How can you earn a few thousand dollars in a couple of minutes? Sure, you can gamble or day trade, but here's a more reliable solution: negotiate your salary.
Next time you receive a job offer, make sure you negotiate before signing anything. With a few words, you can add thousands of extra dollars to your salary.
This fact is especially damaging when you consider employers often base raises and bonuses on that employee's salary.
The economy is slowly opening back up, and many Americans are more than ready to return to work. Make sure you come prepared by learning these scientifically-proven techniques for making more money:
Use an Exact Number
A 2013 study from the Columbia Business School discovered that the most effective way of asking for a raise was by using an exact number (also called an "anchor") instead of a round number. For example, it might be better to ask for a $50,250 salary than a $55,000 salary.
An experiment had 130 participants negotiate the price of a used car. Those who negotiated with a round anchor number received an average of $2,963 more than their initial offer. On the other hand, participants who used a precise anchor only paid an average of $2,256 more than the initial offer – a $707 discount.
The main reason this technique works is that it shows that you've researched your worth.
Lead researcher Professor Malia Mason suggests that you start negotiating with a high inexact number by replacing a few zeros. For example, someone with an offer of $70,000 could ask for $73,000.
Mason suggests that you don't choose a number that's too high, or you'll hurt your chances of negotiation.
Use a Bolstering Range
The same researchers found that asking for a "bolstering range" can also be an effective way of earning more money. You can use this technique by determining your desired salary, called a "point," and using that number at the bottom of your range.
For example, say that you wanted a $60,000 salary. You'd negotiate by asking for a range between $60,000 and $70,000. You'll still receive your desired salary even if the employer gives you the very bottom of your offer. (Plus, they could be generous and give you even more than that.)
Many people put their desired salary in the middle of the range. (I.e., The employee who wants $60,000 provides a range between $50,000 and $70,000 and hopes the employer will land at least in the middle). This method can backfire if the employer gives you the bottom of the provided range.
Check out the chart below for a more detailed explanation:
Don't Be Too Soft
Confidence and kindness are two of the best traits any person can have if they want to be successful. But which one should outweigh the other?
Research from Harvard suggests that kindness might backfire. In one experiment, researchers sent out offers from a fake persona named Riley Johnson to buy iPhones from Craigslist sellers. Johnson asked for a 20% discount each time.
Researchers tested different email templates – some of them with "warm" language and others with firm and direct words.
Here's an example of a friendly message:
Hi there—I'm happy to see your post about the phone. This iPhone matches what I wanted to buy – you must have great taste :). Is there any chance you could sell it to me for 80% of the listed price? Given the prices on similar phones currently for sale, I would really appreciate it, and it would help me out a lot! I live in the area, and I can come to meet you anywhere that is convenient for you. Please let me know by tomorrow if the price is ok for you—and thank you so much for your time and consideration. Hope you have a wonderful day. – Sincerely, Riley
Here's an example of a firm message:
I saw your post about the phone! This iPhone matches what I wanted to buy. I'm willing to pay 80% of the listed price. Given the prices on similar phones currently for sale, I'm firm on that price. I live in the area, and I can meet you wherever. Let me know by tomorrow if the price is ok for you or else I'll move on. – Riley
Researchers discovered that firm messages were more likely to be rejected (24% vs. 14%). At the same time, warm offers were more likely to be ignored (54% vs. 45%). However, buyers were more likely to accept the firm offer than the friendly offer (~13% vs. under 9%).
In another experiment, researchers had 140 participants negotiate the price of a sugar bowl by using either warm or firm language.
One of the warm offers went like this:
Hey there. So I'm looking at this beautiful sugar bowl, which I would love to have to complete my set. It's the last piece I need to complete what a dear relative of mine used when we would spend time together and it would mean a lot for me to have it, but I don't have so much to offer. If you'd be willing, I can offer $250 for it. Please let me know!
One of the firm offers went like this:
Hi! I want to buy this sugar bowl from you, and I can offer you $250 for it. Do we have a deal?
Unsurprisingly, the friendly negotiators paid an average of 15% more than the firm negotiators. Sellers had an easier time making counteroffers and winning concessions when talking to warm customers.
Do you have any high-end luxury brands in your closet? It might be time to show them off.
A study in the Journal of Business Research found that those wearing luxury brands received preferential treatment across multiple studies.
The first study had 180 participants look at a picture of a woman and rate her status and wealth. All photos were the same except for one variable: her brand logo. In some pictures, her clothes had a high-end luxury brand symbol. In others, she had a non-luxury brand logo or no logo at all. When the woman had a luxury brand logo, participants were more likely to believe she was wealthy and had high status.
In another study, 150 participants watched a video of a woman interviewing for a job. Once again, all videos were exactly the same except for the logo she wore. Participants believed that the woman was most deserving of the job and higher pay when she wore the luxury brand.
A similar study from Yale examined how clothing can help or hurt negotiations. In this study, 128 men between 18 and 32 practiced buying and selling. The men who wore suits and ties made an average of $2.1 million in imaginary profits. On the other hand, poorly-dressed men in sandals and sweatpants only earned an average of $680,000. Casually dressed men averaged somewhere in the middle with $1.58 million in profit.
The most consistent way to get a raise is to ask. Research from e-commerce company Zoro found that those who asked for raises were successful 81.2% of the time. About 50% got the exact amount they asked for, but 33.5% received less.
Salaried employees walked away with an average of $2,370. Hourly workers received an average of an extra $1.60 an hour – a total of $3,328 for a 40-hour workweek.
Asking for a raise is hard, especially if you're scared of rejection or making yourself look bad. In fact, 11.9% of workers were "not at all comfortable" asking for a raise. Avoiding action means that you could be robbing yourself of thousands of dollars.
Remember that the worst thing your employer can say is "no."