What you are worth as a developer is what the target market agrees to pay to have you on board.

What the market will pay fluctuates quickly, just like the financial markets, and can’t really be generalized, so websites with indicators can’t help further than giving you an indication. It may not be in sync with the value you can potentially provide because what the market agrees to pay you is generally subjective.

Knowing what you are worth on the market is an important bit of information you can get using the two proposed techniques below. One for freelancers and another one for employees and other permanent roles.

As a freelance developer, I was always asked by head hunters what was my current daily rate. At the beginning, I used to give a random number based on assumptions in the hope it would be accepted. I quickly noticed that it was always accepted… I deduced I was under market rate. I started to increase my daily rate by 50€ increments for each mission I was offered until I faced some resistance. Resistance is not a formal rebuttal by the head hunter but some sort indication that they want to negotiate. In order to prevent myself being abused by the wheeler dealer type of agents, I always stayed firm on my position refusing any reduction. The accepted daily rate was my current market value.

For permanent roles and employees, you can’t negotiate your salary upfront without doing actual interviews. Here is the process I actually used to fine tune my method and that works very well for employees:

  • Update your resume & post it on the two main job advertising sites in your location or profession. You don’t have to be concerned about the fact that your actual boss may find it. In most cases, it will reinforce your position. The hiring process is a painful and onerous process. If he asks you why you do it, tell him the truth.
  • Try to get at least 5 interviews and find out information on the proposed compensation package. Be sure to include everything: salary should not be your main focus.  Location of the company, nature of the project, work environment, alignment with your career objectives are also things you should consider.
  • Take an average of at least 3 offers that you get, that’s your current market value.
This last technique can be used by freelancers to adjust their estimation of market value. I often noticed that the market value you calculate using the first technique is always a little bit lower that your real market value. This is due to the fact that your market value for a first 3 months contract as a freelancer is lower than what you are worth at renewal date.   The hiring process for freelancer is also very painful and pricey, so it’s often very easy for a freelancer to negotiate a daily rate increase with the agent at that time.   The agent has no extra effort to do to get an additional 3 months commission, so they won’t risk having no commission at all by refusing to increase your daily rate a little.
Please note that this is true when the market is good.  When the market is bad, they have more choice and therefore they can replace you easily with someone else.  Knowing when you can negotiate or not is a skill you will get with time.