Adriana Herrera, PayDestiny FounderThis career coaching article will help you understand Desired Compensation Type.

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Career Coaching Guide

Desired Compensation Type

by | Last updated Feb 6, 2024

Desired compensation typeThis career coaching article will help you gain a better understanding of what is meant by the phrase “desired compensation type” and how it differs from “desired salary range.”

After having read this article you’ll have learned the right time to share your desired compensation type and tips to positively express your desired compensation type. 

Let’s get started!

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What is desired compensation type?

What is desired compensation type?

The salary, benefits, and job perks you receive from an employer are known as your compensation. How an employer views compensation will depend largely on the size of a company. A small business has less flexibility to offer different types of compensation compared to a venture funded startup tasked with hiring and stealing away the best employees for their business. Large businesses, depending on their operational philosophy and if they are publicly traded, may have very rigid parameters to negotiate compensation. 

Regardless of a company’s nuances compensation elements that contribute to desired compensation type include:

  • Base monetary compensation in the form of hourly or salaried pay, 
  • Compensation that impacts your take home pay such as health care coverage, life insurance, and company stock options, and
  • Job perks such as the ability to work remotely, flexible schedules, and continued education stipends. 

A job and its duties determine the type of compensation that may be possible. For example, in addition to hourly or salaried pay some positions may include other forms of monetary pay such as commissions, tips, cash bonuses, merit pay, retroactive pay, paid-time off, and royalties.

Your desired compensation type should be directly relevant to your job description. For instance, if the position is an Administrative Assistant at a small business where most employees work on salary with some performance-based bonuses it makes no sense to request commission. Conversely an Insurance Representative is a position that has opportunities to earn commissions on income earned for the business. In this case desired compensation type should not be limited to a salary and include commission. When a position has opportunities to earn commissions, bonuses, etc. the rate of commission should be negotiated and set as part of the compensation type.

What is the difference between desired compensation type and desired salary range?

What is the difference between desired compensation type and desired salary range?

Desired compensation type and desired salary range are closely related, but not to be confused with one another. Desired salary range includes both the minimum and maximum salary you would accept for a given position. Desired compensation type is broader than desired salary range, it delves into what benefits and perks you anticipate receiving during your employment.

At minimum your desired compensation type should include answers to the following questions:

  • What are the benefits and how long will the benefits last?
  • What level of annual pay do you anticipate receiving?
  • Will your pay be based on an hourly or annual basis?
  • How much vacation time do you expect to receive?

Desired compensation type takes into account other forms of non-income related reward such as professional development opportunities, career advancement possibilities, unlimited vacation time, tuition reimbursement, health care coverage, retirement plans, flexible work arrangements, and company stock options.

When thinking about, and negotiating, desired compensation type do not limit the conversation to monetary compensation/ salary information or you will end up lowballing your overall compensation. 


Determine the requirements of the job to determine desired compensation type

Determine the requirements of the job to determine desired compensation type

While it is important to express what you want in terms of desired compensation type, it is even more important to determine the requirements of the job. Understanding the requirements of the job will allow you to make well-informed decisions about the best compensation package for you.

You want your entire compensation to reflect the value you will contribute and all of the job duties to be performed. A few questions to help you understand the entire requirements of the job include:

  • Is this a new position?
  • Why is this position available?
  • How many people have historically held this position at the same time?
  • What has historically been seen as the most difficult part of this job?
  • What is the scope of responsibility for this position?
  • To whom will I report directly?
  • Who reports to me directly and indirectly?
  • What positions and teams does this position rely on?
  • What position and teams rely on this position?
  • Are there specific tasks or job duties that must be accomplished that are not described in the job description?

Once you have an understanding of what kind of work you will be doing and what is expected from you it becomes easier to make an informed decision about desired compensation type.

What to answer for desired compensation type when it’s too early to answer

What to answer for desired compensation type when it’s too early in the conversation

When asked for your desired compensation type, you may feel as though it’s too early to express what kind of compensation package you want. In this case, a good alternative is to respond with:

“I would like the opportunity to discuss that in more detail after I have had a chance to learn more about the responsibilities and deliverables associated with this position.”

Another way to avoid requesting one particular form of compensation is to instead focus on expressing your interest in the role by saying something along these lines of:

“I am very excited by the opportunity to join XYZ company. Desired compensation type is flexible; the most important aspect is an equitable compensation package that fairly reflects the duties and responsibilities as well as the skills and experiences I bring to the company. I would like time to better understand the requirements of the position to determine what type of compensation package would be best for both of us.”

How to answer desired compensation type

How to answer desired compensation type

It is appropriate to provide an answer to your desired compensation type after you have:


  • Learned the full scope of the job and its duties,
  • Researched what the market is paying for a person in your area with your skills and experiences,
  • Figured out your minimum rate of pay,
  • Figured out your must have benefits and perks,
  • Asked questions to understand what benefits and job perks are available, 
  • Acknowledged (and will stick to) a walkaway rate you have set for yourself (this is any compensation offer below your minimum rate of pay and that excludes your must have benefits and perks),
  • Prepared a list of quantified achievements that support your desired compensation package,
  • Have practiced expressing your desired compensation type so that you sound confident, and
  • Have practiced using your achievements to support why your compensation package is X.

Deposit an Achievement

Does preparation to answer desired compensation type sound overwhelming?

PayDestiny has free and compassionately priced software to help you build your skills and confidence to complete all of the bullet points listed above.

When expressing your desired compensation type you should never say:

“I need…”

“I won’t…”

“My bills require…”

“I want…”

“I can’t work for less than…”

It’s important to remember that the employee-employer relationship is a two-way street. It is a mutual exchange of value. Using any of the phrases above can lead the person you are speaking with to view you in a negative light. The phrases above are about you, not what you will contribute to earn your desired compensation. 

When you get to the point of discussing desired compensation type it’s important to be firm but pleasant. The more the person likes you the more inclined they are to want to help you reach your desired compensation. Do not overlook the importance of showing gratitude when expressing your desired compensation type.

When you have determined that you are ready to express your desired compensation type below are a couple of examples for: 1.) a position that is paid an annual salary, and 2.) a position that is paid an hourly wage.

An example of how to answer desired compensation type for a position that is paid an annual salary:

“I appreciate all the questions you have answered and I am excited for the opportunity to join the company. Based on my understanding of the position’s responsibilities my desired compensation type is $XX,XXX annually with X benefits and X job perks.”

An example of how to answer desired compensation type for a position that is paid an hourly wage:

“Thank you for the opportunity to join the company. Based on my understanding of the position’s responsibilities my desired compensation type is $XX,XXX annually based on an hourly rate of X with X benefits and X job perks.”

Now It’s Your Turn

Understanding desired compensation type is an essential component of negotiating not just equitable but competitive compensation for yourself. Desired compensation type is different from desired salary as it accounts for monetary compensation, benefits, and perks. When speaking about desired compensation type you’re speaking about everything you’ll receive in exchange for the work and value you provide to an employer.

Have a question about and/or additional thoughts about desired compensation type? Drop it in the comments below. If you found this career coaching article helpful please share. Thanks! 

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