When you receive a job offer, the base salary is the number that dominates the conversation. But base salary is often less than 70% of total compensation, and focusing on it alone can lead you to accept a worse offer or reject a better one. Total compensation includes base pay, bonuses, equity, retirement matching, insurance, PTO, and other benefits that have real dollar values even though they do not show up on your paycheck.
Here is how to evaluate a job offer by calculating the full financial picture. Use our job offer comparison tool to model offers side by side.
What Should You Include in Total Compensation?
Base Salary
The fixed annual pay. This is the foundation but not the whole picture. Two offers with the same base salary can differ by $20,000 - $50,000 in total comp depending on the other components.
Annual Bonus
Many companies offer target bonuses of 5-20% of base salary for individual contributors and 15-40% for managers. Key questions: Is the bonus guaranteed or performance-based? What percentage of target do employees typically receive? A "15% bonus" that pays out at 80% on average is really a 12% bonus.
Cash value: If the target bonus is 15% of a $120,000 base, the expected value is $18,000 (or $14,400 if you discount for typical 80% payout).
Equity Compensation
Stock options, RSUs (Restricted Stock Units), and equity grants can be the most valuable component at tech companies and startups. For public companies, RSUs have a clear current value. For startups, equity is speculative -- value it conservatively or at zero if the company is pre-revenue.
Typical vesting is 4 years with a 1-year cliff, meaning you receive nothing if you leave before year one, then vest monthly or quarterly thereafter. A $200,000 RSU grant vesting over 4 years is worth $50,000/year at current stock price, but the actual value depends on stock performance.
401(k) Match
Employer retirement matching is free money. A common match is 50% of contributions up to 6% of salary, or dollar-for-dollar up to 4%. On a $120,000 salary with dollar-for-dollar 4% match, that is $4,800/year. Some companies offer 6% or higher matches worth $7,200+. Always contribute at least enough to capture the full match.
Health Insurance
Employer-sponsored health insurance premiums vary dramatically. Some companies cover 90-100% of employee premiums; others cover 50-70%. The difference can be $3,000 - $8,000/year in out-of-pocket premium costs. Also compare deductibles, out-of-pocket maximums, and HSA contributions. Some employers contribute $500 - $2,000/year to your HSA.
Other Benefits With Real Value
- PTO: 15 days versus 25 days of PTO is a 10-day difference. At a $120,000 salary, each PTO day is worth roughly $460. Ten extra days = $4,600 in value.
- Remote work: Eliminating a commute saves $3,000 - $8,000/year in gas, transit, parking, and wear on your car, plus 200-400 hours of time.
- Education benefits: Tuition reimbursement of $5,250/year (the tax-free limit) has clear value if you plan to use it.
- Parental leave: 12 weeks paid versus 6 weeks paid is a $12,000+ difference at a $120,000 salary.
- Life and disability insurance: Employer-paid coverage worth $500 - $2,000/year.
How to Compare Two Offers
Build a total comp spreadsheet for each offer. Here is an example comparison:
- Offer A: $130,000 base + 10% bonus + $0 equity + 3% 401k match + 80% health premium covered + 15 days PTO = ~$157,000 total
- Offer B: $120,000 base + 15% bonus + $40,000/yr RSU + 6% 401k match + 100% health premium + 25 days PTO = ~$195,000 total
Offer B has a lower base salary but is worth roughly $38,000 more per year in total compensation. Without doing this analysis, you might choose Offer A because it "pays more."
Compare offers with our job offer comparison tool for a complete side-by-side analysis.
How Should You Adjust a Job Offer for Cost of Living?
If offers are in different cities, you must adjust for cost of living. A $150,000 offer in San Francisco has less purchasing power than a $120,000 offer in Nashville. Use our relocation calculator to convert between markets, and check your take-home pay after state and local taxes with the paycheck calculator.
Remote work adds complexity: if one offer is remote, you keep local cost of living while potentially earning a higher-market salary. This can be the single highest-value perk in any offer. Convert between hourly and annual pay using our salary converter if comparing contract versus full-time roles.
Non-Financial Factors That Affect Your Finances
Some factors are not directly financial but have significant financial implications:
- Growth trajectory: A lower-paying role at a fast-growing company may lead to faster promotions and higher long-term earnings.
- Job stability: A higher-paying role at a company with layoff risk may be worth less than a stable role that pays slightly less.
- Work-life balance: A job that demands 60 hours/week at $150,000 pays $48/hour. A job at $130,000 for 40 hours/week pays $62.50/hour.
- Manager quality: Your manager is the single biggest predictor of job satisfaction and career progression. A great manager at a slightly lower-paying job often leads to better outcomes than a bad manager at a higher-paying one.
The Bottom Line
Never evaluate a job offer on base salary alone. Calculate total compensation including bonus, equity, 401(k) match, insurance, PTO, and other benefits. Adjust for cost of living if the offers are in different locations. The offer with the highest base salary is frequently not the best offer when you do the math.
Compare job offers with our job offer comparison tool, adjust for location with the relocation calculator, and check your take-home pay at our paycheck calculator.