Pay scale

[james mcgrew]

Nice Article by Paul Downs on Pay Scales


http://boss.blogs.nytimes.com/2013/0...ay-what-i-pay/

[Mark Meyer]

A good attempt to figure it out, but I think there's too much thinking going on.

Like anything people sell or buy, something is worth what someone is both willing to let it go for, and how much someone is willing to pay for it.
Pay works the same way, and all of the values the author puts on the various pay grades are out the window when the economy tanks, or if schools and trade-schools fall down on the job of the quality of people they graduate, or government regulations change the landscape, etc. etc.

It doesn't matter what the potential employer "thinks" he has to pay, nor does it matter what the potential employee "thinks" he's worth.
If an employer puts out an ad for a position and 100 people respond, and most or many of those respondents are qualified for the job, then the employer has offered too much for the job.
If that employer puts out an ad for a position and few or none apply, then he has to rethink what he is offering to pay for the job and increase the offer.
If a potential employee applies for 10 jobs and is qualified for all of them but no one will pay him what he wants, then that potential employee is going to have to lower his sights for what he can get paid.
If a potential employee sees that people similarly qualified are making more than he thought he could make, then he can be more direct in asking for more.

I wish it was all as easy as the author tries to make it, but I've been an employer for right at 40 years now, and like anything else, you pay the least and try to get the most, and the potential employees try to get paid the most for the least they can offer.
Quantifying an exact pay scale I don't think can be made a science. It's not even an art. It's more of a dance where the partners keep changing and everyone tries not to get their toes stepped on but often fail.

This is an interesting conversation because I think it applies to what we charge for our products as well. Competition is always ongoing, costs of doing business change, and our customers are constantly throwing new roadblocks in our way in our quest to give them the most for the least (or is that the least for the most?).
I see people occasionally ask "what should I charge?" for some of the things done, but there is no simple answer that fits everyone, and I'm not sure that there's even a guideline. If there is, I still haven't found it.
It's really quite personal, and one company or individual might get $150 for something that another company or individual might command $1500.
It all comes down to the same thing as does paying employees, and that is: "What am I willing to work for?" and "What is my customer willing to pay?"

Anyone who can make a "science" out of that would be a very rich man indeed.

[danieldance]

I used to work for a company owned by Hank Rowan (founder / owner of Inductotherm, and not has a Rowan University named after him.)

I posed this same question to him once, and he said . . .

"Always charge a product for what it is WORTH, not based on what it costs."

[bmc0787]

thanks for posting Jim.
I was fortunate to hear Paul Downs speak at the cabinetmakers 20th anniversay in Denver last year and he was excellent. He was the keynote speaker. Not only is he a great public speaker but also very honest and forthcoming about his numbers. He has been in business for a long time and has been through it all. He tracked all his figures from the beginning and laid everything out for us. If you ever have the opportunity to hear him speak, its well worth taking the time to do so.
Brian

[Ger21]

Those wages are very similar to what our shop pays, although our starting pay would be more than $10/hour.

[PANTHER]

That article is 6 years old (as is the original post) so I'm sure his scale is higher now. Min wage here is $12/hr.

[SteveNelson46]

Originally Posted by danieldance

I used to work for a company owned by Hank Rowan (founder / owner of Inductotherm, and not has a Rowan University named after him.)

I posed this same question to him once, and he said . . .

"Always charge a product for what it is WORTH, not based on what it costs."

I totally agree. IMHO, charging someone more for a product just because he is willing to pay more is dishonest. Set a fair price and charge everyone the same. However, in today's society that doesn't seem to be the norm.

[John B]

Originally Posted by SteveNelson46

I totally agree. IMHO, charging someone more for a product just because he is willing to pay more is dishonest. Set a fair price and charge everyone the same. However, in today's society that doesn't seem to be the norm.

"What it's worth" is in the eye of the beholder. The very definition of Fair Market Value is "what a willing buyer will pay a willing seller (in an arms-length transaction).

The very concept of "Value Billing" is inherent in almost every industry & profession.

If you spend hours or days designing something and producing it, charge the customer for your time, talent, machine time & materials and he walks away happy then you have an FMV transaction. When someone else walks in the door a week, month...or years later and want the exact same thing, you charge him for "value"...not just machine time & materials...even though "all you did" was call up the old file and run it.

Likewise, when the original customer comes back and re-orders the same thing, you're not going to charge him again to do it from scratch, and you probably won't charge as much as you charged that "second customer" (who may have paid less than he did originally)

That's Value Billing. It's not unfair. It's not unusual. Unless we all go back to nothing but hand tools (and even those carry a significant investment), there's no reason to think that everyone who walks in the door should be getting the same price, even for the same thing.

I think that's what Rowan meant up there.