I’m not a fan of the phrase, “Get paid what you’re worth.”
I love the sentiment. And, to be specific, that sentiment is, “Don’t settle. Don’t accept less than you should. Get that bag.” I agree!
But the phrase itself is problematic.
The first natural question is: how much are you worth?
Don’t make tough trade-offs between speed, quality, and scarce research. Dive into Tommy Geoco’s book, “Making Design Decisions” to learn how to design interfaces when resources are limited. Use code DANMALLTEACHES for 20% off this guide that shares Tommy’s decisioning workflow developed over 13 years as a Silicon Valley designer and startup founder.
Let’s start with worldview.
I’m a Christian. I believe God made the Earth and all the people in it, and I believe He loves everyone so much that He would send His only Son to die so that all the people who want to live with Him in heaven for the rest of eternity can do so. If you share this worldview, you probably believe in the Bible, and the Bible has some answers to the question, “how much are you worth?”
Look at the birds in the sky. They don’t sow seed or harvest grain or gather crops into barns. Yet your heavenly Father feeds them. Aren’t you worth much more than they are? —Matthew 6:26, Common English Bible
A capable, intelligent, and virtuous woman… She is far more precious than jewels and her value is far above rubies or pearls. —Proverbs 31:10, Amplified Bible, Classic Edition
For reference, the Sunrise Ruby from Myanmar went for $30.3 million at the Sotheby’s Magnificent Jewels auction in Geneva. Marie Antoinette’s Natural Pearl and Diamond Pendant sold at auction for $36.8 million. Yes, you’re easily worth more than those. But something tells me that if you asked for those numbers at your next performance review, you’d get laughed out of the room.
The average tech worker makes somewhere between $71,000 and $212,000 each year. Even if you have a different worldview than I do, I bet you believe that that range doesn’t come close to capturing what a human is worth.
Does that mean everyone is settling for less than they’re worth? No!
An annual salary isn’t a representation of what someone is worth. An annual salary is a representation of what the opportunity is worth.
I wrote a small book called Pricing Design which teaches a school of thought called value pricing. A common mantra among people who talk about value pricing is, “Price the customer, not the service.” Most people can get down with this idea. You might expect that you could get paid more working at Google or Amazon than you could at a local graphic design shop. Is that because you’re worth more to/at Google or Amazon than you’re worth to the local graphic design shop? No! It’s because the opportunity is greater at a big tech company, for lots of reason. This is pricing the customer.
I have my own spin on that idea too. Instead of pricing a service or a role or even the customer, price the moment. A year ago, a senior designer may have been able to easily command a $200k salary from many employers. Today, after loads of companies laid off tens of thousands of workers, you’d be lucky to even get a email reply for a job application. And no, it’s not because your work is bad. It’s because the moment changed. The supply and demand ratio shifted massively. So the price for your work needs to shift too. Otherwise, you’re not living in the reality of the moment. You’re living in a fantasy world.
The best way to price the moment is to know confidently how much value you create. (And yes, that’s easier said than done.)
Let’s explore an example. How much value does a designer at Netflix create?
A tough question to answer, for lots of reasons!
A place to start is to determine how Netflix even defines value, and Socratic method our way there.
As a public company, I imagine shareholder value is an important metric.
What drives shareholder value? I would guess that the more subscribers Netflix has, the more the stock price rises.
What makes subscribers join and stay? Maybe constantly finding movies and shows they’d enjoy watching.
How does Netflix do that? With techniques like artwork personalization.
What if you were one of the people who came up with the idea for artwork personalization? What if you were one of the people who designed a good portion of those thumbnails? You’d have a good starting point for the fact that you’re directly contributing to increasing value at the company, as reflected in stock price or company revenue.
In 2017, Netflix’s revenues were around $10B; in 2023, revenues were around $30B. That’s a $20B increase. What percentage of that increase was artwork personalization responsible for? If artwork personalization was 1 of 1,000 other experiments Netflix was running, then artwork personalization contributed about $20M to these revenues ($20B ÷ 1,000 experiments).
If you were 1 of 20 people that worked on artwork personalization, perhaps you personally contributed about $1M of value to Netflix ($20M ÷ 20 people).
That’s over 6 years, so each year, perhaps you personally contributed about $166,666.67 of value to Netflix ($1M ÷ 6 years).
If everyone asked to receive every dollar of value they created, Netflix would have no profit (which is exactly why some people prefer to run their own companies instead of working for someone else’s). Instead, it’s more reasonable to ask for a portion of the value you create as a reward for your work. What portion? I like starting with 10%. 10% is a small enough number that people don’t feel like you’re being greedy, but often lucrative enough to you if you’re creating significant measurable value.
In this example, you’d ask for a $16,666.67 annual bonus for the value you created.
It’s the difference between thinking “I just make thumbnails here” vs. “I’m doing work that contributes to the overall value of this company, and, therefore, I want to share in the reward.”
Sound familiar? This this is exact argument at the root of the current Hollywood strike. Notice that when it’s positioned as, “AI is taking my job so I want to be paid more,” it sounds more like whining so people are less sympathetic. That’s a socialist position within a late-stage capitalist context, which is why it rarely works even though it’s sensible. But when it’s positioned as, “I’m creating value here, so without me, everyone’s piece of the pie gets smaller,” it feels much more reasonable. It uses a capitalist argument to combat capitalism.
These are the kinds of stories you want to bring into your performance review at the end of the year. Even better, these are the kinds of stories your manager should be hearing about you and your work every week.
Most people get value pricing wrong because they think it’s about taking the most money you can. They think it’s about ignorantly blurting out the highest number you can with a straight face and blindly hoping the person on the other side of the table agrees. Think it’s zero-sum, that either you win while they lose or they win while you lose.
All of that is the wrong perspective. Whether it’s a service you offer or the salary you’re negotiating or a table you’re selling on Facebook marketplace, value pricing is all about math. There’s a formula:
What I earn = Value created × 10%
The “value created” part is tough to compute, but hopefully the example above gives you some inspiration about other ways you calculate that number.
The nice thing about this approach is that you can show your math openly. If your manager or clients asks how you arrived that this price, show them the formula. Tell them how much value you’ve already created and how much more you’re going to create with and for them. The key is that this is a hypothesis. You don't have to be right about this hypothesis. You just have to have one, something that many designers (and engineers, and tech workers in general) don’t have, because they’re falling back on the arbitrary “getting paid what they’re worth.” That’s usually shorthand for, “This is how much money I want to make,” which isn’t a really compelling argument for anyone who’s actually paying you.
If you’re wrong about the value you create, what’s great is that they’ll tell you! People love proving other people wrong, so play that up! Let them correct you on how much value you create; most times, they actually end up proving that you create even more value than you thought you did.
So, don’t try to get paid what you’re worth. Instead, know how much value you create, and keep a mutually acceptable proportion of it (start at 10%) that takes care of your wants and needs. It’s not as slick of a catchphrase, but it’ll get you paid.
If you’ve attempted to use this formula and want some feedback, reply and share it with me and I’ll give you my thoughts on it.
Join 57,400+ subscribers to the weekly Dan Mall Teaches newsletter. I promise to keep my communication light and valuable!