbashing 6y ago
        No, you made Apple more money. In fact I'd really wager that an iPhone is something that costs much less in manufacturing costs than other things made in China.
- absolutelyrad 6y ago
  You pay as little as you can get away with.
Rapzid 6y ago
Heh, pay looks better than Stack Overflow; not saying much.

jeanlucas 6y ago

Awesome as always

langitbiru 6y ago

I am also building a similar tool. It's not a salary calculator. It's a tool to predict the salary range from the job opportunity. https://predictsalary.com https://predictsalary.com So if I wanted to predict the salary range from the job opportunities in Gitlab, I would have to take the "location" of the user into account. That's interesting.

WA 6y ago

"Hey if you were to live in SF, that would be your pay. But since you live in a shitty rural area, we deduct 15% of that." I mean, thanks for being open, but I don’t get this at all. Cost of living depend on so many factors. Why take it into account at all? Why charge customers based on value you provide, but pay employees by what their own expenses are?

thaumasiotes 6y ago
> Cost of living depend on so many factors. Why take it into account at all? Why charge customers based on value you provide, but pay employees by what their own expenses are? To be totally fair, companies that sell in more than one market universally charge higher prices for the same thing in areas with higher cost of living. That's pretty much what "higher cost of living" means.
- Thorrez 6y ago
  Yeah, but usually the reason products are more expensive in a higher cost of living area is due to production and distribution costs being higher. Real estate for stores costs more. Onsite employees cost more. With a digitally distributed product and fully remote employees, none of those factors come into play.
  - hobofan 6y ago
    [deleted]
    - vladvasiliu 6y ago
      I'm not sure how that works in practice. Even with the CoL adjustment, people from lower CoL area still cost less. Say a company has a choice between engineer H from a high CoL area and engineer L from a low CoL area. They are otherwise comparable in their skills, experience, etc. Why would they hire H when L is expected to be able to do the job to the same standard? How is this eliminating competition based on location? People would move to a lower CoL area, so they could get an advantage.
      - hobofan 6y ago
        Yeah, you are right, that didn't make much sense...
      - Thorrez 6y ago
        > Even with the CoL adjustment, people from lower CoL area still cost less. How so? If the CoL adjustment is high enough, they should have equal costs. But I do see your overall point that with a CoL adjustment people in a low CoL area would in theory be able to be hired easier, because in theory they wouldn't need to be held to as high of a hiring bar.
    - Thorrez 6y ago
      I wasn't talking salaries, I was talking about prices for selling products, same as thaumasiotes. I mentioned salaries only because payroll is a component of the production cost of a product. And when it comes to location, I was talking about the location of the buyer. You're talking about the location of the employee. With a physical product being sold by onsite employees, the location of the buyer and the employee are the same. But with a digital product the location of the buyer and the employee are not necessarily the same, so something purchased in a high CoL area could have been produced by an employee in a low CoL area, and vice versa. So it doesn't make much sense to change the price of a product based on the location of the buyer in that case. Typing this out, I realized there's an error in my previous comment, I didn't need to say "and fully remote employees". A digital product is sufficient to uncouple the employee's CoL from the buyer's CoL. The employees can all be onsite and the CoLs between the buyer and employees would still be uncoupled.
hobofan 6y ago
If they were to pay their employees based on the value they provide (and factor in the labour market), they would probably not arrive at SF salaries, and couldn't afford anyone from SF. That's why they benchmark it against SF and then go down from there. 80% of a SF salary is still plenty! So while it's not perfectly "fair", the outcome for most people involved is still pretty great.
Jare 6y ago
> Why charge customers based on value you provide, but pay employees by what their own expenses are? This is incorrect. Costs and salaries are market based, shaped by supply and demand.
- vladvasiliu 6y ago
  That explains variations in the case of people having to show up daily at the office in some location. The market is that location and you have to pay a rate expected in that area / market. But in the case of remote, isn't the market the whole area to which you're open? If a company is open to hiring from the entire US, the market becomes the whole country. So if you decide on hiring engineer E, why would you pay more if E decides to live in SF instead of [low COL city]? E is the same exact person and whatever work they do is not dependent on where they happen to be. The only variation I could see as "fair" would be dependent on how taxation varies. I'm not familiar with how these things work in the US, but if there's variation in payroll or income tax due to the state where the employee actually works, I can understand that for a given cost the company, the employee's after tax salary may vary.
