Myth #2:
" I haven’t worked for a year, and I was told that I should lower my salary expectations for my next job to be below market rates because I’ve been out of the industry for so long."

When I heard this from a few people, I seriously wondered if these people suffered from low self esteem.

This reminds me of something I read once in which a businessman was having trouble selling his products. What was his solution to this problem? Well, incredibly, he raised the price, and he was able to sell a lot more of his products!

Why am i telling you about this businessman? Well, what happened was that because the price of his products were much lower than the prices of the products that his competition had, people actually thought that the quality of his products was inferior. Similarly, you don’t want to put a very low price tag on yourself because people may think that you are desperate or that you don’t have high quality skills. Sometimes people grow suspicious when the quality and value of what they are getting seems to be out of sync with the price that they are paying for it. And this is even true with the value of your own intangible skillset.

Do what Warren Buffet Does

Another digression I wanted to make to really make sure that you understand this point: Warren Buffet (one of the world’s richest men as you probably know) actually made a substantial part of his fortune through the concept of value investing – whereby a company’s actual value is estimated and then compared to the stock price. If the current stock price is much less than the estimated actual value, then that stock is at a discounted price, and represents a bargain. Basically, Buffet would buy stock that was ‘cheap’ when compared to the intrinsic/actual value of the company that the stock represented. Eventually, investors will catch on and realize what the company is worth, and so the stock would go up, and Buffet became rich following this simple idea. So, knowing what something is actually worth can make a huge difference in the kind of salary that you get.

And I can also personally testify to the falsity of this myth. I was out of the job market for 9 months by choice, and in my next job I actually was able to get a 50% increase in salary compared to my former job. Of course, this isn’t really that common – I was just lucky that they really liked me. And it helped that I knew that they were really interested in hiring me since they gave me a job offer on the spot. Literally – as soon as I finished interviewing their HR representative came in and offered me the job.

But, take caution – you don’t want to put a very high price tag on yourself as well. Always be reasonable and try to gauge what the market rate is for someone with your experience, and considering other factors like the area you live in, the job you’re applying for, etc.

What to do when you’re asked for your salary range

Before interviewing you, companies will often ask for your expected salary range. If you’ve been out of the job market for a while, this is where you need to be especially careful and not give numbers that are far below what your past experience will justify. But at the same time, It’s also important to give reasonable numbers here – you don’t want to ask for $180K when you know it’s an entry level position. Then they’ll just think you’re insane, and will not even bother to bring you in for an interview (wouldn’t you do the same?).

Let’s say that after you did your market research, you gave them a range of 65K-70K, and they extend you an offer of 70K. That means that they must really like you since they are giving you the upper end of that range. That is typically a good sign that you have some bargaining room – you may be able to negotiate to a salary that’s 5-15% higher than what they offered you.

The most important thing is to remember that you want to try and see if you can figure out just how interested they are in hiring you: if they’ve already extended an offer to you then that’s obviously great, but sometimes they may be dying to get you to join their company. And, you really want to use that to your advantage when negotiating your salary.