SaaSam

Account Executive

Acclaimed Answer

Should it matter where you live when factoring base salary for a remote roll?

So a recent thread about the "Mass Exodus" posted by @Gyro25 sparked my curiosity on this matter as I've seen some companies vary comp based on your location and cost of living. Here's the original thread: https://bravado.co/war-room/posts/thoughts-on-leaving-california?comment=true

I thought about this for a great while and personally I don't see why this should matter when discussing comp. If the cost to the employer is the same, say 100k, why should someone make less because they have a lower cost of living? If you offer a 100k base aren't you saying that is what said employee is worth?

I understand wanting to make things attractive to employees in areas where it is more expensive to live but if you're willing to pay 100k in one place why pay someone of the same qualifications less based purely on geography?

Curios to know everyone's thoughts, broaden my mind.

Should comp depend on cost of living in your specific location for a remote role?

Attached poll

Yes No Other (comment)

*Voting in this poll no longer yields commission.

💰 Compensation

🤝 Interviewing/Offer

13

31 comment

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CaneWolf

Politicker

8

Call me what you want, just sign the damn contract

Sure, if they're going to drop my quota by a commensurate amount.

BmajoR

Arsonist

7

Account Executive

From an employee perspective, yes I want the same salary. From an employer perspective, that high salary is a direct result of your location. There are number of factors for why location is directly correlated to higher salary.

1. Cost of living, this one is obvious.

2. Talent pooling - as the market in one area becomes more competitive, the easiest way to poach better talent is to pay them more. This in turn drives the average salaries of that industry in that area up.

3. Cost of business, similar to cost of living. The more desirable areas cost more to operate out of, so cost of business overheard and cost of living rise in tandem.

4. Desirable climate - maybe 1% of people want to live in Phoenix and the rest are lying. People move to affordable areas because they cannot afford to live their lifestyle in the area they currently reside. Better climate = higher cost of living.

It's all relative, and the housing market is a shining example of this. Location, location, location.

Remote work with non-adjusted wages is ruining affordable markets for those that need it most. Affordable cities in California are no longer affordable to the vulnerable parts of our population and now they're suffering because people can come live like royalty and drive up the cost of living.

Sacramento for example, the cost of a single family home in August of 2021 rose 20%!!!!! It's only 2 hours from San Francisco, but it is hot, gross, flat, and ugly. There's a reason homes there cost a fraction of the Bay, but now they're increasing at alarming rates and pushing out the people that could afford to live a comfortable life there previously.

SaaSam

Politicker

1

Account Executive

#4 got me laughing.

You make some good points.

It'll be interesting to see, in years to come, what the effect of a larger remote workforce has on the national housing market.

Sunbunny31

Politicker

1

Sr Sales Executive 🐰

Hey now, I've lived in Sacto. Hot, yes. Flat, yes. Ugly - depends entirely on where you were. There are some extremely nice areas there. And yes, 2 hours from SF, but also a quick trip up to Donner or Tahoe for day skiing. So....

BmajoR

Arsonist

3

Account Executive

Hahah! Okay, that was a bit harsh. But I grew up in a shitty valley town so I can say those things.

The closer you get to the hills, yes I agree its beautiful. Right! It's only 2 hours away from arguably one of the most beautiful outdoor recreation areas in the state - but its still in the valley and therefore less desirable. Given that it is 2 hours from the Bay and Tahoe, you'd think it would be desirable but that's not the case. Now you have an influx of people moving there that "don't care where they live" that are driving up the costs.

I'll always pay more to live exactly where I want to live than settle for something more affordable.

Sunbunny31

Politicker

1

Sr Sales Executive 🐰

I bashed on TX on an earlier post, when I normally avoid doing so, so you're all good.

FamilyTruckster

Politicker

3

Exec Director, Major Accounts

Broderick has bomb ass wings. Best in Sacramento.

Sunbunny31

Politicker

1

Sr Sales Executive 🐰

Great tip. Driving through tomorrow, but won't have time to stop...this time.

