What's a Salary Range and How to Set It Up in 10 Steps
A salary range is the span between the minimum and maximum amount a company is willing to pay for a particular role. It typically includes a minimum, a midpoint, often aligned with the market average, and a maximum based on experience, performance, or specialized skills.
In practice, it works as a reflection of how you value work, how you compete for talent, and how you manage your budget.
Done right, salary ranges can take the guesswork out of hiring and help employees understand where they stand and where they’re headed. Done poorly and you risk confusion, turnover, or paying more than you need to. This guide walks you through how to calculate a salary range that works for your business and the people who make it run.
What is a Salary Range?
A salary range works as the pay boundaries you set for a role: the lowest you’d offer, the most you’d pay, and the optimum spot in the middle. That middle point usually lines up with the market rate for someone who’s fully qualified and performing solidly in the role. For more clarity:
- Minimum (floor): The lowest amount you’re prepared to pay for someone just meeting the requirements.
- Midpoint (market rate): What you'd pay a fully qualified, competent hire.
- Maximum (ceiling): Reserved for top performers or candidates with rare, highly valuable skills or qualifications.
For example, if you’re hiring a full-stack developer, your range might look like $70K–$90K–$110K. A junior candidate with potential might come in near the bottom. A mid-career developer with the right stack? Somewhere around the midpoint. And someone with rare skills or leadership potential might push toward the top.
Salary ranges help you find that balance between what the market pays, what your team expects, and what your budget can handle. They also help you stay consistent across roles, so two people doing the same job aren’t getting wildly different paychecks.
Quick note: salary ranges aren’t the same as pay bands, which cover whole levels or job families, or job offers, which land somewhere within the range. The range is the structure. The offer is the action taken.
What is a Salary Range?
Salary ranges might seem like an internal Human Resources tool, but they affect just about every part of your business: how you hire, how you retain, how you plan.
For employers, salary ranges bring much-needed structure to compensation decisions. They help you budget with intention, avoid ad hoc offers, and stay compliant with emerging pay transparency laws in places like California and New York, where employers are now required to disclose salary ranges in job postings. Ranges also support internal pay equity and make it easier to defend pay decisions if ever challenged.
For employees, ranges set expectations. They show that there’s a system (not just randomness or whims or negotiation chops) behind pay. That deeply matters. A transparent range helps employees see where they stand, how they can grow, and what it might take to reach the next level. It also signals fairness and helps build trust in your comp philosophy, even if you’re not disclosing everyone’s exact salary.
For recruitment, salary ranges can be a significant shift. They improve both the quality and quantity of applicants, especially among younger talent. More than 40% of job applicants said they would not be interested in a job that did not list a salary range. In some states, like Colorado and New York, employers are also required to list a salary range. So there are multiple upsides.
Common Salary Range Structures
Before you set a salary range, you’ll need to decide what kind of structure fits your company best. Some setups give you room to maneuver. Others favor precision and control. The right approach depends on how fast you’re growing, how lean your team is, and how much consistency you need across roles.
Here are three key dimensions to consider:
Broadbanding vs. Narrow Bands
- Broadbanding uses wide salary ranges that group several job levels together, like combining junior, mid, and senior designers into one pay band. It gives managers flexibility and room for internal growth, but can make it harder to guarantee equity or justify pay differences.
- Narrow bands break everything down into tighter, more specific ranges, usually by job level. This structure makes it easier to benchmark, offer fair promotions, and stay internally consistent, but can feel limiting for smaller or flatter teams.
Fixed vs. Flexible Ranges
- Fixed ranges stay accurate and consistent over time, and are typically reviewed annually. This is common in companies with formal compensation cycles.
- Flexible ranges allow for quicker adjustments. Startups often lean into flexibility to stay competitive without locking themselves into rigid pay scales.
Internal vs. External Market Positioning
- Some organizations focus on internal alignment and build ranges based on existing roles and equity across the team, even if that means lagging slightly behind the market.
- Others anchor to external market data, as they aim to pay at or above industry averages to attract top-tier talent, especially in competitive sectors.
How to Set a Salary Range in 10 Steps: A Step-by-Step Guide
A well-designed salary range gives you a major edge in hiring and retention. To get it right, you must understand the role, your market, and your business reality. Here’s a practical 10-step framework to get it right:
1. Define the role clearly
Start with the basics: what is this person going to do? Break down responsibilities, required skills, experience level, and reporting lines. If you're hiring a product manager, are they owning a feature or a full roadmap? Will they manage people or work solo? The clearer the role, the easier it is to benchmark it properly.
2. Conduct market research
Use tools like Payscale, Glassdoor, or Salary.com to gather compensation data. Then filter for roles in your industry, geographic region, and company size. If a role is in high demand, like a senior data engineer professional or growth marketer, you may need to stretch your range to stay competitive. For instance, a software engineer at a 15-person fintech startup in Austin won’t earn the same as one hustling in investment banking in New York.
3. Benchmark against internal roles
You don’t want to create friction by offering a new hire more than someone already doing a similar or more senior job. For example, if your senior designer earns $85K, think carefully before offering $95K to a mid-level marketer unless there’s a strong justification. Internal pay equity it’s fundamental for retention.
