What Is Competitive Pay?
What Is Competitive Pay?

What Is Competitive Pay?

What Is Competitive Pay?

When searching for a new role, you’ll often encounter job postings with the words ‘competitive pay’ listed as the salary information.

The term competitive pay indicates compensation that is equal to, or above, the market rate for the given position in the same industry and location.

This rate is used to attract talent to roles, as it conveys to candidates that their skills are being appropriately valued, not undersold.

To be truly competitive, the remuneration needs to be within 10% of the average market rate.

The omission of an exact salary suggests that the company may be willing to negotiate the salary with the successful candidate. This flexibility allows companies to secure the top candidates for a price that suits both parties and keeps talent from joining a competitor.

This is where the term ‘competitive’ comes in – firms are competing to hire the best employees and, to do so, are willing to match or exceed the industry salary rate.

What to Watch Out For

The phrase competitive pay can, however, sometimes be used unhelpfully to mask the salary of a role. It allows for the piquing of candidate interest before revealing the exact remuneration level, which can lead to disappointment.

Be aware of this and seek clarity on what is meant by competitive pay in each instance – so you know the base pay attached to a role before advancing further in the recruitment process.

As the classification of competitive pay also involves consideration of the benefits package attached to the role, make sure to enquire about the benefits on offer.

Competitive Benefits

As mentioned above, for a remuneration package to be considered competitive, it is likely to include more than just the base monetary salary.

A competitive offering may include:

  • Additional bonuses or commissions
  • A generous allowance of paid annual leave
  • A retirement plan with high employer contributions – a 401(k), IRA or Roth IRA plan
  • Stock options
  • Comprehensive health insurance
  • A life insurance policy
  • Paid parental leave
  • Childcare facilities or vouchers
  • The ability for flexible/remote working
  • Opportunities for professional development
  • Reimbursement of any tuition or training costs
  • A company car or expensed travel
  • Subsidized or free on-site catering
  • Subsidized gym access
  • A health and well-being allowance
  • A relocation bonus

Companies often have varying scope to offer competitive monetary salaries depending upon their size.

While small or new businesses or organizations may not be able to offer the same level of base salary as an established firm, they may offer a generous benefits package to increase the attractiveness of their offer and make it viable for prospective employees.

Be sure to effectively evaluate any benefits package, considering the difference it will make to your monthly outgoings and long-term financial plans.

What Influences Competitive Pay Levels?

The competitive pay, or market rate, for a role can be impacted by the following factors, which can apply upward or downward pressure on salary offerings.

Job Title

Company salary rates are set according to job title, as these often indicate job function and level. They are an easy way for HR to categorize job levels and associated salary brackets.

This means that your job title will have a direct bearing upon the amount of money you earn. When job hunting, do your research around the average salary for your job title, so you are aware of what the competitive rate should be.

As an example, according to Salary.com, the average salary of a Junior Marketing Executive based in New York is $47,342. The average salary of a Marketing Executive is $84,146.

Be aware of the impact a simple word in a job title can have and, if you feel you are no longer at a junior level, don’t be afraid to seek a higher position.

Alongside Salary.com, websites such as PayScale or the Bureau of Labor Statistics are useful for exploring and comparing salaries by job title, as they also filter by industry and geographical area.


The competitive salary rate is greatly influenced by the industry you are working within. For example, the pay a marketing executive receives will differ greatly according to the sector and type of company they work for.

A junior marketing executive working for a non-profit can expect to earn less than their counterpart in an established retail chain or corporate company.

If you are looking for opportunities to maximize your salary (and are flexible regarding which industry you work within), research the average salary for your current role across industries.


The competitive pay rate for your job role will differ depending on your geographical location.

As well as differences in the number of vacant job roles and qualified candidates, the cost of living varies according to state and specific location.

It is more expensive to live in larger cities and attractive areas where property is in demand. This high cost of living has an upward force upon competitive pay rates.

For example, the competitive salary in Los Angeles or New York is higher than the equivalent offering in Des Moines, Iowa. The rate in a city such as Des Moines is also likely to be higher than that on offer in more rural state locations.

