How to use the salary range builder
- Enter the midpoint of grade 1, the number of grades and the step between midpoints as a percent.
- Enter the range spread: how much higher the maximum is than the minimum, as max / min - 1.
- Choose how to round the amounts: cents, dollars, tens, hundreds or five hundreds.
- Read the table of minimum, midpoint and maximum for each grade and the overlap each range has with the next one.
Formula
midpoint of grade n = midpoint of grade 1 x (1 + step) to the power n - 1
minimum = midpoint / (1 + spread / 2)
maximum = minimum x (1 + spread)
overlap with the next grade = (this maximum - next minimum) / (this maximum - this minimum), or 0 if negative
With these rules the midpoint sits exactly halfway between the minimum and the maximum, and max / min - 1 equals the spread.
Six grades
Grade 1 midpoint $50,000, a step of 10 percent and a spread of 50 percent. Grade 1 has a minimum of 50,000 / 1.25 = $40,000 and a maximum of 40,000 x 1.5 = $60,000. Grade 2 has a midpoint of $55,000, a minimum of $44,000 and a maximum of $66,000.
The overlap between grade 1 and grade 2 is (60,000 - 44,000) / (60,000 - 40,000) = 80 percent. Grade 6 has a midpoint of $80,525.50 (shown as $80,526), a minimum of $64,420 and a maximum of $96,631, and the whole structure runs 2.42 times from the lowest minimum to the highest maximum.
How the pieces fit together
A pay structure is a set of ranges, one for each grade of job. Three numbers shape it. The step between midpoints decides how far apart the grades are. The spread decides how wide each range is, so how much room a person has to grow in a grade. The overlap follows from the two: a large spread with a small step means neighboring ranges share a lot of pay. Changing one number and watching the table makes these links easy to see.
To place a salary inside a range, use the compa-ratio and range penetration calculator. To work out a raise as a percent, use the pay raise calculator, and to share a salary across part of a period, the mid-period salary proration calculator.
What this page does not do
It builds arithmetic from numbers you choose. It uses no market data and does not say what any job should be paid. Minimum wage, equal pay rules and overtime rules are not modeled and apply no matter what ranges you set. Rounding is applied only to the figures shown, so a rounded minimum and maximum may not give the exact spread. Use it as a worksheet, and review results with someone who knows your pay data and local rules.
Assumptions and limits
- All amounts are in one currency and shown with a dollar sign.
- The midpoint, step and spread are example values until you replace them with your own.
- Each range is wider than zero, and the spread is defined as max / min - 1, not as a share of the midpoint.
- Rounding is applied after the calculation, half up, to the step you choose.
Frequently asked questions
What is the difference between spread and range width?
Spread here is the maximum divided by the minimum, minus 1. A spread of 50 percent means the maximum is 1.5 times the minimum. Some structures instead state the spread as a share of the midpoint, which gives different numbers.
What does overlap mean?
It is the part of a range that is also inside the range of the next grade up, as a share of the width of the range. High overlap lets an experienced person in one grade earn more than a new hire in the next grade.
How many grades should I build?
The page allows 2 to 30. The number depends on how many levels of work you want to price. Start with the levels you have and check that the lowest minimum and highest maximum make sense together.
Why does the midpoint sit halfway?
The page defines the minimum as the midpoint divided by one plus half the spread, and the maximum as the minimum times one plus the spread. That makes the midpoint the average of the two by construction.