TheIncarceration

Politicker

2

SDR Manager

I've been cracking up at your description of Sac! I also grew up in the central valley. I feel your pain

FamilyTruckster

Politicker

6

Exec Director, Major Accounts

I live in an expensive place, so yes pay me more 🤑

TheOverTaker

Politicker

2

Senior Account Executive

Imma have to agree. Until the cost of a beer is the same in Chicago as it is in Albuquerque...pay the Chicago people more

Gyro25

Notorious Answer

5

Account Executive

Another factor to consider is the shortage of qualified salespeople. In this particular moment in time, the employees have the upper hand over employers in terms of comp, benefits, and roles.

So if you've got a remote job paying you the same regardless of where you are vs one who's going to nitpick about where you're located, you can tell the latter to kick rocks. I know it's not as simple as that, but employees(especially those in sales) have the upper hand currently and can always leverage that.

SaaSam

Politicker

1

Account Executive

Exactly what I've been thinking. Personally I live in an area with low COL when compared to Cali.

If I get 2 offers and one wants to pay me less because I have a lower COL I'll obviously go with the one that pays more because they don't factor that in. At the end of the day the way I look at it is what you're paying me is what you think I'm worth. I'll go where I'm worth more ultimately.

I know it's not really that black and white like I make it seem but at the end of the day as long as the culture isn't shit, I'll go where my bank account can grow.

Sunbunny31

Politicker

1

Sr Sales Executive 🐰

I've enjoyed your value/worth considerations. Frankly, I believe you'll find offers vary, but it's a buyer's market right now, and you should be able to find something good for you.

SaaSam

Politicker

1

Account Executive

Oh most definitely. Right now there are so many ops out there that sales talent really has a buffet to choose from. It was just something I had noticed recently and wanted to get a feel for what the masses thought.

Also really value the opinion of those on the other side of the equation such as those that benefit from this model. I think forming a stance based solely on your own opinion or experiences is really closed minded.

I've appreciated your input, you've put certain things into perspective for me that has given me a better understanding of why.

Sunbunny31

Politicker

0

Sr Sales Executive 🐰

Well, it's one perspective, and there are other, valid perspectives too.

I think the message is, use these stories to your advantage. Use mine for a higher OTE if you're in an expensive region. Use others' if you're not, and are wanting to make the equally valid argument that you're worth the same no matter where you are.

I mean...you're in sales, after all. :)

FattySnacks

Politicker

4

Senior Account Executive

Either way you provide the same value. Don’t short change me because I chose to live somewhere cheaper. Otherwise I’ll go to someone who doesn’t care.
For reference I live in Texas and make the same as my colleagues in SF.

SaaSam

Politicker

2

Account Executive

That's my point of view as well, to me it seems like a no brainer. Of course I benefit from no state income tax as well but at the end of the day you're right. If you provide the same value it's fair to expect the same out of your employer.

I've seen some great points of view for certain situations that might cause a company to factor COL when extending an offer and sometimes it might make sense. Especially if part of the point of doing so is to attract talent in areas like California.

But at the end of the day everyone is going to end up picking the company that they feel values them the most. If you live somewhere with high COL you'll value the fact that a company considers that in their offer. If you choose to live somewhere with a low COL you'll value the fact that a company isn't going to choose to pay you less because of where you live.

Curious, are you from Texas or did you make the move because of things like COL?

Sunbunny31

Politicker

3

Sr Sales Executive 🐰

*role.

I said yes, not only because I do live in a state with a higher COL and will fight for that, but also because part of the reason field reps are remote in the first place is to cover a specific territory. It's better for enterprise companies to have reps in the territories they are selling into so that the travel is more specific and there is local industry knowledge. The company also saves money by having me in CA servicing their accounts here and not hopping on cross-country flights every week to get around for a call or two. As such, they can pay me more to be embedded in my territory. We're not talking about SDRs or ISRs who can be anywhere and the cost is the cost.

Side note: a company for which I worked in the past made a statement that reps who moved out of highly paid regions (CA and NY, for example) to other regions (TN, etc) were going to have their comp reviewed and adjusted. Part of the structure of overall comp was tied to the region in which the rep resided. COL increases to move from a less expensive region into a more expensive metro were also a consideration.

I commanded a certain high OTE based on my location when I joined my new company. I would not have gotten the same had I been in IN or TX, but it was worth it to them not only because I'm experienced, but because they wanted to establish a bigger presence in my region.

