Pay Employees

How Much Should I Pay My Employees?

When you’re hiring your first employee, you probably don’t know how much you should pay them.

Deciding how much to pay your employees is a balancing act – you want to offer enough to attract top talent, but you don’t want to pay more than the job is worth to you. Like any other business expense, you want to get a return on the investment you’re making in your new employee.

The amount you pay your employees will impact your bottom line, your ability to attract talent, and your reputation.

Know What You’re Hiring For

Before you set a salary or hourly rate for a new employee, know what you’re hiring them for. Start by writing a strong job description to outline exactly what you expect your new employee to do.

Set a Range

When you decide to hire a new employee, you should set a wage range beforehand so you know the most you’re willing to pay and the least you can pay. Determining a range combines what the job is worth to you with what the market demands.

Decide the Most You’re Willing to Pay

When you’re deciding how much to pay a new employee, ask yourself how much value will be added to your company because of the new position. Your answer will be the most you’re willing to pay your new employee.

If you’re hiring a salesperson, the answer is easy. A salesperson brings in revenue, so make sure they’re bringing in enough revenue to at least cover their salary.

If you’re hiring administrative or support staff, it might be a little harder to answer the question, so the question changes a little bit. It’s no longer “How much value will my new employee add to my company?” The new question is “How much can my new employee save me?”

Decide the Least You Can Pay

Market rates set your candidates’ expectations. They’ll expect you to pay at least the market rate, unless you can provide good benefits.

You can find market rates by using sites like or PayScale. These sites allow you to search by job title and location. Being able to search by location is especially important because the market rate for a position in California is going to be vastly different than the rate in Georgia. In Georgia, the market rate for a position in Atlanta is going to be different than the rate in Evans.

You can also learn the market rate by calling a local temp agency and price out a temp, then determine a permanent wage from there.

Make sure that the low end of your range complies with state and federal minimum wage laws.

By determining the going rate in your area, you’ll learn the high, low, and average wage, and you’ll have a better idea of what potential candidates expect.

Plan for the Future

When you’re hiring a new employee, make sure to plan for the future. Ideally, you’re hiring someone who will stick with your company long-term, so plan for their benefits, raises, and bonuses and make sure they’ll fit in your budget.