Most tech professionals have no idea whether they are paid fairly. A 2025 survey by Blind found that 62% of software engineers believed they were underpaid, but only 28% had actually benchmarked their compensation against market data. The rest were guessing—and guessing usually means leaving money on the table.

Salary benchmarking is the process of comparing your total compensation against what the market pays for similar roles, experience levels, and locations. Done properly, it takes about an hour and can reveal whether you are sitting on a $20,000+ gap.

Here is how to do it right.

Step 1: Define Your Comparison Set

Benchmarking only works if you are comparing like to like. The three variables that matter most are:

Role and Level

Job titles are meaningless across companies. A "Senior Engineer" at a 50-person startup and a "Senior Engineer" at Google are vastly different roles with vastly different compensation. Focus on:

  • Your actual responsibilities (IC vs. management, scope of ownership, team size)
  • Your equivalent level at major companies (L3/L4/L5/L6 at Google, E3/E4/E5 at Meta, SDE I/II/III at Amazon)
  • Your specialization (backend, frontend, ML, mobile, infrastructure)

Location

Geographic pay differences are real and significant. A senior backend engineer earns roughly $190,000 in San Francisco, $140,000 in Chicago, and GBP 80,000 (~$102,000) in London. Always benchmark against your specific city or metro area.

Company Type

Compensation varies dramatically by company type:

  • Big Tech (FAANG+): Highest total compensation, heavy equity component
  • Well-funded startups (Series B+): Competitive base, significant equity (high risk/reward)
  • Mid-size tech companies: Moderate compensation, less equity
  • Non-tech enterprises: Lower compensation, more stable, sometimes better work-life balance
  • Agencies/consultancies: Generally lower base, variable bonuses

Step 2: Gather Data from Multiple Sources

No single source tells the complete story. Use at least three of these:

Levels.fyi — Best for total compensation at large tech companies. Includes equity and bonus breakdowns by exact level and company. The gold standard for Big Tech benchmarking.

SalaryGood — Our salary insights directory provides city-specific salary ranges across roles. Useful for understanding local market rates and cost-of-living context.

Glassdoor — Large dataset with company-specific salary reports. Best for base salary at non-tech companies and smaller firms. Less accurate for equity-heavy compensation.

LinkedIn Salary — Peer-reported data filtered by location, experience, and industry. Good for understanding ranges within your network.

Blind — Anonymous professional network where tech workers share exact compensation. Highly detailed but skews toward Big Tech and high earners.

Salary transparency postings — Job postings in states like California, New York, Colorado, and Washington now include salary ranges. Search for roles matching yours on job boards to see posted ranges.

Step 3: Calculate Your Total Compensation

Many tech workers only know their base salary. To benchmark properly, you need your complete total compensation (TC):

TC = Base Salary + Annual Bonus + Annual Equity Value + Benefits Value

For each component:

  • Base salary: Your annual gross pay
  • Annual bonus: Target bonus x expected payout percentage (e.g., 15% target at 100% payout = 15% of base)
  • Annual equity value: Total grant value / vesting period. For RSUs at a public company, use current stock price. For options at a private company, the realistic value is uncertain—many professionals discount private equity by 50–75% for benchmarking purposes.
  • Benefits value: Healthcare (employer contribution), 401(k) match, and any unusual perks (housing stipend, commuter benefits). Typically adds $10,000–$25,000 in the US.

Example Calculation

| Component | Amount | |---|---| | Base salary | $170,000 | | Bonus (15% target) | $25,500 | | RSUs ($200K grant / 4 years) | $50,000/year | | 401(k) match (4%) | $6,800 | | Healthcare (employer portion) | $12,000 | | Total Compensation | $264,300 |

Many engineers who think they earn "$170,000" actually earn $264,000 when everything is counted. This matters when comparing against roles that offer different compensation structures.

Step 4: Identify the Gap

Once you have your TC and market data, the comparison is straightforward:

  • At or above P50 (median): You are paid fairly for your market
  • Below P50: You are likely underpaid relative to market
  • At or above P75: You are well-compensated
  • Below P25: You are significantly underpaid and should take action

If you are below median, calculate the dollar gap. This is the number you bring to a negotiation or use to evaluate whether switching jobs makes financial sense.

Step 5: Take Action

If You Are Underpaid (Below P50)

  1. Document your market data with sources and screenshots
  2. Schedule a compensation review with your manager. Frame it as market alignment, not a complaint.
  3. Prepare your value case: Recent achievements, scope increases, successful projects
  4. Set a timeline. If the company cannot adjust within one review cycle, start interviewing externally. Nothing benchmarks your salary faster than a competing offer.

If You Are Fairly Paid (P50–P75)

You are in a healthy range. Focus on:

  • Ensuring your equity is vesting on schedule and at a favorable price
  • Negotiating for non-cash improvements (remote flexibility, professional development, additional PTO)
  • Positioning for promotion to the next level, which typically carries a 15–25% TC increase

If You Are Well Paid (Above P75)

Congratulations. You are ahead of the market. The risk here is complacency—markets shift, and what was P75 two years ago may be P50 today. Re-benchmark annually.

Common Benchmarking Mistakes

  1. Comparing base salary only. TC is what matters. A $160K base with $80K in equity beats a $190K base with no equity.
  2. Using outdated data. Tech compensation moves fast. Data from 2023 is not reliable for 2026 decisions. Always check the date of salary reports.
  3. Ignoring level differences. If you are comparing yourself to L6 engineers but you are L4, the gap is not underpayment—it is a different job.
  4. Forgetting location adjustments. A $150K salary in New York and a $100K salary in Berlin may provide similar purchasing power.

Benchmark Annually

Your market value changes. New skills, promotions, company growth, and macroeconomic shifts all affect what you should earn. Set a calendar reminder to re-benchmark every 12 months. It takes an hour and could be worth tens of thousands.

Start benchmarking now with our salary insights directory — filter by role, city, and salary level to see where you stand.