  - temp667 6y ago
    Fair is not relevant, supply and demand are. Those are geographically different in major ways. Compensation offers follow this including for remote work.
    - vladvasiliu 6y ago
      I agree that fair is irrelevant, but my point is that the supply and demand dynamic is different in the remote situation. Indeed, if all companies went full remote overnight, the demand wouldn't change that much, whereas the supply would be much larger. If the company doesn't expect the employees to be physically present in a given location, the supply of talent is increased since it isn't restricted to a given area anymore. So while I understand that people living in SF wouldn't appreciate having their salaries cut to the level of [low COL city], I don't see how companies would continue to pay SF rates when they can access talent for a lower price just because they live someplace else. And said talent could even be the same exact SF engineer deciding to live someplace else for personal reasons.
Androider 6y ago
Buffer doesn't compete for San Francisco talent and that's OK. Of their 85 employees, they have 1 engineer in SF. Maybe that person isn't making bank. But the 3 persons in Barcelona appear to be. Average engineer salary in Barcelona is $44K and Buffer is paying $100K+. Good for them! https://docs.google.com/spreadsheets/d/11s9VSyf4yaYUsqBKLaVH78NL8wdl8gXoj5BGAzjIFuc https://docs.google.com/spreadsheets/d/11s9VSyf4yaYUsqBKLaVH...
- WA 6y ago
  Yes if that 15% is the maximum deduction, sounds good. I was afraid they so like -50% if you live in another country with lower COL.
  - GauntletWizard 6y ago
    Apparently it goes up to 25%... I'm not a fan, even at 15 (I know my worth, and even though I live in a high COL city, they're not willing to pay nearly enough)
eric_khun 6y ago
When talking to friends making almost double what I'm doing in California, I end up making more after tax. Added to that, I pay a lot less for rent, food, and entertainment, and I have the freedom to move anywhere I want.
- tikhonj 6y ago
  Wait, how does that work? In California, the effective tax rate for an engineer is going to be in the ballpark of 40–45%. If somebody is making about double then their income after taxes is about the same as your income before taxes. Even with a relatively expensive house (and high property tax), the effective rate is still not going to go far above 50%.
- smabie 6y ago
  That's not how taxes work
bottled_poe 6y ago
Because that’s how economics works. If one dev wouldn’t do the job for some salary, there would be another that would if they can support their lifestyle.
raverbashing 6y ago
15% off a SF salary for a much lower cost of living? Sign me up
Arnt 6y ago
Perhaps it seems more understandable if you ask a different question. How much of a surcharge do employers need to pay in order to attract people who live in SF? And is the talent pool there worth paying that?
- WA 6y ago
  Part of my comment is exactly that. Buffer takes SF salary as the baseline and reduces from there. It’s framed as reduced salary. Not as a bonus for people in SF.
  - Arnt 6y ago
    Oh, I beg your pardon. I thought your subject was about the practice, not the framing.
benhurmarcel 6y ago
They don't pay employees based on what their expenses are. They pay employees based on what alternative employers would be willing to pay them. Someone in SF can get high offers from companies in that area, so you have to match to get him.

strogonoff 6y ago

Is it universally accepted in the industry that it’s OK to pay engineers who live in cheaper places less than those with high cost of living? I mean, the company is getting the same value in either case.

spurdoman77 6y ago
Is it universally accepted that it is OK for consumers to pay less for goods produced in cheap regions?
- strogonoff 6y ago
  I paid a fair bit for an iPhone made in China, which is supposedly on the cheaper side…
  - onion2k 6y ago
    You pay a lot less for the Chinese built iPhone than you would for an American built iPhone.
    - strogonoff 6y ago
      If there was a very good and expensive phone produced in, say, Vietnam, I don’t think I would discriminate and consciously choose a more “appropriately priced” phone instead. Global trade & containers are to thank for that, I suppose.
    - raverbashing 6y ago
      No, you made Apple more money. In fact I'd really wager that an iPhone is something that costs much less in manufacturing costs than other things made in China.
absolutelyrad 6y ago
You pay as little as you can get away with.

Rapzid 6y ago

Heh, pay looks better than Stack Overflow; not saying much.