4. Choose the right range width
A typical salary range spans 30%–40% from minimum to maximum. A narrower band—e.g., 20%—works well when the role is well-defined and performance is easier to measure. A broader band gives you room to grow someone into the role or offer more for hard-to-find skills.
Example:
- Narrow range: $80K–$90K–$100K
- Wide range: $70K–$90K–$110K
5. Establish min–mid–max points
The midpoint should align with the market median for the role. Then determine your minimum for someone newer or developing in the role, and the maximum for experienced, top-tier performers. Use the market data from Step 2 for calculations and consider internal anchors too.
6. Factor in perks and total compensation
If you’re a startup that can’t match big tech salaries, lean into what you can offer: stock options, remote flexibility, generous time off, wellness stipends, or growth opportunities. These benefits carry real weight—only 19% of Gen Zs and 22% of Millennials said high salary was the top reason they chose their current job, according to Deloitte’s 2024 survey. Work-life balance (25% and 31%), growth opportunities, and flexible schedules ranked even higher. Just be clear and upfront about the full package. Total compensation goes far beyond base pay.
7. Align with budget and headcount plans
Even the best range won’t help if it blows up your hiring budget. Before you finalize, check your cash flow, forecasted headcount, and funding stage. Can you support multiple hires at the top of the range? Do you need to stagger hires or prioritize roles? A quick internal check (often done through a job requisition) helps make sure everyone’s aligned on timing, budget, and need before moving forward. It saves headaches and additional costs later.
8. Create a salary range approval workflow
Decide who signs off on salary ranges (founder, finance lead, the Chief Human Resources Officer) and how often you’ll review them, and if managers can request changes, document how. This helps avoid inconsistencies like one team using old ranges while another raises salaries to stay competitive. Clear ownership supports consistent, data-driven decision-making, especially as your team grows or multiple departments start hiring at once.
9. Communicate ranges internally
Make sure everyone involved in hiring or reviews knows what the range is, why it exists, and how to apply it. Prepare hiring managers with answers to common questions like “Is this negotiable?” or “What would it take to reach the top of the range?”.
10. Review and update regularly
Markets shift, inflation creeps, and talent expectations evolve. Build a habit of reviewing salary ranges at least once a year.
If you have a compensation team, they typically step in here. They can help by analyzing market trends, adjusting ranges, and ensuring consistency with your broader job architecture. If not, assign someone ownership to set ranges and keep them current and consistent as your company evolves.
Write Job Ads with Salary Ranges and Post them on your Careers Page using HR Software
Once you've defined a salary range strategy, the next step is putting it to work, and this starts with your job ads. Including salary info directly in the post helps you attract more qualified applicants, improve job board visibility, and build trust from the first click.
Newer HR software—like TalentHR—makes this process less hectic from end to end. Just type the job title, and the platform’s AI-powered generator creates a ready-to-post description, complete with job responsibilities and requirements. You can easily tailor the tone or content to fit your brand, and of course, putting the salary range right in the ad will help people find it and approve of it.
Once it’s ready, you can publish it to your custom careers page (branded with your logo and messaging) or sync it to your existing site using TalentHR’s WordPress plugin. Applicants see all your open roles in one place and can apply instantly, without jumping through hoops.
The built-in ATS system keeps everything organized behind the scenes. You can screen candidates using custom questions, automatically score CVs based on fit, and track every applicant from first click to final offer. And once you’ve made a hire, you can switch them to onboarding without ever leaving the platform. TalentHR is an ideal HR app for software businesses and yet also works for companies in other verticals, like manufacturing or hospitality.
Use TalentHR to publish a transparent, high-performing listing that sets the tone for future hires. Register now for free. It takes seconds to set TalentHR up.
Salary Range FAQs
Q: What’s the difference between a salary range and a pay band?
A: A salary range refers to the minimum, midpoint, and maximum pay for a specific role. A pay band, on the other hand, groups together multiple roles or job levels within a broader compensation tier. Unlike a salary range, which is role-specific, a pay band is a component of your overall compensation framework.
Q: How do I know if my salary range is competitive?
A: Start by benchmarking against current market data for similar positions in your industry, location, and company size. If you’re losing candidates during offers—or struggling to attract qualified applicants—it might be a sign your range is below market.
Q: Where can I find reliable salary benchmarking data?
A: Reliable sources include Payscale, Glassdoor, Salary.com, and industry-specific surveys. You can also use internal data from past hires and compensation consultants.
Q: Should I disclose salary ranges in job ads?
A: Yes—especially now. Job ads with salary ranges consistently perform better and attract more qualified applicants. It's also mandatory in some states like New York.
Q: How does job architecture influence salary ranges? How does this help a hiring manager?
A: A "job architecture" addresses roles, levels, and reporting, and can set salary bands for each role. It sets forth the structure a hiring manager uses to assign the correct salary range to a specific position. It's also a good way to prepare hiring managers so they're not caught off guard during an interview!