SaaSam

Politicker

1

Account Executive

Thank you for that, I've been full of grammar and spelling blunders today. Luckily I've caught most of them.

You make a great case for why COL should matter as it pertains to someone that is servicing a territory and likely traveling within that territory. Obviously if they need you to reside in said location they need to adjust your comp.

Curious to know how you would come down on it if that wasn't the case. If you were truly 100% remote and not tied down to a territory. Essentially a situation where geography wasn't a factor in your day to day responsibilities.

Very good point though that I didn't consider and I do agree that if you're expected to focus on and service a specific geographical territory compensation should take COL into consideration.

Sunbunny31

Politicker

2

Sr Sales Executive 🐰

So in light of the pandemic, a number of people found themselves working from home, and then moving. People who normally would be in a local office are now at home. The valid question is: why would a company pay more if those people have chosen to be in CA over NV, when they could just as easily be in a more affordable area? I think you will find as a matter of course that a company that has an office located in San Jose will pay more to those employees than they might in Salt Lake City or Memphis, just because that's how you attract good candidates in those regions. But as an example, if you want to give me Memphis money when I live in SF, I'm not likely to take the offer. If it's not important to the company to acquire and retain talent in CA, then they can set up any pay structure they want and deal with the result.

It's a solid reason why call centers and such are set up in places like Utah - nice enough places to live, but with a much lower COL, so they can set a rate for an in-house team that makes sense. In that sense, if you wanted to join a team that is normally based in UT but want to stay where you are, you might not get an offer that is going to be financially acceptable. The trick is always going to be if you're an attractive enough candidate to incent the company to offer you more than they would to another candidate who resides in a region with a lower COL.

Diablo

Politicker

1

Sr. AE

You got great explanation skill @Sunbunny31 😉

SaaSam

Politicker

1

Account Executive

I never really thought about it that way but it makes sense to see it as a method of ensuring you attract talent in certain areas.

I can also see the desire to keep employees "close to home" if you have HQ in a place like Cali or NY. While still remote, its less of a logistical issue to have local employees also.

Sunbunny31

Politicker

0

Sr Sales Executive 🐰

Thank you, @Diablo . I find I have to edit my stream of consciousness pretty tightly, or it's a ball of text.

hh456

Celebrated Contributor

2

sales

I Iove the value argument.

A clockmaker fixed Big Ben and sent the monarchy a bill for $1,000,000. They said, “ok I guess, please itemize.” He said sure.

- 4 coins = $10
- 1 hammer = $3
- knowing where to tap = $999,987

Where you live doesn’t matter. Do you know what to do and can you do it? We’re value generators as sales people, not metal stamping machines.

SaaSam

Politicker

3

Account Executive

At the end of the day I've always viewed the base as a compromise between what I believe I am worth and what an employer believes I am worth. This leads me to get the feeling that an employer assumes I am worth less than someone in a place like Cali simply because of where I am located.

I know that isn't really the case but that's the message it spreads IMO

hh456

Celebrated Contributor

1

sales

That’s a good point. Am I worth less because I live in Wyoming instead of Sacramento? No. I have the same value.

Sunbunny31

Politicker

2

Sr Sales Executive 🐰

I agree to a point, but that is probably relevant to exactly what you do. Are you 100% remote, no travel? If so, then your lack of access to an airport may not be a factor and have at it.

And not saying "you" specifically, but the hypothetical rep in question. It's all relevant. However, the flip side of that coin is if you are exactly perfect for the company, your value is high, and they'll definitely not care where you live. Plus, you have a really solid argument that OP can employ if it is even a factor.

ultraman

Tycoon

2

Shepherd

Like @CaneWolf said, if my base is lower, I would expect that to be reflected in a lower quota. What happens to the salesperson that lives in the smaller market, working remote and outperforms salespeople in larger markets. Yeah, they make it up in the commish but depending on when that pays out, they gotta live light. I’m all for a decent base that I can build a life around and commission that enhances that life.

thebuckhunter

Politicker

1

AE

Shouldn't matter. Period. If an enterprise rep is based at $120k with a $750k quota, then why does it matter if I commute and hour to do that job vs. commute 5 minutes by living in downtown big city, vs. not commuting because I'm remote.

Flippinghubs

Opinionated

0

Account Executive

To an extent, yes absolutely

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