Quite often, we have a pretty good idea of what the going rate is for a given job, but we stumble around a little when we need to set a minimum and maximum rate. Here is a quick, simple procedure to build a pay range.

First, we need to decide on the “spread” of the pay range. (Range “spread” is the percentage from the minimum of the pay range to the maximum.) The most common range spread for white collar positions is 50%. Senior execs will often have a spread of 60-70% while blue collar positions will run from 25-40%. For our purposes, let’s work with a 50% spread.

Starting with the “going rate”, we’ll now develop the Min and Max by applying a basic formula. Divide the desired range spread by 2 plus the desired range spread. In our example, it would be .50 / (2 + .50) which yields .50 / 2.50 which results in .20 or 20%.

Now, we’ll take 20% of the going rate and subtract from it to determine the Min. Now, take 20% of the going rate and add it to get the Max. Check your work by dividing the Max by the Min. If you’ve done the math right, it should equal 1.50: a 50% range.

Have fun!