Competitive Pay: Definition, Examples and How to Negotiate
Competitive Pay: Definition, Examples and How to Negotiate

According to the US Bureau of Labor Statistics, the annual mean wage for a marketing manager is $194,940 in New York compared to $121,730 in the state of Iowa.

There are instances, however, of rural locations being well-compensated. If there is a low availability of skilled talent in the area and it is difficult to encourage professionals to settle, this may have an upward force on the competitive salary rate.

It is important to conduct your research according to your location, so you can get an accurate picture of what a competitive package means in your region.

Seniority Level

Entry-level roles will have a much lower competitive salary rate than senior or executive positions. This is because the level of skill and work experience required is vastly different.

For example, the competitive remuneration level for a senior marketing executive will be substantially higher than that of a junior marketing executive.

When researching competitive pay in your industry and/or location, be sure to include your level of experience for an accurate impression. Experience may relate to educational qualifications, as well as the number of years of experience you have in the sector or in an equivalent role.


The supply of qualified applicants suitable for the role will impact the competitive salary.

If you are looking for a position as a senior marketing executive and there is a large pool of talent to select from, the competitive pay rate will be lower.

The size of the talent pool may be impacted by location or by profession/role. Some professions are niche or highly technical and therefore have fewer fully trained employees in general, while others are popular and have many skilled practitioners.

For example, the supply of software developers in large cities may be high due to the attractiveness of the location and impression that there are more opportunities available. This supply may drive down the competitive pay rate.

Conversely, there are likely to be fewer suitable candidates for a senior software developer position in a more rural location. This may cause the competitive salary rate to increase due to increased demand on the part of employers.

This may not always be the case, however. To return to our marketing manager example, the US Bureau of Labor Statistics shows that there is a higher level of employment for marketing managers in New York, than in Iowa (with an employment rate of 2.5 per 1,000 compared to 1.54 per 1,000).

There are both a larger number of job roles in New York and a larger talent pool – a higher concentration of marketing managers to fill the vacancies.

Yet, the competitive pay rate remains high, as the availability of professionals is proportionate to the high number of opportunities.

This means the market has avoided saturation, and coupled with high cost of living, sustains a generous remuneration package.

Tips for Negotiating Competitive Pay

1. Use a Salary Calculator

When preparing for a conversation regarding salary, use a salary calculator to get a good idea of what the average rate is for individuals with similar qualifications and experience to your own.

You can also use salary calculators to inform your expectations according to sector and region.

It is important to arrive at a salary negotiation with an accurate expectation of what a competitive rate of pay should be.

Useful salary calculator sites include:

2. Research the Pay in Your Region

Don’t overlook the importance of tailoring your salary expectations to your location.

Look into the demand for professionals with your skill set in your region (by researching employment levels, the concentration of jobs and location quotients) to see whether your talents are sought after.

If your occupation is in demand, you are likely to have more bargaining power within your salary negotiation and can adjust your ideal salary outcome accordingly.

3. Know Your Ideal Salary, and Your Limit

Before entering a salary negotiation, it is crucial to have considered your ideal outcome. Make sure you are clear on the level of salary you want for the role and what your minimum figure would be.

Knowing and conveying these limits displays that you have put careful consideration into what a viable (and indeed desirable) level of salary looks like for you.

Having these parameters in mind will help you to put forward a stronger case for having your worth appropriately valued.

4. Be Confident

When negotiating your pay level, have confidence in your own worth and the value you bring to the organization. Be approachable and open to compromise, but honest about your salary limits and deal breakers.

As with any discussion with your employer, be punctual, polite and professional throughout.

Final Thoughts

Whether you’re looking for a new role or evaluating your current role, salary will undoubtedly play a large part in your consideration.

A competitive pay packet should appropriately value your skills and reflect your desirability in the labor market.

Researching how a proposed or current salary compares to the average market rate according to role, industry and location will help you to ensure you are receiving the right level of wage for your work.

If you believe you are being undervalued, don’t be afraid to enter into a salary negotiation with your employer.

Companies want to recruit and retain the best employees, and a competitive remuneration and benefits package is the strongest way to ensure talent is not lost to market competitors.

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