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Our vision for location-independent salaries at Buffer

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Re: Our vision for location-independent salaries at Buffer

#51

Post by axiosgunnar »

rahimnathwani wrote: post #21
stavros wrote: post #4

I completely don't get location-based pay. I provide you with some work, that's worth some amount of money. Why does my location change the value of my work? Do I suddenly become better if I move to SF? I get that some people have arguments for it, I just entirely disagree that any of them are valid. Whether I'm in a city that costs a lot to live in is no more the responsibility of my employer than whether I like to…

Salaries don't differ because of cost of living. They differ because of supply and demand. A software engineer in SF probably has a higher BATNA than one in Delhi. Not in every case, but in most cases. So the amount you'd need to pay her to accept is higher than the amount you'd need to pay the engineer in Delhi. You could decide you'll pay them both the same. Or you could decide you're not willing to pay SF salaries…

> her

Why did you assume the gender of the software engineer?

Re: Our vision for location-independent salaries at Buffer

#52

Post by bryanrasmussen »

dgellow wrote: post #49
bryanrasmussen wrote: post #34

Earlier quoted context omitted.

often, but there are solutions out there to allow you to set a location based price - generally based on analysis of what the market in the area will pay - for example here https://www.optimum7.com/blog/programming-2/location-based-p... you can do it but it is frowned up but as they say here: "The functionality works like a charm, which is exactly how Amazon or Staples.com works! You get to sell the same product at d…

I cannot read your link (I'm in Germany): > Your access to this site has been limited by the site owner Your access to this service has been limited. (HTTP response code 503) > If you think you have been blocked in error, contact the owner of this site for assistance. > Block Reason: Access from your area has been temporarily limited for security reasons.

weird, because I'm in Denmark. ah well, it's probably just because we're above Germany then :)

at any rate it's just a product offering:

Dynamic Product Pricing by Location via Zip-code or IP Recognition

so you can add this desirable feature to your CMS etc. etc.

They of course note that "When it comes to eCommerce sites, a location-based pricing strategy is not illegal, but it is frowned upon." but then they go into how great their product is which allows you to implement this.

They give reasons why a company might want to do this:

1. The company reduces prices of its products drastically in the North zone, thereby penetrating that market against competition.

At the same time, it increases their wholesale price exponentially across other regions where they are earning ample margins to overall increase revenue with minimal loss for a business like theirs which needs every penny counts!

blah blah blah

There are many factors that play a role in the pricing of a product including:

    Demand

    Distance from the warehouse

    Local / Regional Income Levels

    Local / Regional Competition

    Supply fluctuation
etc. etc. but in the end this product is to allow the seller to easily differentiate their price dependent on location, some of which will have to do with transportation, and some because they think they can get more money out of you.

In a recent discussion about Tinder charging more based on user profiles it was discussed that perhaps using PII to determine pricing, which location would be a part of, would be against GDPR.

Re: Our vision for location-independent salaries at Buffer

#53

Post by stavros »

rahimnathwani wrote: post #21
stavros wrote: post #4

I completely don't get location-based pay. I provide you with some work, that's worth some amount of money. Why does my location change the value of my work? Do I suddenly become better if I move to SF? I get that some people have arguments for it, I just entirely disagree that any of them are valid. Whether I'm in a city that costs a lot to live in is no more the responsibility of my employer than whether I like to…

Salaries don't differ because of cost of living. They differ because of supply and demand. A software engineer in SF probably has a higher BATNA than one in Delhi. Not in every case, but in most cases. So the amount you'd need to pay her to accept is higher than the amount you'd need to pay the engineer in Delhi. You could decide you'll pay them both the same. Or you could decide you're not willing to pay SF salaries…

> But, even if you do this, would you be willing to pay every employee at each level the same amount as the highest paid employee at that level?

No, I'd negotiate. I'd get the cheapest ones first, then raise my offered salary until I couldn't find anyone, then again, then again. Note how none of this has to do with their location, because the engineer in Delhi will get a higher salary just because all the cheap ones have been taken.

This indicates to me that location has nothing to do with salary, it's all market forces, and trying to insert COL adjustments into the mix is awkward and easily refuted.

Re: Our vision for location-independent salaries at Buffer

#54

Post by rchome »

stavros wrote: post #48
ehnto wrote: post #45

Earlier quoted context omitted.

That still works in the worldview I laid out, because you simply won't accept less. I guess part of my point was that it's not a bout COL specifically, it's about how low people in the market are willing to accept. If you have high COL you simply can't accept less, and if you have low COL but are in a spicy market, you don't have to accept less if you don't want to.

Sure, but I can replace "high COL" in your sentence with "like to drive Ferraris" and it is equally valid, and I don't think anyone will claim that the employer has to pay for my Ferrari affinity.

If you absolutely must get paid in Ferraris, you can go ahead and reject any job offers which don't offer them. However, the market of labor which must be compensated with Ferraris is non-existent, so employers don't have to offer this benefit to compete for talent. Everyone has a COL however, so employers do need to adjust for it to attract employees in a given location.

Re: Our vision for location-independent salaries at Buffer

#55

Post by rahimnathwani »

stavros wrote: post #53
rahimnathwani wrote: post #21

Earlier quoted context omitted.

