How To Establish a Salary Range

A potential employee talks discusses salary.

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As small businesses compete for talent, it’s critical that they establish salary ranges for their positions. In the absence of salary ranges, an employer might miss out on top-quality candidates or might overpay new hires.

Since February 2021, the average pay for U.S. workers has been more than $30 per hour and varies depending on where you are in the country. Does that number seem too high or too low for your small business? Maybe. Maybe not.

Coming up with a salary range for each position at your small business can take some of the guesswork out of setting the appropriate pay for your employees, helping your business attract and retain workers—and ensuring your business is properly allocating its payroll.

Key Takeaways

  • A salary range sets the minimum and maximum amount of pay for a position or group of positions.
  • Including the salary range in a job posting can attract more and better-qualified candidates.
  • Various online resources and calculators can help you establish pay ranges for the jobs at your small business.
  • A number of factors go into calculating a salary range, including location, job requirements, and company budget.

What Is a Salary Range?

A salary range establishes a minimum and maximum amount of pay for a position or group of positions. For instance, if you’re hiring an inside sales representative, the low end of the range might be $35,000 a year while the high end of the range might be $65,000 a year.

Use Market Research To Determine Pay Ranges

The web is chock-full of information about pay ranges. So before you post a job ad, scour the internet to find examples of pay ranges for positions you’re trying to fill.


The website of the U.S. Bureau of Labor Statistics is a great source in the hunt for pay ranges. Other good sources include the Robert Half staffing company,, Glassdoor, Payscale, Indeed, SalaryExpert, and the job postings of your competitors.

Data you pull from online sources can be incredibly insightful when you’re establishing salary ranges for your small business.

Compare Salary Ranges Throughout Your Company

As you’re determining the salary range for a certain position at your company, you might want to review the pay ranges for every position. For example, you might realize you need to increase the salary range for a job posting if your internal research shows your current employees are being paid above that range. Or you might determine that your current employees are being underpaid based on your salary review.

During this process, figure out whether your budget can withstand changes in salary ranges that result in higher payroll costs. You might conclude that your budget needs to be increased to fatten your salary ranges, or that you can’t afford to boost the budget in order to tweak salary ranges. Competitive and budgetary concerns are two of the factors that will affect your salary decisions.

Calculate a Salary Range

To calculate a salary range, factors you should weigh include:

  • Location: What are other businesses in your region paying for this type of position?
  • Requirements: What levels of education, skills, and experience are you seeking for the person who will fill this position?
  • Budget: Would your payroll be stretched thin if you allocate a generous amount of money for a certain salary range?
  • Corporate structure: How does this position fit into your organizational chart and your business plan? How valuable is this position compared with other positions at your business?
  • Benefits: Can attractive benefits such as health insurance and paid time off make up for a salary range that’s lower than salary ranges for competitors in your region or industry?
  • Local laws: What mandates do your state, county, or city have regarding the minimum wage that you must pay?

Clearly Communicate Salary Ranges

When it comes to salary ranges, it’s wise to communicate them either in a job posting or during the interview process instead of later on, during salary negotiations.


Also, it’s best to be proactive about setting salary ranges rather than establishing them after a sticky issue arises, such as an increased turnover rate or a pay-related lawsuit.

However, this doesn’t mean you must widely broadcast salary ranges for each position at your company. But being transparent about a position’s salary range with a prospective or current employee can help attract and retain talent.

Use the Salary Range To Attract the Right Employee

The salary range might be the first thing a candidate looks for in a job posting. In fact, if a salary range doesn’t appear in a job posting, a candidate might not even submit an application. Therefore, it might pay off in terms of attracting and retaining the right employees to include the salary range in a job posting.

In some places, state or local laws require an employer to add a salary range to a job posting. Be sure to check the labor laws governing your small business before you publish an ad for a job.

Why Should You Advertise the Salary Range?

Here are five things that putting a salary range in a job posting can do:

  • Help assure potential employees that you’re being fair and transparent about pay.
  • Remove the element of surprise. If you’re upfront about the pay range, then a new employee who wasn’t aware of the pay range might not be upset later on if they believe they’ve been underpaid.
  • Weed out candidates whose pay expectations exceed your salary range.
  • Narrow the slate of candidates to those who believe your small business is a good place to advance their career.
  • Save time. During an interview, a candidate is quite likely to ask about the salary range for a position. Plus, pay ranges for an array of positions are available on a number of websites. So why not get this out of the way by putting that information in your job posting?

Clarify Your Needs With the Job Description

Being as specific as possible in a job description, such as mentioning the salary range, can generate more candidates who are well-qualified for the position you’re trying to fill. For instance, if you’re looking for an inside sales representative, a detailed job description might discourage someone with no experience related to inside sales (such as somebody who has specialized in outside sales) from applying for the job. This can save time and frustration for both you and a job seeker.


Once you’ve nailed down the specifics of a position you want to fill, you can more easily research what the salary range should be and can more precisely target potential employees.

The Bottom Line

Setting salary ranges for positions at your small business means you’ve got to conduct market research and review your business’s budget and priorities. But if you commit to establishing a pay range for each position, that work could pay off in the form of more job applicants, better-qualified job candidates, less turnover, and a happier workforce.

Frequently Asked Questions (FAQs)

How big of a salary range should I give during the interview process?

During the interview process, ask a candidate about the salary they’re expecting. If the number is within your salary range for that position, then tell that candidate that their figure falls within your range. You can dive into the details once you’ve reached the salary negotiation stage. Of course, the salary conversation might not require this sort of back and forth if the job posting included the pay range.

What is median pay for an American worker?

The median wages for U.S. workers was $1,041 per week in the second quarter of 2022, according to the U.S. Bureau of Labor Statistics.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Federal Reserve Economic Data. “Average Hourly Earnings of All Employees, Total Private.”

  2. Payscale. “What Is Pay Communication and Why Does It Matter?

  3. Colorado Department of Labor and Employment. “Equal Pay for Equal Work Act, Part 2.”

  4. U.S. Bureau of Labor Statistics. “Usual Weekly Earnings Summary.

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