Three weeks ago, I got a DM from a product manager at a mid-stage startup. She'd been there four years, gotten "exceeds expectations" on every review, and her salary had gone from $115k to $128k in that time.
Eleven percent over four years. She was making less, adjusted for inflation, than when she started.
She asked me what she was doing wrong.
"Nothing," I told her. "You're playing the game exactly as they designed it. You show up, do great work, get your token 3% bump, and slowly fall behind market rates while they pocket the difference."
She asked what she should do.
"Stop playing their game. Start playing yours."
That conversation is why I'm writing this. Not for the people who are already savvy negotiators. For the people who've been grinding for years, getting "great feedback," and watching their purchasing power erode because they believed the lie that good work speaks for itself.
It doesn't. You have to speak for it.
Why "Waiting for Your Review" Already Lost
Here's something most employees don't realize: The budget for your raise was decided months ago.
At most companies, salary increase pools get locked in during Q4 planning—October, November at the latest. By the time your January or February review happens, your manager has a fixed pot of money (usually 3-4% of their team's total compensation) and zero flexibility.
When you sit down in that review room and talk about your accomplishments, you're not negotiating. You're watching a movie about a decision that was already made.
I learned this the hard way early in my career. I spent an hour preparing a presentation on my contributions. My boss listened, nodded, and said "Great work—here's your 2.5%."
Didn't matter what I said. The number was set before I walked in.
The lever: If you want a real raise—something meaningful, not cost-of-living crumbs—you need to negotiate off-cycle. Start the conversation in Q2 or Q3 for a Jan bump. By the time the budget gets set, your number should already be in it.
The "Merit" Illusion
Let me be blunt about something that's uncomfortable for high performers to hear:
Your company doesn't pay you based on your value. They pay you based on the minimum required to keep you from leaving.
If you've been loyal, haven't interviewed elsewhere, and never pushed back on compensation, you've signaled that the minimum to keep you is whatever you're already making, plus a token annual increase.
Meanwhile, the person they hire next month for your same role will get 2026 market rates—often 15-30% more than you.
This isn't unfair from the company's perspective. It's rational. Why pay you $150k when you've demonstrated you'll stay for $128k?
The fix: You have to change the equation. You have to make them think you might leave. The only way to do that credibly is to actually be willing to leave.
The Case Study: How Jennifer Got 22% in a Flat Year
Jennifer was a senior software engineer at a public company. Good performer, five years in. Salary: $185k base. She saw that new hires with less experience were coming in at $195-210k.
She came to me frustrated. The company had announced a "compensation adjustment freeze" due to market conditions. HR said no exceptions.
Here's what we did:
Month 1: She started interviewing. Got initial screens at three competitors. Got two to move forward.
Month 2: One competitor made it to final rounds. They made an offer: $225k base, plus refresher stock.
Month 3: She went to her manager. Not threatening—matter of fact. "I've been approached by another company. They've made an offer. I'd prefer to stay here, but the gap is significant. Is there anything we can do?"
What happened: Her manager went to HR. HR went to the compensation committee. Suddenly the "freeze" had exceptions. She got bumped to $225k—matching the external offer—with a one-time $30k retention bonus.
Total increase: 22% base, plus $30k cash.
What made it work:
- She had a real offer. Not a bluff.
- She was willing to actually leave.
- She framed it as a business problem, not an emotional grievance.
Companies find money when they're about to lose someone they actually need. The freeze is real for people without leverage. It evaporates for people with options.
The Only Thing That Matters: Replacement Cost
Forget about "value" or "fairness." Here's what your manager is actually calculating when you ask for a raise:
Cost of saying yes:
- Extra $15-25k per year to your salary
Cost of saying no (if you leave):
- 6-12 weeks with a gap in the team
- $30k-$50k in recruiter fees
- 100+ hours of interview time from the team
- 3-6 months of ramp-up time for the replacement
- Paying the replacement 2026 market rates anyway
Total cost of replacing you: $75k-150k in the first year, easy.
Your raise looks cheap by comparison.
This is how you should frame the conversation—not as "I deserve this" but as "This is the math on retention vs. replacement."
The Playbook (What Actually Works)
Step 1: Get Real Data
Forget Glassdoor and Salary.com. They're 12-18 months stale and skew low.
Use:
- Levels.fyi — Best for tech roles, crowdsourced data with company-specific breakdowns
- Blind — Anonymous employee network, great for total comp (base + equity + bonus)
- Competitor interviews — The most accurate data is an actual offer
You need to know what someone with your role and experience could make if they started a new job tomorrow. That's your benchmark.
Step 2: Build Your "Brag Doc"
Your manager doesn't remember what you did six months ago. They remember the most recent fire drill.
Keep a running document of wins:
- Problem you solved → Action you took → Business impact (ideally in dollars)
Example: "Q2: Rebuilt the checkout flow → Reduced abandonment rate by 12% → Estimated $400k additional annual revenue."
When you have the raise conversation, you're not saying "I work hard." You're saying "Here's $400k I generated."
Step 3: Pick Your Moment
Don't ask during your annual review. It's too late.
Good times to ask:
- After closing a major project successfully
- When headcount is frozen and they can't replace you easily
- Q2-Q3, before budget planning starts
- When you have an external offer in hand
Bad times:
- During a reorg
- Right after layoffs
- When the company just missed earnings
- Your first 12 months (unless scope changed dramatically)
Step 4: The Conversation
Don't ambush. Schedule a specific 1:1 for "career and compensation."
The template:
"I wanted to talk about my compensation. I've done some research on market rates for my role and experience level in 2026. Based on [Levels.fyi / recent offers / competitor conversations], the range is [$X to $Y]. I'm currently at $Z, which puts me [N%] below market.
Given my contributions this year—specifically [Win 1] and [Win 2]—I'd like to discuss adjusting my compensation to align with the current market.
I want to be here long-term, and I want to make sure we're on the same page about how we're valuing this role."
Then stop talking. Let them respond.
The Nuclear Option (Use Carefully)
Getting an external offer and presenting it works. But it's not without risk.
The reality: About 50% of the time, they match. The other 50%, they wish you well and you're out.
Even when they match, you may be marked as a "flight risk." Some managers never trust you the same way again.
When it's worth it:
- You're genuinely willing to leave
- The gap is so large (20%+) that nothing else will move them
- You've already tried other approaches
When to skip:
- You're bluffing (they'll call it)
- Your relationship with your manager is already strained
- You like the company and just want a modest bump
If you present an offer, be mentally prepared to take it.
FAQ
How much of a raise should I ask for?
Annual "cost of living" raises are 3-5%. Real market corrections are 15-25%. If you're asking for less than 10%, it's probably not worth the conversation—small asks don't get prioritized.
Can I negotiate equity instead of cash?
Yes, and sometimes it's easier. Equity budgets are often separate from salary budgets. If cash is frozen, ask for an RSU refresher or a one-time grant.
What if I just got promoted?
Wait 6-12 months before pushing on salary again. But keep building your brag doc. Promotions don't always come with market-rate compensation attached.
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