How to Negotiate Salary With a Job Candidate

You have found a candidate who can do the job. The interviews went well, the references check out, and you are ready to make an offer. Then the candidate asks for a salary that is 15% higher than your budget.

A larger company may have more room to absorb the difference. But for a small business with narrow margins, it could mean putting off another hire, reducing operating expenses, or agreeing to a commitment that the business cannot comfortably afford.

The obvious choices are to increase the offer or walk away. Neither should be the first move.

Before deciding, find out whether the gap is negotiable, whether the candidate’s expectations reflect the market, and whether the role is worth more than the company originally planned to pay.

A salary budget is a business decision, not proof that the amount is competitive. It may have been set months ago, based on an outdated job description or what the company paid the previous employee.

Before going back to the candidate, check what similar positions actually pay. In the United States, the Bureau of Labor Statistics breaks down wages by occupation, state, metro area and industry. The UK’s Office for National Statistics tracks earnings by occupation and region, while Eurostat provides comparable pay data for EU countries.

Don’t take any of these figures at face value. Check when the data was collected, which locations it covers and whether the amounts are gross or net. Salary data can also lag behind the market, so compare it with recent job ads for similar roles.

If you’re hiring remotely across borders, make sure you’re comparing like with like. A job with the same title can involve very different responsibilities, and the cost of hiring someone as an employee may differ considerably from engaging an independent contractor. Taxes, benefits, and other employer costs depend on the country and the type of arrangement.

If the role has expanded since the original budget was approved, the problem may not be the candidate’s expectations. It may be the budget.

Do not respond to a higher salary request with an immediate yes or no. Ask the candidate how they arrived at the figure and whether base salary is their main concern.

A candidate may have another job offer, need a minimum salary to cover their expenses, or feel that the position involves more responsibility than the pay reflects. Before you rule them out, find out whether the gap is too large to bridge or whether there is room to negotiate.

You could say:

This gives the employer useful information without promising a raise that has not been approved.

It also helps distinguish a salary gap that can be negotiated from a more fundamental mismatch. If the candidate needs a salary the business cannot sustain, a longer discussion will not necessarily solve the problem.

The difference between the original budget and the candidate’s request is only part of the calculation.

Employer costs include more than wages. Depending on the country and the employment arrangement, the company may also pay payroll taxes, pension contributions, health benefits, insurance, paid leave, equipment and other expenses.

For example, if you had a budget of $60,000 per year and the candidate asked for $69,000, the difference would be $9,000 per year in base salary, or $750 per month before adding the employer’s additional costs.

That does not automatically make the request unreasonable. But the business should be able to explain how it will fund the difference and whether the hire still makes sense at that price.

Set three figures before negotiating:

Having these figures in place makes it easier to negotiate without letting the pressure to hire push you beyond what the business can sustain.

If you can’t meet the candidate’s request, consider changing another part of the offer. Depending on the position and the company’s situation, possible options might include a bonus, additional paid leave, flexible working arrangements or a clearly defined performance bonus.

These options aren’t equivalent to a higher salary. A one-off bonus won’t cover regular monthly expenses, and a performance bonus isn’t guaranteed income. Before suggesting benefits as a way to close the gap, ask the candidate what matters most to them.

A salary review may also be worth discussing, but be clear about the details. Set a date, agree on what will be reviewed, and make sure the person making the decision has the authority to approve a raise. Don’t promise an increase if you can’t guarantee it.

Rather than saying, “We can look at your salary in six months,” explain which duties, targets or results will be considered at that point. Make it clear that the review is an opportunity to consider a salary increase, not a promise that one will happen.

If the candidate’s minimum requirement is still beyond what the company can afford, be honest. A lower offer backed by promises the business cannot keep is likely to leave both sides dissatisfied.

Negotiations can create pressure to make an exception for someone who impressed the interview panel. Before approving a higher salary, check how it compares with the pay of people already doing similar work.

A difference may be justified by experience, specialist skills or additional responsibilities. If there is no clear reason for it, the company may create pay disparities that are difficult to explain later.

Apply the same principles to comparable candidates. Keep a record of the role’s salary range, the reasons for any exception, and the person who approved it.

Before finalising an offer, employers should also check the relevant pay-transparency, minimum-wage and equal-pay requirements. These rules vary by jurisdiction. In the European Union, the Pay Transparency Directive sets out requirements concerning information about starting pay or pay ranges and prohibits employers from asking job applicants about their pay history. EU member states had a deadline of 7 June 2026 to transpose the directive into national law. Employers should check the rules that apply in the country where they are hiring rather than assume the same requirements apply everywhere.

The goal is not to make every offer identical. It is to make compensation decisions that the business can explain and defend.

here are three sensible reasons to stop negotiating.

First, the candidate’s minimum is above the company’s absolute limit. Second, the additional cost cannot be justified by the responsibilities or expected contribution of the role. Third, the candidate and employer have different expectations about what the job involves or what the compensation package should include.

Before ending the discussion, consider the cost of restarting the search. You may need to spend more time interviewing, leave the position vacant longer, or reconsider the job’s requirements. Those costs matter, but they do not automatically justify paying more than the business can afford.

If you decide to look for other candidates, our guide on finding candidates who aren't actively looking for a job offers another approach to your search.

If you decide not to proceed, tell the candidate promptly and professionally. If the candidate is willing to accept a lower figure, make a clear final offer rather than extending negotiations indefinitely.

It is easier to deal with salary disagreements when employers set a realistic range before advertising the position. They should base it on current market data, the duties involved and what the company can afford. They should also decide in advance who can approve an exception and what would justify one.

If a candidate asks for more, check the figures, ask questions, calculate the total cost and make a considered counteroffer. Paying more may be a sound business decision if the role and the budget justify it. If the numbers don’t add up, it is better to walk away than to make a commitment the company will struggle to keep.

Small businesses do not need to win every negotiation. They need to hire the right person on terms both sides can accept.

Looking for your next hire?