A compensation range is the span of base pay an employer will offer for a specific role, set by three numbers: a minimum, a midpoint, and a maximum. A marketing manager role might run from $85,000 to $115,000, with the midpoint near $100,000. Whoever fills the job gets paid somewhere between those two ends.
The range solves three problems at once. Pay has to be high enough to hire, even across two people doing the same job, and capped where the budget can absorb it.
You’ll also see ranges called salary ranges or pay ranges. Same thing, and all of them mean base pay, before bonuses, equity, or benefits.
What’s Inside a Range: Minimum, Midpoint, Maximum
Stay with that marketing manager range of $85,000 to $115,000. Each number marks a different point in a career, and the midpoint anchors the other two.
| Number | Who sits here | Typical market anchor |
|---|---|---|
| Minimum ($85,000) | Meets the core requirements, still growing into the role | 25th to 40th percentile |
| Midpoint ($100,000) | Fully competent, performing the job well | 50th percentile (market median) |
| Maximum ($115,000) | The most experienced, strongest performers | 65th to 75th percentile |
The midpoint matters most, because the whole range is built around it. Once someone reaches the maximum, they’ve run out of room, and the next raise has to come from a promotion.
Almost nobody sits exactly on these marks, though. To pinpoint where a person actually lands, comp teams use compa-ratio, covered below.
What Determines a Compensation Range?
Two companies can post the same job title and land on completely different ranges. Market data gives you the starting number, but four things pull it around from there.
Geography moves it the most. The same financial analyst role might pay $85,000 to $120,000 in San Francisco and $65,000 to $95,000 in a lower-cost city. Companies with people in several markets either build separate ranges by location or apply a geographic adjustment to one national range.
Industry pulls the same way, since a product manager in fintech and one at a nonprofit aren’t chasing the same paychecks. Company size matters too, with larger organizations generally running higher, wider ranges while startups trade cash for equity.
Then there’s what’s already happening inside the building. Current salaries quietly cap what a new-hire range can be, because setting one above what your team earns creates wage compression the day the job posts.
Under all of it sits your compensation philosophy, the choice to lead, match, or lag the market. That one comes first, because it decides which percentile the midpoint chases.
These pressures don’t line up neatly. You might want to pay top of market and find the budget won’t allow it. The work is in the tradeoff.
How to Set a Compensation Range
Most teams build a range the same way: pin the midpoint to market data, then set the floor and ceiling as percentages of it.
Match the market and the midpoint sits at the 50th percentile, the minimum near 85% of it, the maximum near 115%. A $100,000 midpoint gives you roughly $85,000 to $115,000, the same marketing manager range from the top of this page.
The five steps behind that math:
- Define the role and where it sits in your structure, so you compare it against genuinely similar jobs.
- Pull market data for that role, location, and industry. Lean on recent numbers, since survey data older than 18 months starts to drift.
- Check internal equity against what your current people earn before you commit.
- Run the math using the midpoint-and-percentage method above.
- Test against budget and write down how you got there.
One caveat worth knowing. The percentile anchors in the table above and this percentage method describe the same range two different ways, and they won’t always match. A minimum at the 25th percentile isn’t guaranteed to equal 85% of the midpoint. Pick one method as primary and use the other as a check. For worked numbers, see salary range examples and the salary range calculator.
Reading and Sizing a Range
Two questions come up constantly once a range is live: how wide it should be, and where a given person falls inside it.
Width is the range spread, the distance from minimum to maximum. Most individual roles land between 30 and 50%. Entry-level and hourly work needs less room because the job varies less; senior and leadership roles need more. The reliable mistake is stamping one spread onto every level. Range spread and job leveling cover how to size it.
Position inside the range is what compa-ratio measures. Divide a salary by the midpoint: someone earning $90,000 against a $100,000 midpoint has a compa-ratio of 0.90, or 10% under the market anchor. Right at 1.0 is market; over 1.0 is above it. Comp teams use this to shape merit increases and to catch pay equity gaps between groups. Compa-ratio covers how to act on it.
Common Mistakes
Three problems show up again and again, and each is easy to avoid:
- Set and forget: A range built three years ago is almost certainly behind the market now. Review yearly.
- One spread for everything: A width that fits a professional role leaves senior roles no room to separate strong performers from average ones.
- Skipping internal equity: Drawing ranges purely from market data, without checking current pay, bakes in compression and, at worst, pay equity exposure.
The thread through all three is the same. A range is a living thing, not a one-time setup.
Pay transparency raises the cost of getting it wrong. Colorado, California, New York, Washington, and Illinois already make employers post ranges in job listings, with more states joining each year.
A range built on real market data holds up when a candidate or regulator asks how you got there, but an arbitrarily wide one just advertises that nothing solid sits behind it. Pay transparency has the state-by-state detail.
Frequently Asked Questions
What salary range should I give when an employer asks?
Look up the going rate first, then offer a range about 15 to 20% wide with your real target near the middle. Keep the bottom number at something you’d actually accept, since employers tend to hear the low end as your floor.
What’s the difference between a salary range and a salary band?
A range is the minimum-to-maximum pay for one role. A band is wider and groups several roles or levels under a single structure. Ranges are more precise; bands give more room to move people across roles without redrawing everything.
How do you find the salary range for a position?
Start with survey or market data for the midpoint, then put the minimum near 85% and the maximum near 115% of it. Adjust for location, industry, and whether your company aims to lead, match, or lag the market.
Where do companies get the market data to set ranges?
Most buy compensation surveys from providers like WorldatWork, Mercer, Willis Towers Watson, or Aon, usually on subscription. Cheaper options like Payscale, ERI, and Salary.com work when there’s no survey budget, though they carry less industry-specific detail.
How often should compensation ranges be updated?
Once a year is the norm, timed with the compensation planning cycle. In fast-moving markets, teams revisit specific roles sooner when the rate for those jobs jumps.
Build Ranges That Hold Up
A range is only as good as the data under it, the fit to the role, and how recently anyone looked at it. Let one slip and the range stops reflecting what the job is worth, usually discovered the hard way, in an exit interview.
CompLogix’s salary planning and budget modeling tools handle range design, market benchmarking, and compa-ratio reporting in one place. Talk to the team to see how it fits an organization your size.