Salaries don't differ because of cost of living. They differ because of supply and demand. A software engineer in SF probably has a higher BATNA than one in Delhi. Not in every case, but in most cases. So the amount you'd need to pay her to accept is higher than the amount you'd need to pay the engineer in Delhi. You could decide you'll pay them both the same. Or you could decide you're not willing to pay SF salaries…

> But, even if you do this, would you be willing to pay every employee at each level the same amount as the highest paid employee at that level? No, I'd negotiate. I'd get the cheapest ones first, then raise my offered salary until I couldn't find anyone, then again, then again. Note how none of this has to do with their location, because the engineer in Delhi will get a higher salary just because all the cheap ones…

"This indicates to me that location has nothing to do with salary, it's all market forces, and trying to insert COL adjustments into the mix is awkward and easily refuted."

That's exactly what I said at the start of my comment:

"Salaries don't differ because of cost of living. They differ because of supply and demand."

Your proposed method of setting compensation ("get the cheapest ones first, then raise my offered salary until I couldn't find anyone") will end up paying people in Delhi less, because their BATNA will tend to be lower. So, even if that's not your intention, you will end up with location-based pay. And if there are significant differences between different same-level employees in Delhi? The lower-paid one will ask why. So you'll institute some sort of pay band that only applies to Delhi or India overall. So you'll end up with location-based pay bands.

Re: Our vision for location-independent salaries at Buffer

#56

Post by stavros »

rahimnathwani wrote: post #55
stavros wrote: post #53

Earlier quoted context omitted.

> But, even if you do this, would you be willing to pay every employee at each level the same amount as the highest paid employee at that level? No, I'd negotiate. I'd get the cheapest ones first, then raise my offered salary until I couldn't find anyone, then again, then again. Note how none of this has to do with their location, because the engineer in Delhi will get a higher salary just because all the cheap ones…

"This indicates to me that location has nothing to do with salary, it's all market forces, and trying to insert COL adjustments into the mix is awkward and easily refuted." That's exactly what I said at the start of my comment: "Salaries don't differ because of cost of living. They differ because of supply and demand." Your proposed method of setting compensation ("get the cheapest ones first, then raise my offered s…

> Your proposed method of setting compensation will end up paying people in Delhi less, because their BATNA will tend to be lower

I disagree, the company will just avoid SF engineers. Then, because nobody artificially adjust your salary based on location, salaries will equalize, so someone in Delhi and someone in Madrid will make the same, regardless of their location.

We're talking remote, you can't mix remote and on-site in the same conversation. The BATNA of both is the same, because they're competing in the same global market.

Re: Our vision for location-independent salaries at Buffer

#57

Post by rahimnathwani »

stavros wrote: post #56
rahimnathwani wrote: post #55

Earlier quoted context omitted.

"This indicates to me that location has nothing to do with salary, it's all market forces, and trying to insert COL adjustments into the mix is awkward and easily refuted." That's exactly what I said at the start of my comment: "Salaries don't differ because of cost of living. They differ because of supply and demand." Your proposed method of setting compensation ("get the cheapest ones first, then raise my offered s…

> Your proposed method of setting compensation will end up paying people in Delhi less, because their BATNA will tend to be lower I disagree, the company will just avoid SF engineers. Then, because nobody artificially adjust your salary based on location, salaries will equalize, so someone in Delhi and someone in Madrid will make the same, regardless of their location. We're talking remote, you can't mix remote and o…

> We're talking remote, you can't mix remote and on-site in the same conversation.

You must consider both because, for now at least, people's BATNA is affected by local opportunities as well as remote ones.

> The BATNA of both is the same, because they're competing in the same global market.

The BATNA is different. The SF-based engineer can choose from a remote job or one in SF. The Delhi-based engineer can choose from a remote job or one in Delhi.

If the BATNA for both were the same, then you wouldn't be able to hire an engineer in Delhi for less than 80k USD (or whatever today's entry level engineer salary is in SF). But you can. This proves the BATNA is not the same.

We might want the BATNA to be the same. But today it is not. As a result, market conditions don't require companies to use the same pay grades everywhere.

When I lived in China, I worked for two different FANG companies (in Beijing and Shanghai). In both cases, the compensation bands for folks in China wasn't the same as those in the US West Coast. My total compensation was lower than I would have accepted had I been based in the US. But it was reasonable compared with the other options available to me without needing to move out of China. So neither company had an incentive to pay me more.

Re: Our vision for location-independent salaries at Buffer

#58

Post by lmm »

boredtofears wrote: post #41
lmm wrote: post #8

Earlier quoted context omitted.

> Do I suddenly become better if I move to SF? You probably do - you're probably hanging out with other programmers more, maybe you can meet up with colleagues sometimes - or, even better, suppliers and clients. And you have more options for other employers, so you can capture more of the spread as producer surplus rather than consumer surplus.

Yes, the bay is the only place you can hang out with programmers or meet with suppliers and clients.

It's exponentially better at it.

Re: Our vision for location-independent salaries at Buffer

#59

Post by tails4e »

jmchuster wrote: post #35
tails4e wrote: post #26

I have to say I am constantly amazed at how high silicon Valley renumeration is. 600k to 1M would get you a lot of engineers pretty much anywhere else. Even if we don't look at the higher end, 200k is very common it would seem, and that would get you 2x engineers is Europe. Im in Europe and I've seen the quality of engineering is no different; the SV engineers perform the same (and some much worse), but still hiring…

The top companies make over a million in revenue per employee.

They would still make that by employing in cheaper locations also, that's the main point I was making, enginneer capability is very high in Europe (and I've direct experience by having lived and worked in both US in SV and Europe)
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