How to answer What is your salary expectation for this position? While interviewing for a new job, an employer may ask you about your salary expectations. Although many interviewers save this question for later, others may ask it earlier in the process or when it is time to negotiate your offer. It is important to prepare for this question as it can maximise your negotiating power. In this article, we examine why an employer might ask this question and how to answer your expected Cost to Company (CTC) along with sample answers.
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How to answer your expected CTC in an interview
When you prepare for an interview, it is prudent to understand how to answer your expected CTC. It is also beneficial for you to research the company, its vision, products, services, prospects and employee testimonials. A company may choose a candidate who gives them a favourable CTC expectation over another candidate with the same qualifications and skills. Like you prepare for the technical aspects of an interview, you can also prepare to answer questions related to your CTC. Here are some important steps on how to answer your expected CTC:
1. Understand the components of CTC
The CTC is a company’s total expenditure on an employee, including monetary and non-monetary expenses. Basic salary, allowances and deductibles are the three major components of CTC. Basic pay is normally not more than 40% of CTC. Allowances and deductibles may vary based on the type of company, their internal policies and company size. Knowing more about the different components of CTC can help you negotiate a better deal during an interview situation.
Other allowances and deductibles of CTC are:
- house rent allowance
- dearness allowance
- medical allowance
- entertainment allowance
- conveyance allowance
- provident fund contributions
- professional tax
- income tax
2. Perform research on salary trends
Salary trends are normally uniform and there may be some variations based on the location and size of the company. You can research current salaries on job search sites. Factor in the experience, skill level, working conditions, risks, travel requirements, benefits and perks that you may get from a competitor company. Some agencies list salary guides and salary surveys for various roles in multiple industries. You can research these to get an idea about current CTC trends.
3. Mention a salary range
After screening, if a company calls you for an interview, it implies that they are willing to consider paying you more than your current CTC or matching it. If the question of expected CTC comes up, indicate a range that you are comfortable with, based on your previous research on salaries and your current salary. Consider the allowances and benefits and the components that are added to your take home salary before indicating your expected salary range.
For example, if your research shows that the average salary for your role is ₹6,00,000 per year, you can mention higher amounts as expected CTC. Alternatively, you can also add about 15% to 20% to your current CTC and mention a range. Mentioning a range shows your flexibility and willingness to go forward with the interview. If you are filling an online application, include the word ‘negotiable’ at some point in the notes, even if you choose a figure or range from a drop-down list.
4. Be ready with a rational explanation
Once you mention an expected CTC range, an interviewer may or may not ask for the reasoning behind the numbers. Be prepared with an answer. You can use your qualifications, skills and experience as highlights to justify your expected CTC.
5. Deflect the question if necessary
During the interview, an interviewer may ask about expected CTC at the initial stages before asking you job-related questions. You can diplomatically refuse by saying that you can answer the question later once you understand the role and its responsibilities. You can also politely ask if they are willing to disclose the salary range they can offer for the position.
6. Mention expected CTC during formal rounds
In a typical process, you may have to face three rounds of interviews for entry and mid-level roles. Senior and executive roles have a more elaborate and formal process and go through multiple interview rounds. The second or the third round may be ideal to disclose your expected CTC when there is mutual clarity regarding your qualifications, skills, abilities and new responsibilities.
7. Be willing to negotiate
Knowing your CTC components is crucial so that you can negotiate accordingly. You can bargain for increased basic pay. The company may not offer many allowances or may not have the budget for your salary range but may be willing to offer you equity. You can also negotiate for cash allowances, rather than those given as benefits.
8. Be realistic and truthful about your answer
Though quoting an expected CTC amount is your discretion, do not inflate or quote unrealistic figures. Some skills and roles are niche and in-demand, and employers may pay high salaries to attract skilled professionals. Quote a realistic figure that is more than your current CTC within the company’s budget and in line with current salary trends. If your salary expectations are high, you may also have to substantiate it with reasons that can convince a business that you are worth hiring.
General tips for answering your expected CTC
A recruiter may ask you this question in the initial round of an interview, if you are a fresher or applying for an entry-level job. A hiring manager or a senior manager may ask you this question after the first or second interview round if they are interviewing you for middle and senior-level positions. Though there are no definite rules about when an interviewer can ask this question, your answer can be clear, honest and without any room for ambiguity.
Provide a salary range and indicate your willingness towards negotiating salary. If you feel that it is too early to disclose your expectations or are unsure about a figure, you can let the interviewer know that you may answer this question in future rounds. Do not leave the question unanswered.
Why do interviewers ask about expected CTC?
The primary reason for interviewers asking this question in the initial stages is for screening purposes. Businesses give a set of guidelines like qualifications, experience, skills and salary range to recruiters to screen and recommend suitable candidates for interviews. If you quote a high figure, it can indicate that you are too senior for the role or your expectations are too high. If your expectation is above the company’s guidelines, they may not consider your application. If you mention a salary under their range, they may think that you have less experience.
As the interview moves to the formal stages, you may meet senior management and hiring managers. When they ask about your expected CTC, it may imply that they are considering your candidature and exploring if your expectations match their budgets. On rare occasions when companies find an exceptional candidate with very high CTC expectations, they may offer salaries beyond their fixed budgets.
Sample answers for expected CTC question
There are no specific answers to how to answer your expected CTC. You can use your discretion to answer it in a way that is clear and leaves no doubt. Here are a few examples to provide context as you research average salaries and determine what response is best for you:
- Example 1: “While I am certainly flexible, I am looking to receive between ₹8 lakh and ₹10 lakh annually. Due to my skill set and experience level, I feel that this is a comfortable and appropriate salary range for my work.”
- Example 2: “My baseline salary requirement is ₹8 lakh per annum. The value and expertise I can bring to this role support my compensation expectations. Is this in line with your thoughts?”
- Example 3: “Let me start by reiterating how grateful I am for the benefits this job offers, such as generous paid time off and health benefits. That being said, I am expecting my salary for this position to fall between ₹7 lakh and ₹9 lakh annually. My rich background in client services specific to this industry can play a role in strengthening the organisation.”
- Example 4: “Thank you for asking. I feel that an annual salary between ₹5 lakh and ₹7 lakh is in line with the industry average and well reflects my skills and experience level. I am, however, flexible and open to hearing about the company’s compensation expectations for this position.”
- Example 5: “I am seeking a position that pays between ₹12 lakh to ₹15 lakh annually, but I am open to negotiate salary depending on benefits, bonuses, equity, stock options and other opportunities.”